Good Morning,
I am still bearish on the market so you may find my recent postings a little upsetting or annoying. The STI has been up for 10 days but the ROC is getting weaker on the upside. The banking blue chips like DBS, UOB and OCBC, are not really moving higher and are giving up gains throughout the day before the ‘manipulated match up’. Property stocks like CDL, Capitaland and Keppel Land are trading lower.
What goes UP; must come down (except our age..hahaha!). If it is up 5 steps and down 3 steps, we are in a bull market. If it is up 5 steps and down 8 steps, we are in a bear market. That’s how the stock market works. Its very clear that we are at the 5th step, so the down 3 steps have to come.
If one can recall, the first sector that started the recent rally was the Property sector, then the Banking sector, followed by the Commodity related counters and now we are having the ‘pennies’ moving.
So using the same analogy above, the pattern willl be: Property counters will start the profit taking first, then Banking counters, then commodity related counters and then end with the ‘pennies’.
On 24th of Dec 2009, I called for a buy on commodity stocks when Crude Oil was trading at around US$70.00/barrel. Now, 7th of Jan 2010, it is trading at US$83. The price had moved up more than 10% within 15 trading days. That’s a very good run, especially if you recall that many people were bearish during that period.
Quoting from Warren and Li Ka-Shing,
” WHen people turn greedy, you should be fearful…
& When people turn bearish, you should turn greedy…”
Looking around now, the trading volume for Crude Oil was more than 350,000 contracts, the highest amount over the last 10 trading days. The last time that happened, it was on the 21st October 2009. That period, we saw Crude Oil rising up from US$70 to US$82 over 12 trading days. (I too called for buy then).
Then this commodity began to move sideways and eventually broke down on 2nd December 2009.
I am not looking for that to happen again but I believe the selling should bring this commodity to around US$77.00/barrel first. A correctional move should be healthy. And if this commodity really comes down, it will bring the stock market lower, not higher. (I understand this is totally unconventional thinking but facts have proven that the textbook inflation thingy is no longer in use for the time being).
So, if you have been paying attention to the stock market over the last 2 trading days, you should have notice that the Property counters are giving way for no fundamental reason. The Banking counters are trading higher before selling down to DL and the ‘pennies’ are traded on high volume without much upside. Only the commodity-related stocks are trading higher.
In summation, STI cannot go below OP(Opening Price) and 2935. There is a V3Go SC there and the upside V3Go ROC is getting smaller. Also, the V3Go Indicator is near the extreme. Once the STI goes below OP today, get out from the long side. I expect the STI to correct back to 2894 first.
Hope you enjoyed my 2 cents’ worth on the stock market. If you like what I just shared and wish to hear/learn more, make a reservation with us at sales@cronwell.com.sg to attend our Preview on the 12th January 2010, 7.30-9.30pm. I will be showcasing ‘live’ examples of how a Professional Trader should trade in the market.
I will be recommending 2 PENNY Counters for you for 2010. They have pretty good fundamentals and have carved a niche in their respective industries. I will reveal them during the PREVIEW. They are meant for longer term investment.
Quickly, contact us to RSVP now!! Seats are running OUT! )
Contact us now! sales@cronwell.com.sg
Have a great trading day ahead.
Disclaimer as usual.
Kelvin Han
aka Trend Master
Originator of V3Go Mentoring Program
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