STI Closed At Day Low. Sell? Buy? Hold?

I got quite a number of emails asking what’s my view on the market after the recent sell-offs.

The problem is nothing new: Europe Sovereign Debt Crisis

YES… still the same old problem.

Personally, I feel the debt crisis is simply not enough to crash the market.

Do you really think those Wall Street traders cannot  anticipate all these Greece, Spain, Portugal debt issues in advance?

By the time you read the news and react to it, you are too late already.

So, after many days of selling in the markets, and if only now  you are thinking of selling your stocks… too late.

I can guarantee that when you “cut loss”, most likely price will reverse back up again.

Then when price goes up, you feel like you are missing out, you go and chase… you get trapped again because you bought at the highest and price start to fall again.

The cycle repeats… again and again and again.

“I am a long term/market cycle investor, what should I do?”

If you are into longer term investing… you need to form  your own view and have the conviction to stick to it.

Do you think the market is gonna be bullish or bearish within  the next 6 months, 1 year, 2 years etc?

If you think it’s bullish, then hold on to your stocks and forget all these “noise” in the market.

You cannot be emotional when your stock price just drop a bit  and you are scared like hell.

Because when you enter, be it for short term trading or long term investment, you should already know your “stop loss” or threshold level you can take.

My view is still remains the same: Bullish  (at least till end of 2012)

This is my personal view. I could be wrong. If you are bearish, I respect your view. This is what makes the market interesting.

Since I maintain my bullish stance, every sell-off is an opportunity for me to go long for my short term swing trade.

Do you realize that I seldom talk about those good FA stocks that I buy-and-hold? I mostly talk about short term trading.

That is because I am already invested in those companies which I feel is undervalued. Once I am vested in it, there is nothing much for me to do.

I just buy and hold on those good FA stocks. I don’t really  care about the fluctuation.

So, all in all, I am looking for opportunity to long. There are counters which I am already vested in it. I will buy on dips as long as I maintain my bullish view.

I Am Bullish On STI Now

sti 13 jan 2012

I am quite surprised that the STI is so bullish during the past 4 days. The shortists must have been squeezed till they choked by now.

The chart above is the STI daily (click for bigger view) and I am using the Ichimoku Clouds indicator to “see” the overall picture. I guess most people are not aware of this Ichimoku indicator. First of all, I have to tell you that it’s NOT some secretive proprietary indicator. It has been around since 1969. Secondly, it’s not a holy grail indicator just because you are not exposed to it. I treat it just like a normal MACD, stochastic, moving averages etc. It’s very common for Japanese traders to use Ichimoku, just like japanese candlesticks which is like the de facto now.

At first glance on the chart above, it looks very busy and with a lot of lines like spaghetti. But if you know how to use and read the Ichimoku, it’s not complicated at all. Anyway, this post is not about explaining how Ichimoku works, but I will explain on why I think STI is bullish now.

The blue areas on the charts are known as clouds. If price is below the clouds, the clouds will be acting as resistance and if price is above the clouds, the cloud will be acting as support.

Also, if price is above the clouds it’s considered bullish and if below the clouds it’s bearish.

Looking at “A”, we can see that price has broken through the clouds, which means STI breaks the resistance today.

Is it a fakeout?

I believed not. Looks like a real breakout to me. The volume is relatively higher as compared with “C” ‘s volume back then. Also the Chikou Span (green line) also broke through the cloud at “C” too.

There is also a golden cross at “B”, which is very similar to the commonly known moving average crossovers. Although in Ichimoku context, crossovers below the cloud is considered a weak bullish cross, the price is showing good momentum. So, I treat the golden cross as good signal as the cloud and chikou span breakout adds to confirmation.

The cloud shadows, which are clouds behind the price, will be the resistance ahead. 2,800, 2,830, and 2,870 will be STI resistance in the near future.

Price is approaching 2,800 level already and STI is already way overbought now. I expect a pull back soon. So, although I am bullish, I will not buy now. Wait for the pull back. If you are thinking to buy (long) on Monday, you are chasing… so it’s better to wait.

I am still vested in my S&P 500 position right now and looking into some STI counters next week.

The above information is just my personal opinion. I could be wrong and I am always wrong.

STI Heading for a Correction Soon?

Recently the market is on a rally and most of the counters are now overbought. I believe a correction will be coming soon. Maybe by as early as next Wednesday.

My analysis is based on Harmonic trading pattern AB=CD and classical support/resistance. Both happens to coincide with each other.

The bearish AB=CD pattern information can be found here. I suggest you read it. Very good information.

From the chart below, STI rallied from A to B, then retrace 38.6% from B to C, and could rally again from C to D for 261.8% (projection). By then, it should hit the gap which will act as resistance as well. The bearish AB=CD pattern would form.

A to B is about 9 days. So C to D must take at least 9 days also for the pattern to be valid. So by coming Wednesday, if the STI continues to rally, should be able to hit 2960. It should have a correction.

sti correction ab=cd 30 oct 2011

Has the Bear Market Arrived?

STI 12 Aug 2011

(Click on image for bigger view)

If you look at the STI chart above, you will realized that during the past 10 years, the 50-day EMA (exponential moving average) only cut the 200-day EMA twice. This is very significant to me. It’s a confirmation that the bull market has turned into a bear market.

During the past week, STI plunged more than 10%. The 5o-day EMA has cut the 200-day EMA already.

However, I am still holding my shares. Why?

The 50 EMA is still above 200EMA for Dow Jones.

The market seems to rebound for the past 2 days. It might of course be a dead cat bounce. Unless the market can convincingly drop further the next few trading days, only will I sell my shares and head for the exit.

I will let the market tells me what to do. Having an exit plan firmly in my head helps me to be more rational and prevent panic selling.