Wednesday, March 23, 2011

Sold NOL as I quickly cut loss.

I sold NOL off after less than a day.

A poor decision to enter.

why?

In an uptrend, resistance is usually provided by the higher moving average envelope (something like a straight Bollinger Band) and a good time to buy is usually at the value zone (the area around the 13 day EMA and 21 day EMA), and in a downtrend, support is provided by the lower moving average envelope and resistance at the value zone.

in other words, in uptrends, buy normalcy and sell mania. in downtrends, buy depression and sell normalcy.

I should have applied the latter to NOL this time.

Since this is a short term trade, what matters is the short term trend, which is down.






Undoubtedly, MACD histogram has a nice bullish divergence. Very nice in fact.
RSI and Stochastics have bullish divergence yet are capped at 50%.

Why I decided to sell:
1.) Volume rises on down days and drops on up days. Affirms that investors/traders are reluctant to push NOL up.
2.) I bought at the value zone. This would be ok were my intentions to keep NOL for long term. But, since my intention is to sell it off soon, and since the value zone acts as the major resistance in a downtrend, I bought at resistance. And that's suicidal.
3.) My original TP @ $2.10 was way over-optimistic.
4.) My cut loss price is very very far away.
5.) Even as the broader market turned green today, NOL went red. with a unencouraging doji.

What I learnt from this trade:
1.) I was not impulsive and worked the trade out, TP, cut loss and entry price.
2.) I did not enter at my targeted price; $1.97, entered at a slightly higher price which made me lose money, yet sometimes bargaining over a few ticks can cost you. As I know, from CapMallsAsia. (I wanted to buy at $1.55 when it was $1.57)
3.) As important as indicators like MACD, RSI, Stochastics are, Support and Resistance are still the most important concepts and I overlooked that I was buying at resistance. (how could I? tsk.)

Should NOL breakout, I will try not to bang my head against the wall.
Should it drop however, I will thank high heavens.


My watch-list of CMA, Sembmarine, NOL, Noble, GAR, Genting SP and Wilmar aren't giving me any signals to buy or sell, yet. There could be a profit taking day tomorrow or friday after three straight days of strong gains. CMA looks interesting should it drop to the $1.60 level.

I am not a full time trader, I trade on a small account, this account is a small part of my portfolio, and this is not investment advice.

Tuesday, March 22, 2011

Bought NOL @ $2.01

Bought NOL as a short term trade.





NOL Daily Chart:
Bullish divergences seen for:
1. MACD Histo. Classic A-B-C Divergence.
2. RSI.
3. Stochastics.

What concerns me is the low volume these few days.

Nonetheless, seeing these triple bullish divergences gets me bullish too.


Downtrend Channel support is roughly at 1.90.

Profit Target is at the support turned resistance of 2.10. If it breaches this resistance with high volume, I will set trailing stop. Else, sell off all at 2.10.

Stop Loss is at 1.90.

Thursday, March 17, 2011

Short Term Trade: Noble and Neptune Orient Lines?

Looking at the weekly chart for Noble group.
-MACD and Stochastics show oversold
-13w & 21w EMA show a steady long term uptrend

As for the daily:

Noble has bounced off support at 1.98 thrice
MACD Histogram slight bullish divergence
RSI bullish divergence
Stochastic oversold

Was I to trade Noble, I'd probably buy in at $1.98 to $2.02, with a stop at $1.93 (Below the recent whipsaw) with a price target of $2.20, giving a risk:reward ratio of slightly less than 1:2 after factoring in commissions.


As for NOL:

The weekly chart shows a steady uptrend; however, 13w EMA is about to cross down from 21w EMA.
-No divergence seen in any of the indicators used.

Daily shows:

-Bullish divergence for MACD Histo and RSI
-Stochastics show oversold
-FI shows it's probably too early to pick a bottom
-NOL has bounced off support at 1.88 twice; 1.88 is probably a better entry range.

Were I to enter this trade, I would enter at the 1.90 range with a target of 2.10 and a stop loss of around 1.85 (below recent low) giving a risk:reward ratio of slightly less than 1:4 after factoring in commissions. 

Sunday, March 6, 2011

Banknotes: How they represent a country's focus...

I'm going up to Malaysia with a bunch of Army friends tomorrow and changed RM400 at The Arcade at Raffles Place a few days ago. The money changer passed me 8x new RM50 notes.

Interestingly enough, I'm currently on this book called Malaysian Maverick by Barry Wain:








We look at the posterior side of the old RM50 note:






And the new RM50 note:






The posterior side of the old RM50 note showed heavy industry whilst the new RM50 notes show plam tree and agriculture.

In the book by Barry Wain, he mentioned that Mahathir was obsessed about having a heavy industry sector in Malaysia and pushed ahead, resulting in somewhat disastrous results as the Japanese (Mitsubishi Motors, Sumitomo Heavy Industry etc. ) exploited the cheap labor and costs without much technological transfer.

In the 1980s, he also declared agriculture and commodity as dead sectors.

However, this reversed under Abdullah Badawi and subsequently Najib Razak.

Interesting how a symbolic change of banknotes has so much history behind it!

Thursday, March 3, 2011

Sembcorp Marine: Multiple Bearish Divergences

MACD Histogram on it's way to completing the C part of a classic bearish divergence
RSI lower high as price higher high
Force Index lower high as price higher high
Stochastic lower high as price higher high

Very strong signal considering it's from a weekly chart

Shorting opportunity may arise at 5.50+ level

my own opinion only :)