Sunday, May 17, 2009

A normal Bull market retracement?

Finally we closed the week in the black. Many had asked why wasn't the blog updated. The truth is, i was keeping to my plan: to wait for the retracement to complete and i shall try long. May is coming to an end...The notion of sell in May, go away lingers on my mind. Anyhow, to me, the current upward trend is still intact. Many had said this is a bear market rally... it has ended. I for 1 will not be worried about that, to me, so long market is in a trend, that is where i can make easy money. Since my indicators are telling me uptrend, i shall continue to look to buy. The timing is crucial and as of now, the market hasn't turned. I checked the global indices, the leading sectors and stocks... we ain't going down as yet. For assurance, it will be good if we have a powerful rally to take out the previous high. Otherwise deja vu.

Let us be clear, what can be the catalyst for a selldown or resume of bear market? Bank's stress test reveals that only 74B need to be raised... this is peanuts as compared to how much they have prepared or printed. GM and Chrysler to go bankrupt? Market already warmed to this fact. More job losses? Yes it is expected from the automobile industry. Last week's retail spending was disappointing, the last GDP result was worse off than expected however market shrugged it off as it doesn't reflect going forward. Even many big firm results came in better than estimates, signalling it's not that bad afterall. Magic word... seems like market is full of optimism with regards to the recovery. As such, if there is no sudden bankrupt of any big names or big spike down in econ numbers, this upward trend may edge forward cautiously.

From my homework, it pays to watch next week closely. If we see heavy dumping, i would turn short. Otherwise if volume continues to contract and then a big volume day comes along, time to long?

STI: My eyes caught the bullish crossovers of the short term MAs and the longer term MAs. This is bullish. I eye 2095 as possible immediate support for STI, otherwise, 2026 to 1960 is where a more comfortable support zone is. Ideally, we trade sideways and meet the 20-day MA.

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