Tuesday 6 March 2012

Buy HIGH sell LOW, Huh?

A sea of red from Asia, UK, Europe and to the US....
It was just only a week ago where most, if not everyone were so excited with the global market rally.
The US major indexes were testing the resistance;
·         Dow Jones Industrial was at 13000
·         S&P 500 was at 1370 and
·         Nasdaq was at 3000.
(Did you read my post on Feb 7thDid you know? The BDI theory and four weeks henceforth....)
Similarly, emerging markets, BRIC, Europe, and Asia Pac were extending their weekly gains.

Newspapers, financial magazines, online financial providers were teasing the audience (especially those who missed the January rally – Tug of War – Part 1).
As you all probably know, I exited in mid February – safe and sound with a handsome profit.
The big boys, fund managers, big fund houses were also keen to take profit. However, to take profit they need to sell. That’s a very good point.

(Tug of war – Part 2, the direction the market was heading was unfolded. I was being polite by telling the audience, not to be a ‘sucker’!)
They want to sell but who is going to buy? The fund managers, fund houses, big boys bought low in Oct/Nov and they want to sell high at around late February. Yes, you guess right. Those who missed the boat, etc might just be the buyers; the big fund managers, fund houses want to sell.
The news acted as the middle-man (putting a carrot for the greedy and the ignorant).
Imo, once the ‘quota’ is achieved, Murphy’s Law will step in. You may just watch how the US markets will open tonight in the next 30 minutes.

My important point for the above post is that Be very careful on news that you read – you may just be the substitute the market is looking for.


Updated 11pm, Singapore time. Note that the current low is 12,800. If DJI closes below 12,800, the next support level would be 12,300-12400 level.

My next strategy:

While investors may start to fear, I would be watching very closely when this correction would end and planning my next few entry points.



The BLOG post that precedes the headlines
ONE step Ahead


Friday 2 March 2012

Tug of war - Bull vs. Bear Part 2

A similar post was published last week on Feb 23rd. Since then, there were a lot of happening in Asia and on both sides of the Atlantic.

As you probably know, Europe was overwhelmed with their 2nd LTRO, US had a better revised GDP estimate, expansion in Manufacturing data from Asia to US and Bernanke’s testimonial. There were lots of volatility with the commodity currencies strengthening; the Euro weakening, Gold and Silver plunged! The price of Crude Oil rose from an Iranian report of an Oil pipeline explosion in Saudi Arabia.

How exciting? Let’s see where the Dow Jones, S&P and NASDAQ closed off for the month of February?

Hmmm! It seems like all the 3 major indexes had tested the resistance. Well, today is Friday and it would be interesting to note how the major indexes would close for the week. But on the whole, the activities is still displaying that there’s still a tug of war between the bulls and the bears. The indexes are still range bound. Huh? How boring? Tempted to go in?

I had received many emails and queries. Should we chase the market? Can we buy now? Now we all know;

BUY low and SELL high.

Isn’t this a very simple logic? What’s my point?

The levels we are seeing today for the Dow and S&P was last experienced in 2008, the Nasdaq is at 2002. We also know that the bottom was somewhere in March 2009. Hence, we’ve reached back to the levels of 2002 and 2008. What does the level of US index tells you???

Are the current levels at the high or the lows (of this trading range)?

Are you going to take profit or wait for more profit? Risk-reward?

Are you taking on more buys or adding new position?

We all know that we should buy LOW and sell HIGH. If you were to buy know, are you buying at the low or high?

What is the risk reward for accumulating new buys here or if you were to take profit here?

I hope I made myself CLEAR. You are the decision maker!

If you find this post informative, please do not hesitate to forward this to someone who might agree with this line of reasoning. Thanks in advance!