Sunday, July 19, 2009

CFD TABOOS & STI OUTLOOK 20/7 - 25/07

When there is a post here meant that I have lost recently again. This was a bad mistake on my part when I shorted Kepcorp at 6.84 based mainly on trendlines and previous lows and highs. I forgotten to checked it with other indicators and my waves that Kepcorp was actually uptrending on its daily charts. So far things don`t look too good with first reversal shown on weekly charts.

However, Kepcorp had not broken previous high and may be constrained by its upper B.band, resisting at 7.14 at the moment. I made all the wrong exits last week regardless of taking profits, cutting losses or making entry signals.

I have concluded a few points of using CFD and how risky shorting is.1. When shorting, if it was a wrong entry, cut loss at the first retracement of lower low made especially in volatile times.
Eg. Friday morning, Kepcorp made low at 6.90 which was a perfect timing to cut loss then, when afternoon failed to create a lower low or touching that point, there are directions that afternoon prices will improve which it did. A higher low was created and it went up..

2. When shorting, do not hold shorts too long, try to take profits near the first major support. I once shorted kepcorp to 6.4X but failed to took profits thinking that it will go lower. 6.4X was at the same level of the previous low.

3. Try not to short large caps like I did for Kepcorp, hurting to our margin and also will affect our decision. I was blinded by greed and shorted max for kepcorp. Now at current emotion state, its hard to make a sound decision. Imagine market goes stronger, every 10 cents would be 1k loss, especially for high priced shares like Kepcorp. Greed still kills. This can be a bottomless pit.

STI went out of its upeer B.band on Friday. In most occassions, Monday should be a black candle retracing back to the bands and if that the case, early weeks may have some correction downwards.

Last April was different whereby STI continues to breakup before correcting ..This was an one off case after studying the few previous times of candles outside Upper B.bands. (They usually retraces back.)

Secondly, looking at the differences between the higher lows and previous lows made.. it seems that the gap is getting smaller, coupled with decreasing volume,

STI may be close to a top and next week would be crucial to determine whether STI will edge higher. 2 conditions.

a. STI have to close higher this week than last week. (last weekly reversal would be confirmed by this)

b. Monday candles should still gap up and breaking out of upper B.bands. <----

Maybe I am seeing what I want to see, bearish but if you look back further STI seems to be losing steam despite breaking new high. All the good news came out so nicely to support the overall world market. Next week, we should have more or less a clearer view what will happen. My observations may be an one -off situation and may not apply to all times.

Friday, July 3, 2009

Further observations of using OP theory and timing of entries in current range trading

So far seems that OP theory still works well as one of the criteria to determine of price movements in current volatile market.

Today , I took a risky step and shorted A.reits which was strong and way trading above OP based on the following:-
1. As prices are strong it moved quickly up and broke 1.70 and reached a day high of 1.74. This point of shorting would be perfect as high probability that a.reits prices could have touched a highest point in a day. I did not catch it at 1.74 but was abit too fast and shorted it at 1.70.
The weak market may have prevented losses for me on this counter.

2. A.reits to be at 1.74 would be breaking up way above the upper B.band...which at past prices I never seen a big white candle hanging above its upper band, so shorting beyond 1.7 should be quite safe

Observation together with OP theory on STI.

1. When STI is weak and going red, and you see those counters trading above OP, they are usually very resilient

2. When STI is still green or strong and trading higher than opening and counters still trading below OP like capland this morning..<---this is a perfect choice for shorting.

If STI had been strong, this counter will not lead much and if STI become very weak this will be one of them to lead the fall.

Again all the above are only part of the techniques that I used recently to time my entries and also my decision to hold or cover. I have covered A.reits as it was too strong for me to bring overnight.

Though Kepcorp shows strength in the morning and it was at judgement point. I did not cover as based on the daily charts, weekly charts its downtrending and I should not be covering at high point. The most important point is that it was unable to break previous high today despite the strength in the morning. What I am trying to highlight here is that the above OP theory is only a micro-filter on how we should act, we must still base on our main analysis. it can be a good gauge to assist us on our decision in entries or cut loss point.