Sunday, October 04, 2009

Finally it happens; 50-MA next

Alot of people has been asking where am i... why wasn't the blog updated. I think September summed it up very nicely, boring month! Over the last 2 weeks, did the market really moved? I think not... most of the stocks are like what my friend aptly described, vampire kind of movement.. jumping at the same spot. Thus i adopted a wait and see attitude, quietly observing what the market is trying to do. In between, i found time to travel on business trips and doing some family stuffs. If i have no trading ideas, what is there to share right? Surely we don't want this blog to turn into a travel blog? haha

Like i said in my last update, unless i see my CDL makes money, otherwise i shan't add on. It doesn't make sense to put good money after bad when the obvious was i didn't get the direction right. Though i must admit, certain stocks look to be luring me to put on a second trade. But i was wary of the after-effects of the bearish divergences which was so obvious in alot of charts. Alas, with last week's mayhem in the market, looks like it is the correct choice afterall. Though i didn't make money with that, it gives me confidence. The confidence that i know this game afterall. I found myself feeling more frustrating without a correct market opinion than losing money. This game has taught me that, every loss is a lesson learn and an insurance against bigger loss. However, once my opinion with the market is in-sync, that is where i know the money will start flowing in again. Looking back, although i grumbled about losing back this year's profits to the market, there is something to note here, while i took 2 months to build it up, i lose it over 7 long months. This reminds me of the an advise i read from a book, it goes like this... "In trading the financial markets, it is important to find a strategy that allows you to still make money despite being wrong 70% of the time." It makes sense doesn't it? How easy is it to win all the time? Or even 50% of the time? I hearsay, if you can win 50% of the time, wall street will queue up waiting to hire you. So if it's easier to lose than win in trading, then shouldn't we come out with a method to still make money while being wrong most of the time?

I am now ready to look forward to the next trade. Volatility is expected to pick up in October and i am tempted to adopt the strategy of selling into the rally since i see no reasons to be long in October where everyone is warning of a brutal month and surely this may affect buying sentiments? How about corporate earnings? Some of the good numbers maybe proped up by cutting down headcounts? I remember sales revenue ain't that good in the last report? It's just that, things are not that bad. With a good mix of good and bad econs numbers over last week, is this a hint that the quaterly results will surprise to the downside? I cannot place my bets based on speculating the results... thus i have to rely on charts. As they were just beginning to break support, i am observing if they are gonna stay firmly below it as i do not want to be whipsawed.

I set my sights at 50-day MA for now... it may act as a support. Index are still showing higher lows thus, i won't short for now and rather, i am looking to long. That's why i am still keeping my CDLHTrust - my only long trade. The next thing i am waiting for would be the 4r1g signal. That is my first sign that market is attempting to turn upwards again.

Now if the above didn't materialise, then we would have formed the early stages of a downtrend with the classic lower high and lower low. Usually the component stocks would lead the way in the fall. Thus watch their support levels for clues.

DISCLAIMER: The contents in this website are for fun reading and must not be taken as a buy or sell advice. You must do your own analysis on top of my postings. By reading this blog, you agreed that i am not responsible for your trading.