Posts

Recently, I was asked to write a feature article in the “Shares Investment” publication to give an outlook on the Singapore market. As you can briefly see from the chart in the picture, I am expecting a larger correction, which would at least see prices dip below the 3,000 round figure. To find out more, this publication is available at selected bookstores and most news stands.

 

According to Investment Trends’ Singapore Broking Report 2011, Shares Investment (Singapore) is the most popular magazine among frequent stock market traders in Singapore. Since july 1995, Shares Investment has been weel-acclaimed by both the investing public and local stock brokers – boasting of more than 30,000 readers every issue.

Regarding the market, we are likely to see a strong opening tomorrow given the strong close on Friday. The Dow closed up 277 points, due to the bullish news coming out of Europe, with new measures to “avert” the latest crisis.

It’s funny how the cycle plays out:
Crisis event – FEAR, FEAR, FEAR, it’s the end of the world!!!
Discussion – leaders discuss how to solve it, and markets creep down as the clock ticks. People are worried that no solution will emerge and markets become oversold.
Just in time! – Just when the sand is about to run out of the hourglass, the solution emerges and everyone is happy.
Next crisis – rinse and repeat

So, the big question is: how long is this bullishness going to last? Let’s not forget the core problems are still not solved. The charts will inform us when the time comes.

Let’s also not forget that last Friday was the last trading day for Q2, which signifies something very important: WINDOW DRESSING. We shall see whether this optimism carries on into the next week

Looking at the chart above, I would prefer to go long near the green circled area instead of the red circled area, where weakness in the form of upper shadows. Given the bullishness, there may not be any pullback, so I will be looking to go long on any intraday pullback or pause bar.

////////  Do note that the current short-term trend is bullish, so stay bullish until the price informs us of a change in direction. ////////

Cheers
Spencer

All 3 indices attempted a pullback over the week, and overall the Singapore market was the weakest, closing down for the week, albeit almost flat. Prices may attempt a sideways movement or rebound next week, but overall it still remains bearish, and prices are expected to continue drifting down in the absence of any major positive news. I am holding shorts and waiting for a chance to short more.

This morning, I had short positions in Noble, YangZiJiang and KepLand which were mostly at the money. However, when I opened my screen this morning at 8.30am , I noticed that the SIMSCI futures had surged ahead. I had already placed my stops a long time ago, but I was afraid that they might get gapped through. Surprisingly, and thankfully, the STI opened flattish, giving me ample time to cover my shorts. I managed to escape with a 3% drawdown on my portfolio. However, on hindsight, I should have reversed my positions and gone long. That was a mistake on my part.

Some people have emailed me asking why my positions this time were smaller compared to my shorts the previous months. At this point, I would recommend readers to refer back to my previous blog posts, for example this post on seasonality. Although written 2 years back, it still remains highly relevant. https://synapsetrading.com/2011/06/market-seasonality-and-statistics/


In my private forum, I shared with my students the possibility of a bull flag breakout, but to be honest I wasn’t expecting such a powerful move. We suddenly see an influx of bullish news about the EU “resolution”, but don’t forget that the real issues have not been dealt with yet, and have merely just been postponed.

Will we be seeing further upside? Very likely, based on the price action. It would aim to test the previous swing high of around 2900-2910, however we need to be very careful now because today’s bar was a climatic bar, which has a tendency to short-circuit moves. I would be waiting in cash on the sidelines for the next big move. Good luck trading, and remember that trading is not about being right all the time, it is about making money and keeping it! Cheers!

Key insights from 3 major indices

The Dow Jones has found support at the bottom of the channel, and this could mark the end of its decline and the resumption of its slow creeping journey upwards. The Dow heading upwards could improve global sentiment and give a boost to all indices worldwide.
Key insights from 3 major indices
After the steep drop from the earthquake disaster, the Nikkei has found support at the previous low. The fall has stabilised with a couple of harami inside bars, with one of the bars being a hammer. With Warren Buffett stepping out to encourage buying, it suggests that the situation in Japan is much under control now.
Key insights from 3 major indices
The STI is coming out of the oversold zone, but the question is whether one should buy on dips or short on rallies. Looking at the recent price channel, it is clearly sloping down, and price is under the 200-day moving average, a common gauge of bullishness/bearishness, and in this case bearishness. Based on my trend-following approach, I would avoid going long against the trend. However, neither would I go short now since the reward/risk is unfavourable. I am anticipating this week to close up, but would prefer to see at least a higher low form before considering going long.
Remember, trading is not about calling every small turn, but rather having the patience to wait for the best setups, and positioning yourself such that the odds are in your favour. Good luck!