Thursday, June 5, 2008

market trend: where do we go from here?..

Huyoh! Composite Index down 34 points as of now, a reaction to the drastic fuel hike following an earlier downgrade by Goldman Sachs on our market based on the reason of political instability. All these events add in activities to our otherwise listless market.

So what have we learn from last Friday's sudden surge in volume? A sudden surge in the form of a big wave crashing into the shore without the initial retreat. That was also why i advise all of you to pay more attention to further signs. And on Monday, our market volume fizzled off by more than 50% from Friday's volume. That was a very bad sign indeed, so to speaks.

Never mind all that. It had already happened and there is nothing you can do about it now. What you need to do is to learn your lesson. And this is also the main reason of the existence of this very 'market trend' column. Again i would like to stress here that it is not my intention to prove myself nor am i expecting to be rewarded in any way. My primary reason is to part with some of my experiences to those who have the initiative to learn a bit more.

The reality about this share market is that it is more or less a 'dog eat dog' world out there. People tend to be selfish when it comes to sharing knowledge. They will envy when you make money and when you made a bad decision, they will be the first one to run you down happily. My peers told me 'everybody have to get burnt to learn' when one is involve in this industry. Perhaps, i wasn't that lucky. I indeed got burnt and i learnt. A bitter lesson which i am sure many of you shared with me.

However, i beg to differ from their so-called myth. Nobody need to get burnt to learn. Be humble and learn from those who was burnt. But it is sad you cant find many of these species around to share due to the fact that majority of them still don't know what hit them last time while those who have learned chose to be selfish with their knowledge. They believed that if everyone become knowledgeable, there will be no fools. And with less fools, their making money opportunity will be affected. I know they are right in certain sense but at the end of the day, discipline matters too. Market will never runs out of fools as there will be new fools born everyday on top of those habitual repeated fools like me... but anyone of you can be better than me just by employing better discipline. Trust yourself and trust what you have learned.

So back to business now. Where do we go from here? Forget about those price hike and those downgrading by Goldman Sachs. Lets see it from market cycle point of view. Like i have said earlier, we are going towards the end of the cycle and the ending of each cycle will bring about an opposite cycle. And with all those negative news coincide with this end cycle at the right time will tells us that this cycle will be completed in a matter of days. This is the sudden pull back that i talked about in my last posting. It is like a sea retreating now getting ready for the formation of a new cycle.

What do we look for now? Well i would look for the sign of margin force selling as a sign of major shake down before the run up. My first level of critical support have been broken so the CI will definitely hit 1216 and below. My next critical support is tagged at 1200-1201 level. Any breach of this level between now and next week would consider a good buy for a technical. Please remain cautious as a breach of this level would spells disaster. My advice is to commit yourself when the market start to turn. It is okay to buy a bit higher knowing that the market have hit a bottom or a temporary bottom. And do expect some volatility and some quick rotational play.

Until then, good luck.

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