Updated: Never Hold your stocks through Earnings when you are a Short Term Player!

A question from a friend:

"Thanks for your tip/sharing. I think many of us experienced that. But after gap up, at what price we should take the profit? It is really difficult."

My Comment: 

Before Gap up:  

There are a few ways
1) Use resistance from previous high or low like Box Top or Bottom
2) Use technical indicators on your preference. Some like MA, Oscillators like RSI, or whatever your system like
3) Use time based system. Eg. Contra players never hold positions after contra period. Day traders never hold after Day close. Weekly Traders close on Friday.
Basically for Earnings play, it is a MUST you should exit b4 earnings day.
or
4) MY Favorite: Use price based support and resistance 
which I called "Law of Gravity of Price" which I teach in my class. Sometimes even without looking at charts, I now the next support and resistance.

After Gap up:

Only 1 way, very Easy:
1) Get out immediately at the OPEN. No kidding. After a big gap up after earnings, immediately sell at the open because this stock needs a rest before running again. 95% chance this stock will rest.

5% are for those stocks that are having a lot of shorting. Shorters who are caught in the gap up need to cover positons and hence the stock continues to climb. In my course, I teach people how to screen out those stocks that are hugely shorted and will carry on up for days.

Market Makers may make use of Oil as their new Weapon to bring Market down!

Dear Friends,

It is always interesting to keep track of headlines of influential websites. Basically my strategy as a trader is never believe in the news!

Ha, you may ask, "Then why did you keep track of the news if you do not believe in it?"

Well, after years of trading in the US market, I discovered that whenever the stock market has a great run, market makers or big boys, who manipulate the market, will try to create bad news to bring the market down. Now that Greece problems die down temporarily,they NEED to try to find new STORIES to scare the market. It is their only way to play against the market! 

RISING OIL PRICE may be used now. See the headlines over the weekend in marketwatch. 

Knowing their latest strategy is very important! That is how we think and play like them! The Europe story has been going on for so many months, they need something new. Oil is great for them now.

So what is the strategy for us now that we know their mindset???

My suggestion is you may want to buy oil related stocks or Oil related ETFs like "OIL", "OIH" or "USO" in US, or basically trade OIL FUTURES to hedge your positions against stocks.

I have been trading OIL Futures through my Forex broker and make some money after Light Crude breakout of 5 tops as mentioned a few weeks ago. It is flying now!

Check the 5 tops in my blog below:
http://www.danielloh.com/2012/02/will-light-crude-oil-break-out-of-5.html 

Rgds
Daniel

Market Sentiment Indicator for 24 Feb

New York Stock Exchange Sentiment indicator: 77.95% (Bullish signal: Bull confirmed 7 Dec)
Nasdaq Sentiment indicator: 63.75% (Bullish signal: Bull confirmed 17 Jan)
S&P 500 Sentiment indicator: 85.00% (Bullish signal: Bull confirmed 5 Dec)  

(NYSE & S&P 500 Above 70% now. US may be due for a correction these 1.5 mths. Pls wait for my Bearish Signal)

Energy Sentiment indicator: 83.72% (Bullish signal: Bull confirmed 10 Jan)
Financial Sentiment indicator: 86.42% (Bullish signal: Bull confirmed 5 Dec)

A reading above 70 means Overbought condition. Pls note that entering position above 70 indicates Market Risk is high. You may want to play short term or lower your position size. If Bullish sign turns Bearish when reading is above 70 means you should liquidate positions.

Pls note that this is not a RSI reading. Eg. New York Stock Exchange Sentiment indicator measures how many stocks are bullish now for all stocks listed in NYSE.
Posted by Raffles Business Institute at 11:05

Never Hold your stocks through Earnings when you are a Short Term Player!

Dear Friends,

Genting, China Aviation Oil, Wilmar these few days have something in common. They gap down after reporting earnings miss. For some, you see your profits wiped out in 1 day.

I always explain in my class not to hold your stocks through earnings. This is from my experience trading in US Market for the last 8 years. In the past, I like to speculate if a stock will have good earnings and buy in just before the earnings announcement so that I could profit from the Gap Up. There was one time my bet was wrong and I lost US$25,000 in one night. It taught me a valuable lesson!

As a trader who constantly makes money, we don't like RISK. We love certainty only! And holding position over earnings is like holding a time bomb in your hands! Unless of course, you invest stocks like Warren Buffett, for the long term. But for those that can't stand seeing your profits vanish, why don't you profit take when you already make money from the stock run-up before earnings? Just get out first!

There are opportunities to play again, after earnings. This is one valuable TIP I am going to give you in investing. In my course, I teach investors how to play earnings before and after, which I think is a giveaway gift from the market to make you great money because every stock got their characteristics before and after earnings!

Posted by Raffles Business Institute at 11:22

Enlightenment and Philosophy

Many people asked me how I know Mewah was going to rally the next day or so and how do I know? My answer was actually very simple. I experienced losses first, understand why I cut losses, be fearless and emotionless then have the conviction and confidence to punt back into the stock. I don't THINK why I made a loss, but I only blame it for my own actions and continue to move forward. To many people, they can't do it because confidence was lost and morale went down to the drain. However, fear and emotion is not in my dictionary. They are just feelings, it comes and it disappears.

I am not a magician nor a super trader, I am just a normal person like you do. Of course, what I had been through in my life made me a stronger and mentally tougher person. I don't ask anyone for tips, I don't ask God to give me anything, but I ask God for inner theme. I don't ask my teacher Robin for directions or why his method doesn't work on me, but I pay my own money to buy experience and losses to understand the game better. Just when everyone thought that charts are the most powerful tool for detecting BBs, I came up with a new strategy of detecting BBs without charts and to me, this is an artless art. Of course, I don't know how many people believed me, but those who seen it themselves was stunned. How did I discover this method again? Was anyone willing to teach me? Was anyone sharing? I don't think so. I learnt it by losing more money so to gain knowledge. However, I will share on my next seminar IF any. I can charge a fee, but I decide to give it free. I don't have time for everyone and I can't please everyone. My time is limited and I have no time for long explanation. When I shared in my seminar, if you grasp it, then it's great, but if you don't I can't help it either because if everything is simple then no one needs to work anymore. Everything is already free and what should one ask for more? If you think I am not sharing, refrain yourself from my seminar or blog. If you dislike me so much, why still visit my blog everyday and come for my seminars? I am going to make sure IF I am holding a seminar again, I will have more stringent controls during the registration process.

Look at the $10k losses on my Mewah, I was practicing a new skill and in the midst I paid some tuition fee. Who gave me sympathy when I made a loss? Can one go through the same process as me and don't feel a tinch of sadness and pain when they took a huge loss? I doubt so because when most people starts to make huge losses, their senses turned wild and became more eager to make back more money. That's fatal because the "eager" and "want" are the intangible elements which would tantamount to more huge losses. The only way is to learn to let go and start all over again. I am not rich and my account size is not very huge. I grow it from a small account to something I think it's acceptable today. So my point is, always be yourself, express yourself, have faith in yourself, do not go out and look for a successful personality and duplicate it. To me, that's the road to success.

Ronald K - Market Psychologist - The Big Speculator

Alexander Elder Seminar Review Day 1 Morning

• Trading

by Martin Lee

Over the weekend, I was at a seminar given by Dr Alexander Elder, a world renowned trader and international bestselling author.

The first session on Saturday morning was held at Marina Bay Sands and was attended by a crowd of more than 800 people.

The session also included a market outlook segment given by Joshua Tan from Phillip Securities, and a brief introduction to warrants given by Henry Ng from Macquarie.

Dr Elder was given two hours to complete his presentation “To trade or not to trade”, which was supposed to be meant for beginners.

I wouldn’t call myself a beginner but I decided to be there anyway. I figured it was not often that I would be able to catch Dr Elder deliver a seminar. I happened to bump into an old friend from NUS days during the event, who was also far from a beginner. In fact, my friend is currently a full time investor and he’s only in his 30s!

The first question that Dr Elder posed was whether anyone could become a successful trader. He commented that those people who had addiction problems, or were very obsessed over every single cent, or were impulsive should not trade.

Trading by itself is not intellectually difficult. But once money is involved, it becomes emotionally very difficult. Whatever your weakness is, the market will find it and hit at it. If you are fearful, the market will make you afraid and if you are greedy, the market will exploit your greed.

It is better for someone new to trading to do it part-time while still keeping his or her day job. A beginner does not really need live data as he can trade using a longer time-frame. In fact, using live data should only be used by the professionals. Looking at live prices can induce impulsive trades, which is a bane to any traders.

Dr Elder then started showing some charts (he relies on technical analysis more than fundamental analysis) to give us a rough idea of some of his methods and thinking. As the information wasn’t presented in a linear fashion, I had a feeling some people in the audience could have gotten lost here.

Not to be confused by all the charts, one point he made that stood out was that the best trading decisions are usually negative decisions. ie deciding not to do anything. You might look at ten charts and eight of them do not trigger your buy or sell condition. In those instances, you should not do anything. You only act when your chart tells you to.

A lot of amateurs make the mistake of looking a chart, and then trying to decide whether to take a long or short position based on what they see. Often, doing nothing might be the best policy as you really only want to take trades that have a high probability of success.

Dr Elder ended his talk by answering some questions and giving a 1-minute recap of some important points in trading.

1. Keep a trading journal.
2. Know the difference between price and value.
3. Look at the chart of a longer time frame to decide your overall strategy before looking at the shorter time frame chart to make your tactical decisions.
4. Risk no more than 2% of your risk capital on every trade.
5. Stop trading for a while if you have a 6% drawdown on your capital.

We then took the shuttle bus which bought us to DBS auditorium for the afternoon’s session.

Why it is a sell now?

Why it is a sell now?

I am too tired to write as I have 'training' the whole day. But I do want to send this post out ...

Last week, a young new lecturer asked me about investment in stock-markets!! Yup, she and bf thinking of buying a property for investment and asked me about my opinions on going into stock-markets!! So, I simply advised her to WAIT for stock-market to dive down, wait for BAD news around and I gave her 10 good dividend stocks to choose from --- when market diving with darkest cloud around, with fear ... buy 30% on a stock. If it dive lower by 10% or so, buy another 30%. Lastly, buy all you can when it goes down another 10%-20% ... then HOLD.

Ouch ... yeah, you will get scared with such an advice as all people want to hear is ... today can buy as it is VERY bullish?

Then, the cleaner aunty overheard our conversation and also interested to know. I just said ... sorry, I m busy and have to go. Also, advised her NEVER to go into stock markets!!

Today, someone asked me about my blog and thinking of joining my stock-watch. To be fair to her, it is already mid-of-FEB ... I wont be posting any stock much ... it is a SELL SELL ... sell for me. So, I allowed her to 'try' out my page for 2weeks ... and she can continues into Mac if she is interested.

Now ... I was reminded again and again .... that I am 'always' wrong with my view in markets!! My flawed opinions have been challenged for no good reasons. I am merely stating my own views in markets in my own blog. Why should it bother anyone? I am NOT controlling the markets, right? Use some common-sense ...use that now before GREED overtook your emotions.

This weekend will be the third weekend I failed to buy "The Edge" as it was sold out in Mydin. So, I know ... it is becoming VERY laku now ... another reasons to know that it is time to keep away!! When crowds move in, do get out ... you might suffocate to death ... arrghh ... help ... we are in the bull  ....

Pause ... finally, the forums becoming VERY noisy!! It is so noisy that even non-related to stock-market's forums also talking about some stocks to buy!! You may want to go to RHB's, CNX's, i3-investor's or investlah ... or whatever-lah forums. It is becoming very noisy now. Do you know how I trade? Yup ... move opposite direction!! You knew it, I knew it ... to be contrarian ... but easier said than done, right?

I do not want to spoilt anyone's mood. Buy at your own risk, anyway. I am not 'cursing' the market to go lower next week or next month, ok? I am not saying BN going to lose some seats ... as market collapses like 2008 Mac, ok? I am just merely saying ... the signs are there for us to move aside.

Take a break ... as I will take a break from analysing.

Make sure the trades are short and place your cut-losses tight.

Good luck.

TEH

Personal Market View - HSI inverse-capitulation at 2012/02/08 2.11pm ?

HSI inverse-capitulation at 2012/02/08 2.11pm ?

by ckchoy

A shooting star was noticed at 2.11pm today at about HSI 21000. This may mean the continued uptrend started from Jan till now might have finally reached a short term peak.  

Also noticed penny counters suddenly jumped up fast and furious. This may be a good chance for those big players who have been accumulated low to take profit now. If so market may head for a correction.

Suggest to take profit now especially penny counters that have run up too fast. 

But if HSI breach up 21000 again, the uptrend will continue.

Mid term market still in uptrend, can consider keep buying on dips on asset related counters like properties and commodities.

HSI futures firework

HSI futures firework