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A few rumbling thoughts...
1) Making a positive impact on other people's lives
It is one of the most gratifying feelings one could ever have. To make a positive impact on people's lives and watch them "grow before your eyes" is just an amazing feeling to say the least. Most of the time, it is unplanned and it just happen naturally.
2) Be vigilant when everyone is making money
I read a post some time back on senior bro's blog that says essentially that "for every deal transacted, there is a willing buyer and a willing seller and both thinks that they are smart and making the right investment decision." Who on earth will risk their hard-earned money with the expectation to lose it all? When everyone seemingly is making some good profits from the market. Stay vigilant. You must not under any circumstances take your eyes off the market and be complacent. Ordinary folks without privileged information and a good trading system are not supposed to make money. Under normal circumstances, money concentrates in the hands of a few. If everyone is making money, it is a warning sign t you that a correction is near. Dr. Elder has a chapter on "Market Bell" in his "Sell and Sell Short" that talks exactly that.
3) AUDUSD pair
I had the intention of going long on the AUDUSD pair to hedge my USD exposure. Please see post on 9th of November: http://triple-screentrading.blogspot.com/2009/11/toilet-paper.html. Based on what I understand, I am picking an arguably one of the strongest pair to go long fundamentally.
Well, guess what? I found myself staring at a shorting setup.
This is my valid setup to short and not to buy. Indeed, the divergence has run its course. When I first look at it, the pair was trading at $0.9398 and it is now trading $0.9084 as I type.
4) Gold
What the AUDUSD didn't offer, gold certainly offered. It was a basic pullback in an uptrend to area that is showing good support on the hourly -- the $1,130 area. I went long at $1130 and exited at $1143.30 when a slight divergence is spotted on the hourly. The hourly is not shown here. The profit will come in handy to pay for all the meals for my family's holiday in Japan. Cheers!
5) Goldman Sachs
Last but not the least, GS took a beating yesterday as even their shareholders are demanding a bigger piece of the earning. Goldman has spectacular earnings but most of it goes to their executives but not their shareholders. When I examine the daily chart, it is showing the potential of forming my favorite setup. I am waiting for the right moment to pounce.
6) "Buying" opportunity maybe here again next week to replenish depleted supplies
Have a good weekend ahead and happy hunting!
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Starhub
I think I am addicted to blogging since I started blogging yesterday.
I am really excited to post my recent trades and to share my thoughts on it.
Starhub, I had catch the falling knife on this trade @ 1.94 on 21 Oct 2009, after the news came out that starhub had lost the EPL to singtel. On hindsight, if I had follow my rules, I should have waited for the price to stabilise and indicators to show the buy signal before entering @ around 1.89-1.91 on 28 Oct 2009.
Result was released on 10 Nov 2009, and Starhub had increased its dividend to 5 cents per quarter. Therefore, it is giving 20 cents per year. If anyone had long starhub at the price @ 1.9, the yield is almost 10.5%
Since I have decided to trade this counter right from the start, I had closed my position on 11 Nov 2009, @ 2.03, which is near to the upper envelope.
Lesson to be learnt: Do not catching a falling knife, wait for it to stabilise and signals to appear before buying.
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Sembcorp Industries
Next, i would like to mention the recent trade in Sembcorp Industries too.
There was no signal to buy on FI or MACD-H, except that it touch the lower envelope limit on 3 Nov 2009, which is also the support at 3.18. I have enter on the same day on 3 Nov 2009, but at a higher price @ 3.29.
Result was on 6 Nov 2009,
SINGAPORE, November 6, 2009 – Sembcorp Industries (Sembcorp) reported a profit after tax and minority interest (PATMI) of S$423.7 million for the first nine months of 2009 (9M2009). This represented a 4% growth compared to 9M2008. Profit before tax grew 5% from S$684.5 million to S$720.1 million, while turnover stood at S$7.2 billion. For the third quarter of 2009 (3Q2009), Group PATMI was up 2% to S$148.1 million while profit before tax grew 2% to S$255.4 million. 3Q2009 turnover grew from S$2.5 billion to S$2.6 billion. Cash and cash equivalents stood at a strong S$2.4 billion.
And for this trade, i am happy that i have managed to sell @ 3.48, near the upper envelope limit which was 3.52 on 12 Nov 2009. The price went up to 3.52 and retrace to 3.42 on intra-day, which prompted me to hit the sell button.
Lesson learnt: Follow my plan :)
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Fraser and Neave (F&N)
I would like to express my appreciation to Dream for giving me a chance to guest blog here! It is my first time blogging, and hope that I can continue blogging my trades from today onwards.
Today, I am going to talk about my recent trade on F & N.
I enter into the trade on 6 Nov 2009 @ 3.76. It was a Class A bullish false-breakout as shown in the chart. I closed the trade on 12 Nov 2009 @ 3.84, at 10am as it was going to release its earning result after 5pm. On hindsight, I should have waited until 4.30pm to make the decision. After I closed my trade, I realised that there are more buying interest in the counter. And after 5pm, the result was released.
"Fraser and Neave full year profit grew 25 per cent due to strong contributions from Properties and Food & Beverage
• Attributable profit** rose 25 per cent to $466.5 million
• PBIT* expanded 6 per cent to $810.6million
• Top‐seller of residential property units in Singapore
• Resilient Food & Beverage continued to record double‐digit profit growth
• Commercial Properties grew from strength to strength"
Dividend of $0.105 was given as well. And well, as seen from the chart, from 13 Nov 2009 to 19 Nov 2009, the counter went from my selling price of 3.84 to 4.01.
What did i learn from this trade?
Based on the chart, there are no selling signal for me to close my trade. And on hindsight again, I should have waited for the sell signal to appear, or to sell near the upper envelope limit. Another lesson learnt :).
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More on how Paulson sees BofA
Nov. 17 (Bloomberg) -- Paulson & Co., the hedge fund firm run by billionaire John Paulson, expects Bank of America Corp.’s stock to almost double in the next two years as writedowns abate, according to a letter sent to investors.
The bank, ranked first by assets and deposits in the U.S., may rise to $29.81 by the end of December 2011, Paulson said in a quarterly letter sent to investors. Paulson expects “banks will have passed the current writedown cycle and have visibility for growth in 2012,” the letter said. Bank of America closed at $15.77 in New York Stock Exchange composite trading.
Paulson reversed course this year by investing in Bank of America, ranked among the nation’s biggest home lenders. Last year, his New York-based firm’s wagers against the U.S. housing market helped earn an estimated $2.5 billion. Charlotte, North Carolina-based Bank of America represents Paulson’s biggest holding among financial companies, the letter said. A copy was obtained by Bloomberg News.
Bank of America dropped to $2.53 in February amid concern that the U.S. might seize banks that ran short on capital. While the bank “has risen from when we purchased the stock, we believe considerable upside remains,” the letter said.
Paulson, who manages about $29 billion, started a hedge fund last year called Paulson Recovery to invest in financial companies hurt by mortgage writedowns. His firm held 160 million shares of Bank of America at the end of the third quarter valued at $2.7 billion, according to regulatory filings.Last Updated: November 17, 2009 17:45 EST
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How a seemingly perfect trade setup can be rubbished by FA concerns
This is the daily chart of China milk product.
If you look at the first vertical line, that is where I entered at 0.430. At that point, it seems pretty sure that the selldown is easing off with a corresponding drop in force index. Again, unfamiliarity with the counter or just plain ignorance created this mistake. I didn't know that they are releasing results. The results are particularly bad. It resulted in a massive selldown, bringing the price way way below the lower envelope. The seemingly perfect class A bullish divergence became a failed signal.
Well, you can argue that it's a class B. But if you have to squint, may I suggest you just jump to the next chart? There are so many counters out there, why pick one which your crystal ball shows a hazy future?
Trade something with better FA. At least, there's no need to cut loss when there's surprises.
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Ausgroup
Entered this trade on Ausgroup on 30th October 2009, at 0.640. The reason for entering is that there is a potential class A bullish divergence on the daily. Peak A has a price low of 0.645. On 30th Oct morning, the price went down to 0.640, which I entered.
The price went up to a high of 0.67 intraday, but towards the closing of the market, there was a severe selldown to close at 0.65. Price fell upon the release of the dismal results and went down to a low of 0.590, breaking the support level at 0.620. At this pt in time, the potential class A looks like it had become a class B signal or even a failed signal. Nobody can tell from the right edge of the chart.
After toying around 0.62 for around a week, the price shot up on 16th Nov, 2009. I subsequently sold it at 0.655, averting a $250 losses and changing it to a $18 profit. It might seem trivial and insignificant, but there are some very good lessons to learn from this counter.
Lessons:
1. I do not know Ausgroup as well as the other counters that I've been following. Hence, I've no idea that this counter follows the so-called FA so much. When profits fell as announced in the results release, the counter fell and broke support at 0.620. When contracts win are announnced, it broke through the value zone.
If you do not know how a stock behaves, you do not have an edge. At the very least, check out the when the earnings release dates are!
2. Unlike trading futures, there is no need to exercise a strict cut loss regime. Stocks have a certain value to it, and as long as the fundamentals are sound, keeping the stock will eventually result in at least a breakeven. I'm not saying ass-shares here, only fundamentally sound companies.
3. On hindsight, it's better to trade on the 2nd signal of the peak C. Or at least upon touching the lower envelope. Again, this mistake comes from not knowing the stock behaviour well enough. Some stocks like to touch envelope before bouncing back, some don't. I do not even know how Ausgroup will respond.
4. It might be good that only blue chip quality stocks or fundamentally sound stocks are traded. I did not check the FA of ausgroup, hence when the prices fell after the dismal results, I do not feel assured.
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