Sembcorp Industries: Potential Short Term Trade

I've identified Sembcorp Industry as a potential short term trade.

Following Alexander Elder's triple screen trading system, let's go systematically:

1.) Find the Market Direction and trade with the market tide
Basically, if said stock is on uptrend, trade only from the long side. If Stock is on a downtrend, look for opportunities to short.
Let's have a look at Sembcorp Industries' Weekly chart:

As you can see from my blue line, the long term uptrendline is still intact, and Sembcorp Industry is currently hovering over it's uptrendline support. 13week EMA is also up.

Second Screen- Identify a Market wave that is against the tide
Like Salmon swimming upstream, a wave that is against the tide is bound to dissipate. So let's have a look at Sembcorp's Daily chart:

According to Dr. Elder, for oscillators like Elder Ray, Stochastics and Force Index, on an uptrend, take only BUY signals and ignore SELL signals(vice versa for downtrends). MACD Histogram for uptrends should also be at lows, but ready to turn up. He considers MACD histogram and divergences more important than crossovers and the like.
For those familiar with Triple Screen, we are in the autumn season.


For Sembcorp, let's have a look at MACD first. MACD is at oversold region, and the 2 lines show no sign of turning up. However, MACD histogram shows oversold bars that may or may not be ready to turn up.




Oscillator wise, I have 2 on the chart. Elder recommends we BUY when Force Index is negative on an uptrend. Looking at the chart again, Force Index is negative but upturning. As an added bonus, Force Index also shows a bullish divergence. I've used the 2day EMA to smooth things out, but editing FI to 13 day eMA also shows a bullish divergence.

Stochastics also shows oversold region, indicating a BUY on daily chart.
Hence, second screen shows an almost unanimous BUY signal.

Third Screen-
The Third Screen is basically where to put your stops and buy stops.
Elder recommends BUY when uptrend is intact, a retracement is occuring and BUY signal is indicated, unless multiweek lows are reached. In this case, Sembcorp Ind. is at it's lowest level since 11 weeks ago. So it's a question mark regarding the multiweek low thing.

If I do enter this trade, Elder recommends having a BUY stop order at 1 tick above today's closing price to catch any upside breakout, and BUY order will NOT be filled if there's a downside breakout. Hence reduces the trader's risk, at the expense of a few ticks profit.

For Singapore Market I doubt we have this kind of buy order, so it must be done manually.

So what should my buy price be? Today's HIGH was $4.93, so I should be buying ONLY when prices reach 4.94/4.95 bid/ask. If tomorrow downside breakout, I won't be caught, but I'll be sacrificing that few ticks of profit.
What should be stop loss be then? Elder recommends stop loss 1 tick below the low of the past 2 days, whichever is lower. Looking at Sembcorp, my stop should be when Bid/Ask is 4.81/4.82.

This leaves me with a total downside risk of $160 per lot if the trade goes awry ($4.95 to $4.81), with a target sell price of around $5.10 to $5.20, a reward of $150 to $250 a lot. (includes round trip commission) This leaves me with Risk/Reward Ratio of roughly 3:4, not very good actually.

I will see how it goes tomorrow. :)

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