Wednesday, May 20, 2009

Watching those highs

The retracement i was looking for appeared and it was in the strongest of fashion. Most of the stocks are rebounding off their 38.2% Fibo level. I learnt that this level is most useful in very strong price movement. Bingo! 3 weeks ago the rally is considered strong.... with that 38.2% supported... hence it may suggest that this rally can continue.

My plan was to sapu stock at the retracement and watch if we breaks previous high as an indication of strength. I checked around, there are many stocks breaking their previous highs. Something that is positive in my opinion. Next to observe would be if there are bearish divergences around. There are still many stocks which i can go long technically. But i always prefered to trade high liquidity stock. Like UOB-KayHian has a buy signal, but due to the low volume, i will still give it a miss. Following sectors is one big advantage i learnt along the years. To make big or small money depends on the position sizing.

I been monitoring the leading sectors like an eagle. Banks and props seems to be hesistating...i need them to break the previous high convincingly otherwise, i remain cautious. This is because one of the scenarios i painted is one by one the sectors trade and fail at resistance, then the market may fall. Otherwise if the former sectors starts to break new highs, then this bull has got legs.

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