Yanlord – follow up on short positions | Technical Analysis | Singapore Stocks

As predicted, Yanlord has headed down, and instead of having a rebound/pullback, it just consolidated for a while before breaking out downwards again. Based on the moving averages which are all pointing down, and the lower high swing count, this is a “with trend” short trade. If one takes a 1 to 2 month view, it has a good chance of reaching the bottom of the channel. Will be looking to lock in 50% profits near the 1.50 area.

The Only Two Things that Move Stock Prices

Despite what people may otherwise tell you or any preconceived ideas you may have, there are only two things that move stock prices. They are supply and demand – nothing more and nothing less. This is the foundation of basic economics as shown in the graph below. Since quantity remains the same, price is what fluctuates as a results of supply and demand.

If there is more demand than supply for a stock, then the price shall rise. Conversely, if there is more supply than demand for something, then the price shall fall. This is absolutely true in any market.

The next question is what affects the supply and demand for a particular security or traded instrument. Is it the profits in the financial statements? The upcoming expansion plans? The new product? Is it dividend payments? No one can be absolutely sure at any point why people may be buying and selling shares. That’s where technical analysis comes into play.

The Only Two Things that Move Stock Prices

The Only Two Things that Move Stock Prices

The next big revelation is that the bulk of supply and demand does not come from retail traders or retail investors. They come from the big boys (BB) and smart money (SM) like traders and fund managers in banks, funds and other institutions. They are the ones who move the market. Learning to interpret price action and volume is our window to tap into their psyche and profit from their actions.

Yanlord – great shorting opportunity | Technical Analysis | Singapore Stocks

Yanlord is at the top of the down-sloping channel, and has set up a 2nd entry short via a lower high. Volume is strong, and one is cautious that the previous long black bar may be overdone, it is more prudent to wait for a small pullback for a lower risk entry. I tried adding in some coded arrows, but realised that nothing beats reading the price action.

Straits Times Index – new highs after deep pullback | Technical Analysis | Stock Indices

 

I just returned from Italy, and it’s good to see that the STI has made new highs. If I have time, I will respond to the numerous email requests I have received, but no promises. I will be looking for stocks to go long.

Straits Times Index (STI) – Swing counts are all you need to catch the trends | Technical Analysis | Stock Indices

To be honest, it’s actually possible to trade by just counting swings, but it takes experience. From basic TA teachings, an uptrend is formed by higher highs and higher low, while a downtrend is formed by lower highs and lower lows. This gives us an easy way to identify a trend immediately. However, the tricky part is being able to identify trends in multiple timeframes amidst the fractal nature of the market. Such a technique becomes very powerful, because it gives you the confidence of knowing what the path of least resistance is. Below is an example of this analysis applied to the STI Index.


On the larger timeframe, the STI has completed a lower high, but on a smaller timeframe, it is still making higher highs and higher lows. Hence, there are 2 possible setups for such a situation:

1) go long when STI manages to go past the previous H on the higher timeframe
2) wait for a short entry (lower H) on the lower timeframe.
If the STI succeeds in making a lower low (by going below 2666), then it will be very bearish indeed. However, seeing that the US indices have succeeded in making higher highs, there is a good chance of the STI making new highs (by going above 2947) too. However, if this lower high completes, then be prepared for a prolonged range bound market, and be prepared to trade swings on a smaller timeframe.