WAT (MY) Preview
PATTERN TRADER TUTORIAL
(K.L. Malaysia) – BATCH 11
WATMY11 on 27 to 30 August 2010
Next Preview in Kuala Lumpur will be on:
Wednesday, 11 August, 2010 @ 19:00
Discussion Topic: How will you Trade to Survive a Volatile Market?
The Market has been extremely volatile. If you didn’t know why or if you can’t handle it, it is obvious that you don’t kow what you’re doing and you should not be trading.
With so many choices to trade, what will you pick as the instrument that best suits you? Options? Futures? Forex? Equities? Bonds? How will you know what will be best for your trading style?
What kind of trading style will you take on? Investing? Short-term Swing Trades? Non-Directional Trading? Day Trading? Scalping? How will you know what style you will be comfortable with?
How will you know the answers to any of the above questions if you don’t know about the business of the Financial Markets in the first place?
If these are the kind of questions that you always ask yourself, then it is about time you did something about it. Come and find out that the Pros do and what they know and why you are always going to get beaten by these elite group that make up the smaller percentage of winners.
MALAYSIA
Malaysia Office B-2-12 TTDI Plaza Jalan Wan Kadir 3,
Taman Tun Dr. Ismail 60000 Kuala Lumpur, Malaysia
Office : (60) (03) 7725 0212 Fax : (60) (03) 7725 8212
Reserve your seat for the next session now!
Drop an email to: watmy@akltg.com (For classes in K.L. Malaysia)
Click here for Course details: Pattern Trader Weekend Edition 2010
*LIMITED SEATS, SO BOOK EARLY!!
____________________________________________________________
The Pattern Trader JKT Tutorial
Jakarta, Indonesia – Next Class:
WATJKT09 on 01 to 04 October 2010
For more information on Preview dates, Schedules, Costs, or to make a reservation, please send your query to: indonesia@akltg.com (For classes in JKT Indonesia)
INDONESIA
Indonesia Office
PT Adam Khoo Learning Technologies Group
Wisma 46 Kota BNI, 2nd Fl,
Suite 2.05 Jl. Jendral Sudirman Kav. 1 Jakarta 10220
Tel: (62) 21 574 7511 Fax: (62) 21 574 7501
Click here for Course details: Pattern Trader Weekend Edition 2010
Upcoming Singapore Previews
PATTERN TRADER TUTORIAL PREVIEW
(Singapore) – WAT BATCH 42
WAT42 starting on 18 August 2010
Next WAT Preview in Singapore will be on:
Thursday, 05 August, 2010 @ 19:00
Discussion Topic: How will you Trade to Survive a Volatile Market?
The Market has been extremely volatile. If you didn’t know why or if you can’t handle it, it is obvious that you don’t kow what you’re doing and you should not be trading.
With so many choices to trade, what will you pick as the instrument that best suits you? Options? Futures? Forex? Equities? Bonds? How will you know what will be best for your trading style?
What kind of trading style will you take on? Investing? Short-term Swing Trades? Non-Directional Trading? Day Trading? Scalping? How will you know what style you will be comfortable with?
How will you know the answers to any of the above questions if you don’t know about the business of the Financial Markets in the first place?
If these are the kind of questions that you always ask yourself, then it is about time you did something about it. Come and find out that the Pros do and what they know and why you are always going to get beaten by these elite group that make up the smaller percentage of winners.
Venue:
Adam Khoo Learning Technologies Group Pte Ltd
10 Hoe Chiang Rd #01-01 Keppel Towers Singapore 089315
Tel: (65) 6274-0105 Fax: (65) 62742105
Reserve your seat for the next session now!
Drop an email to: watrader@akltg.com (For classes in Singapore)
Click here for more information on the
New Revised Pattern Trader Tutorial (WAT2010).
Upcoming Workshops
Get in touch with these other upcoming workshops:
- Breakout Patterns Workshop in JKT. – 14th August 2010 – 2pm to 5pm
- Candlestick Workshop in SG. - 23rd August 2010 – 7pm to 11pm (Tentative)
- Breakout Patterns Workshop in SG. - 25th August 2010 – 7pm to 10pm (Tentative)
- Candlestick Workshop in Penang, MY. - 9th October 2010 – 9am to 1pm (Tentative)
Click on the appropriate link to make your booking in the country of your choice.
Drop an email to:
watrader@akltg.com (For classes in Singapore)
watmy@akltg.com (For classes in K.L. Malaysia)
indonesia@akltg.com (For classes in Jakarta, Indonesia)
Market Update
9,686.48 -46.05 (-0.47%)
Volume: 199,355,421 from 262,824,114 the previous day (-24.15%)
Range: 9,614.32 – 9,770.87 (156.55 points)
|
Originally Posted by Conrad on Friday 02 July 2010
 Hammer after a down trend. But one can’t seriously read into any sort of technicals just before something like Non-Farm Payrolls …
|
DOW made its lowest close for the year and broke below 9,700 in the process. It also achieve a second weekly close below the 50week SMA within the last 5 weeks. Still on weekly candles, DOW has completed a 3 Outside Down which usually promises more down side in the week to come.
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NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,091.79 -9.57 (-0.46%)
Volume: 492,195,620 from 739,637,046 (-33.45%)
Range: 2,077.71 – 2,110.66
NASDAQ has broken below its neckline but the trend looks to be waning … for now. If the momentum chooses to continue after completing a 3 Outside Down pattern on weekly candles, we could be in for a spectacular breakdown this week.
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S&P 500 INDEX (SPX: CBOE)
1,022.580 -4.79 (-0.47%)
Volume: 2,995,417,200 from 5,447,925,200 (-45.02%)
Range: 1,015.93 – 1,032.95
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Originally Posted by Conrad on Friday 02 July 2010
The S&P500 came so close to crossing over (the Death Cross – 200 over 50 DSMA) in the second half of the day and it won’t take much to make it happen on Friday.
|
The S&P500 is right at the point of no return on the Death Cross. As of Friday’s close, the S&P500 is only 35.10 points above last July’s close of 987.48. As with NASDAQ and DOW, S&P500 has also completed a 3 Outside Down pattern on weekly candles.
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Rather than a dovish or hawkish Non-Farm Payrolls report, we got a damn confusing one – the US lost 125,000 last month, the largest decline since October but the unemployment rate improved by declining from 9.7% to 9.5% … yup, confusing … maybe that’s why the market was so flat and directionless.
| BRIEFING.COM – Friday 02 July, 2010 @ 09:09 ET The Labor Sector is Trending in the Wrong Direction The momentum in the labor sector is trending in the wrong direction. Total nonfarm employment fell 125,000 in June, 25,000 worse than the Briefing.com consensus expected, after rising 433,000 in May. However, the drop in total payrolls was due to a 225,000 decline in temporary workers hired by the Census Bureau. Excluding those workers, total payrolls increased by 100,000. The major disappointment came in the private sector. After posting a surprising 241,000 gain in April, private payrolls showed gains in May and June of only 33,000 and 83,000, respectively. These last two months of private payroll growth are indicative of a jobless recovery scenario. To make things even worse, those that still had jobs witnessed a 0.4% drop in weakly earnings as hourly wages declined 0.1% while the number of hours worked dropped from 34.2 to 34.1. The drop in hours may be a bigger cause of concern than the weak payroll growth numbers. We anticipated that consumer demand would remain strong through at least the end of the year and firms would need to increase production in order to meet that growth. The drop in hours suggests that firms are producing beyond current demand requirements, and, as a result, inventories may be stockpiling too quickly. The weakness in the earnings data may be a precursor to further declines in retail sales over the coming months. The unemployment rate declined from 9.7% to 9.5%, beating the consensus expectation calling for an increase to 9.8%. However, believing that the rise in the unemployment rate is a sign of strength is a misnomer. The unemployment rate only decreased because there was another step down in the labor participation rate. The number of discouraged workers continued to rise and the labor force shrunk by 652,000 to its lowest level since February. If these workers had remained in the labor force, the unemployment rate would have actually increased to 10.1% and matched its recent peak. |
So it was terrible news. The reason we didn’t tank big time was because of the lame excuse that it wasn’t so bad. But it wasn’t so bad only because the news reported it in a way that headline statistics were used to buffer the severity of the actual situation when the actual situation should be a lot worse – the unemployment rate should have increased to 10.1% if not for this statistical illusion.
The market is going to make the economy pay dearly for this illusion come Tuesday. When reality sets in and the joy of a long weekend is behind it, the market will react violently for being duped. Also, those who missed out on Friday because of they went on leave before the long weekend will be back with a vengeance. Its going to be an ugly spectacle.
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SUMMARY
As the U.S. market is closed today, the DMA will be back tomorrow BMO to complete the preview for the week.
In the mean time, for your information …
• In January 2007, I called a soft market by the end of Q3 that year and we got it.
• In April 2008, I called more down-side when everyone thought the down trend since October 2007 was done and dusted … and we went down some more.
• In July 2008, people saw the completion of three waves to the downside and called a bottom. I called a capitulation and a low of 6,000 when the DOW was at 11,500. They said I was mad.
• In October with DOW at 8,000, people called a bottom while I stuck to my 6,000 low within the next two quarters.
• In February 2009, everyone called for a repeat of a Great Depression with down sides at a ridiculous 4,000 while I told Adam Khoo to release “Profit From The Panic”, effectively calling the bottom at 6,500 or at worse, 6,000. The market rallied after hitting a low in March.
• In April this year at the ShareInvestor Event at Bursa Malaysia and at CIMB (MY) with G.M. Teoh, I called for a possible Head & Shoulders reversal and a major correction in May and got it – bigger than I expected, I must admit.
• After the Flash Crash of May during my TA Masterclass and at the WA Expo in Singapore, I called for the end of the third wave up since March 2009 and called for lower highs and lower lows there after.
Over the last 8 weeks, I’ve been telling my students this all this is going to get much worse before we get better.
Now, I am calling a return to the downside and the possibility of a return to recession by year’s end. A revisit of the 6,500 low is out of the question for now. But I will be keeping an eye out for that crucial 8,000 level from the “V” neckline between January and April 2009.
So there you have it. I am bearish. Now let’s do the deed.
June 2010 In Review, July Preview
June was another mad-house month but I did get a much needed break.
Between 2 to 7 June, the family and I went back to Korea for the second time in two years, this time, free and easy, and shopped the hell out of the place. We also spent an entire day at Everland and personally, I took 4 RCs … this was one of the most fulfilling times I have spent with my family.
Sorry, didn’t have time to post the pictures but I’ll let you have this 18 course meal for 4 pax which only costs S$59.00. Drool on!
13 June saw the graduation of Wealth Academy’s 22nd Cohort.
On 23rd June, Batch 39 graduated after 8 intensive weeks and an impromptu revision session on Sunday 20 June with Roy and Dianah. This batch is finally coming together after a slow and quiet start – thanks to the coaches also including Gabriel, Leon and Jason.
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July Preview
June 2010 wraps up the worst quarter in more than a year. Now let’s bring on July!
July starts rather bullishly and ends just as bullishly as it starts but can end very poorly if the market is in a bear run. The first day of July has been up 17 of the last 20. The first couple of weeks is usually good for a relief rally but that immediately turns sour the week before Expiration Friday with 7 of the last 11 being bearish. July’s Expiration Friday itself has been down 6 of the last 9. July begins NASDAQ’s worst four month of the trading calendar.
But its not all bad news in July … Independence Day (4 July) fall on a Sunday which makes Monday 5 July a public holiday – a three day weekend – which implies a rally day on Friday 2 July … but it is also Non Farm Payroll day. Could this be an indication of a good return on employment numbers this week?
Let’s not discount what happened last year when July Non-Farm Payrolls came out as the worst in 26 years and sent the DOW reeling 222.26 (-2.68%) to the south on that Friday before the 4 July three day weekend.
Originally Posted by Conrad on Friday 3 July, 2009
… the worst jobs report in 26 years, oil at $66 (last year this time it was $140) and the worst pre-4th of July trading day in more than 100 years … its good to be part of this history!
Anything can happen and patterns tend to repeat themselves. Talking of which, watch for the break-down of NASDAQ’s Head & Shoulders pattern which could lead into more downside for the next few months. At best, I expect it to be volatile … very volatile.
I’m not going to talk about my upcoming schedule for July because it is really stressful but I will be K.L. for the Shareinvestor Event on 17 and 18 July.
That’s it! A short and sharp report for now until I get more time to do a really decent posting again.
Cheers!
May 2010 In Review, June Preview
What a May that was … there was that flash crash that went into a 400-point relief rally and then slow-bled only to go into another 300-point rally. All three benchmarks fell below their 200DSMAs and only the NASDAQ closed out May above its 200. The Dow Jones Industrial Average held above 10,000 in spite of one more triple digit drop on the last day but still lost more than 1,000 points in May. The VIX spiked to a high of 48 – a level not visited since March 2009 as the market “recovered”.
And with that, May 2010 ends as the most aggressive May in the last 20 years, surpassing that awful 2006 May as the biggest loser in recent times.
Remember that we didn’t get a Sell-In-May last year (2009) and remember what I said about that? Well, we’ve paid for it … for some who were ignorant, dearly.
In the Apr/May 2010 issue of INVEST Magazine, I wrote;
We know some of the obvious Self-Fulfilling Prophecies such as;
• Sell in May and Go Away
• October Effect
• Santa Claus Rally
• January BarometerWhat most people don’t know is the longer term effects of some of these prophecies when they DON”T happen. And there is a psychological explanation for most of these failed prophecies.
Take for example, the “Sell in May and Go Away” prophecy when investors normally sell off in the month of May. What this prophecy is about is not a bearish May. Rather, May has a good track record of being bullish more than bearish. The prophecy is more about May having one of the more significant corrections than most other months. How May ends up being bullish after the sell off is due to bargain hunters who scoop up “discounted” stocks after that irrational sell off.
But here’s the little known statistic about the “Sell in May” phenomenon that will scare any bull – When May doesn’t sell off, the following year is likely to be bearish or at best, very volatile.
Statistically, it has been the worst May in 48 years. The only other May that is worse than this one was back in 1940, 70 years ago. This May of 2010 will be remembered forever as the Flash Crash. Congratulations people … you lived through a moment in stock market history.
My May in Review
An even busier month than April, May saw every weekend burned doing classes in Malaysia, Jakarta, Singapore and everything else in between …
Between Friday 30 April and Monday 3 May, Kuala Lumpur saw its 10th WAT batch go through a grilling 35 hour weekend to graduate as our latest entrants into the world’s most irrational business.
- WATMY10 – 3 May, 2010
On the weekend of 8th and 9th May, Singapore finally got its TA Masterclass.
Then between Friday 14 and Monday 17 May, Jakarta graduated batch 8.
And on Wednesday 19 May, Singapore Graduated its 38th and most cohesive batch to date.
The Wealth Academy Expo on Saturday 22 and Sunday 23 May saw a crowd of no less than 1,200 people attend.
Many thanks to Roy, Dianah, Leon, Gabriel, Jason Tan and Jason Lee for stepping up and giving their testimonials because they know I can’t sell to save my life! Also thanks to Paul and the many other graduates who helped out in convincing the crowd to join our community.
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With the end of May comes the start of June … AND MY LONG AWAITED VACATION!!
But after I come back, it is going to be back to full swing with no respite …
Between the 10th and 13th of June, Adam and I will be back for another round of Wealth Academy followed by a few rounds of speaking engagements and Jakarta’s Technical Analysis Masterclass on the weekend of 19 and 20 June. In between that, its the usual fly-in-fly-out between the three countries to host Gatherings, Workshops and Follow-up sessions.
THE MARKET
June is one of those months where things can get crazy (as if May wasn’t crazy enough) and is often flattish with low volumes. June is the start of the worst 5 months of the trading calendar and it effectively ends NASDAQ’s best eight months of the trading year. The first two days are usually the most bullish days of the month. That’s all the good news June has to offer because June is treacherously bearish with only a little respite in the middle of the month. The week after the June Triple Witching Day has been down 17 of the last 19. Also watch for the end-of-quarter Portfolio Pumping in the last days of June. The very last day of June has been down 13 of the last 18 on the DOW and down the last 4 straight years in a row on the NASDAQ.
Just in case you forgot what happened in June last year …
For those of you feeling a little more adventurous, drag out a 10 year chart with daily candles on the DOW or S&P500 and see how June performs … be prepared for a horror show of bearish proportions! For my students who are reading this, here’s a tip – remember what I said about “Insurance”? June is a good time to get “insured”.
Oil tends to consolidate in June before continuing a reliable up-trend till September. Nat Gas is expected to dip a bit. Gold should retreat from its heady highs while silver bottoms in the middle of June. Copper is also expected to dip further. Sell Grains. If you were long Corn, its time to bail if you didn’t do it in May. Sugar will also be going down.
June has always been a bogey month for me that’s why I usually take a vacation during that month. And this time, its back to Korea, conflicts, tensions and all, for another round of shopping and chilling. At least it will be cooler than this steaming hot island! As a trader, I’ve always maintained that the Korean threat is never going to be a main mover of the market so why should I differ in my opinion if I want to holiday there? I have seen these “threats” time and again over my 46 years and the North has never pulled the trigger to start anything serious since the 1950s. And they are not about to start now. Furthermore, the exchange rate is really a bargain now!!
Spain’s downgrade, Greece’s on-going debt threat, America’s financial reforms, China’s bursting asset bubble, North and South Korea’s on-going tensions, Malaysia’s subsidies slash, market slow-down during the World Cup (11 June to 11 July) … all the usual negatives that we’ve grown so jaded to, may just jump up and bite us in what is usually a summer slumber – it often happens in June.
So …
- Be protective, keep your Stops tight and be prepared for anything.
- Be prudent and stick to safe bets with money you won’t need.
- Be practical and stay out of the market if you don’t have to trade.
- Be patient about going long on anything because this might not be a buying opportunity yet … not if my analyses on the economic health of the major economies are right.
Happy Hunting! … or better yet, don’t go hunting in June!
Thursday 06 May 2010 AMC – Market Analysis
U.S. Markets – Thursday 06 May 2010 AMC
Originally Posted by Conrad on Thursday 06 May 2010
I already said it at the start of the week and with only two days left to go, I am maintaining my bearish stance to the end … Now Lows exploded to outpace New Highs for the first time this year by 109 to 101, the VIX also spiked to its year’s high only to make a modest retracement toward the close and volumes have been steadily increasing. The Tsunami hath cometh.
Direction for Thursday 06 May 2010; Down
… you can all stop sending me emails, smss and facebook mails. I don’t know why it is such a big deal because I didn’t make it happen. It just happened and it was timely since I had shorts on GS and ADM. But my C and DRYS and XHB got shellacked. Thank goodness for Puts coz they cancelled out my (paper) losses on my underlyings.
Market Internals for Thursday 06 May April, 2010 – 16:54 ET AMC
Leading Sectors: None
Leading Industries : gold- GLD +3.0%, gold miners- GDX +1.4%, Silver- SLV +1.2%.
Lagging Sectors: Financials (-4.1%), Consumer Discretionary (-3.5%), Energy (-3.4%), Industrials (-3.3%), Tech (-3.3%), Materials (-3.1%), Utilities (-2.7%), Health Care (-2.6%), Telecom (-2.4%), Consumer Staples (-2.4%)
Lagging Industries: solar power- TAN -6.5%, clean energy- PBW -5.1%, Finance RKH -4.4%/XLF -4.2%, India- INP -4.0%.
NYSE :
Higher than avg volume @ 2573 vs closing avg of 1165
Decliners outpacing Advancers (adv/dec): 178/3027
New lows outpacing new highs (hi/lo): 52/218
NASDAQ :
Higher than avg volume @ 4415 vs 2444
Decliners outpacing Advancers (adv/dec): 351/2439
New lows outpacing new highs (hi/lo): 60/190
Other Market Moving Factors:
• Technical levels breakdown as selling gains momentum
• Greenback gains again to stand at new 52-week high against competing currencies
• Weekly jobless claims count comes with little overall surprise
• Geithner to speak at 9:00 AM ET and Bernanke to speak at 9:30 AM ET
COMMENTARY
High Frequency Traders – A lot of the action in the sell-down was attributed to HFT, whether it was Fat Fingers, program errors or exchange system errors, it was the HFTs that gave the market it’s big swings as the market fell and Buy orders were filled at ridiculous prices against market-order Shorts that were placed in panic. Add to that the number of Shorties that covered as the market hit the year’s low in February at 9.900.
The main catalyst for the sell-off was the EUR/JPY around 2:06pm (ET). (The EUR/JPY has been the instrument of choice for carry-trades.)
Regardless of the reason, the point remains that there is something fundamentally wrong with Mr Market if its system can fail so miserably if it was an error and the HFTs including the market makers/specialists need to be watched (regulated) more closely (which will level the playing field for the private retailers).
We know it will never happen. Market politics will dictate that it will never happen. So take the ride and be prepared to smash and grab in a market that is expected to be like this for a long time to come.
TECHNICAL UPDATE – THURSDAY 06 MAY, 2010 – AMC
DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
10,520.32 -347.80 (-3.20%)
Volume: 459,882,732 from 218,831,496 the previous day (+110.15%)
Range: 9,869.62 – 10,879.76 (1,009.30 points)
Originally Posted by Conrad on Thursday 06 May 2010
The S&P500 and NASDAQ have closed below their 50DSMAs while DOW dipped below and rallied to close above it. These are nervous times with the benchmarks threatening to break below critical technical levels after breaching their 50DSMAs … S&P500 is only 15 points above its critical 1,150 support while NASDAQ’s levels of downside interest will be at 2,375 and 2,325. The DOW is barely above my short term XOP of 10,800 and my Jan 2010 XOP of 10,735.
All gone in one session. All three benchmarks are below those critical levels and below the 20, 50 and 100DSMA. I am so bearish now that I didn’t even bother to look for the next support. My focus now is on the upside resistance in case I need to cover my Shorts. Let’s not forget that there will be a few more idiots out there that will see this “dip” as an opportunity to buy again. I won’t be reversing so soon – I prefer to wait for the trend to stabilize before I jump in on a Long again.
NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,319.64 -82.65 (-3.44%)
Volume: 1,215,520,149 from 769,574,237 (+57.95%)
Range: 2,185.75 – 2,407.79
S&P 500 INDEX (SPX: CBOE)
1,128.15 -37.75 (-3.24%)
Volume: 8,503,952,800 from 5,344,326,800 (+59.12%)
Range: 1,065.79 – 1,167.58
Decliners outpaced Advancers by an average 10.33 to 1
on higher volumes (+93.63%) on Thursday (avg -3.29%).
New Lows have now clearly out-gunned New Highs for the first time, across the broader market and in thumping fashion by 408 to 112 (3.6 : 1). However, as I am looking at my market internals, I can’t see how this sell-off will have legs … in other words, this could be a case of the Sell-In-May nervousness that caused that odd capitulation. And to confirm that, NYSE and NASDAQ have cancelled all orders between that window.
Could it be too early to start scooping up “discounted” stuff? I’ll be patient and do the hardest thing … watch and wait.
Bonds were sent flying with the long end leading as Greece greased the skids and stocks managed to collapse in spectacular fashion. CNBC is reporting that the DJ was down the hardest since 1987. The problems of Greece were a big driver with black-boxes and funds all piling on, helping chase the risk players out, while safety buyers plowed into bonds. Global bonds – minus the usual suspects — were also bid on the day as were other measures of “quality” as markets melted down or up, as the case may be. The situation between now and tomorrow’s payrolls report is unlikely to change materially, so, while there will certainly be some corrective action, trade may be way vulnerable to the downside if the numbers come in well beyond expectations. While the facts on the ground are not going to change much, the outsized bounce seen will be a tough one to hold.
The curve was swung back to the flattest levels since the start of Dec, with the 2-10-yr yield spread flung to 255.8 from 271. The dollar ran higher, but was stalled as the euro regained some ground. The yen was a big beneficiary, seeing 88.26 from 93.98 pre buck and the best on the euro since 2001.
Treasury Yields AMC on 06 May @ 14:59hrs:
• 2 Year Note 0.84% -0.02
• 5 Year Note 2.14% -0.16
• 10 Year Note 3.40% -0.15
• 30 Year Bond 4.16% -0.23
2/30 Spread : 332bps (-21) … 2/10 Spread : 256bps (-13)
Now this is really flat. One more session like that and we’ll INVERT. If you’ve never seen a market capitulation, wait for the inversion (if we get it) and see what happens after that.
SUMMARY
Honestly, I am expecting a bounce on the market and it wouldn’t surprise me if it went into a 2% gain for the session.
On the other hand, I am still nervous about how skittish the market is and have no confidence about being bullish especially as Asia continues its sell-off and Europe looks like opening to the downside in a big way. The concern in not about a Fat Finger trade but more about Asia’s inherent realization of its over-bought status and regional measures to cool the property markets and Greece’s growing stress which was not helped by Trichet’s comments (or lack of committed comments) that would draw any sort of conclusion to this high level threat to the entire Union. This threat also threatens American banks who have recently revealed that their exposure to Greece’s debts could be considerable.
Finally add the potentially spicy Non-Farm Payrolls to this mix of Western Salad, Eastern Stir Fried Veg and S.E.Asian Rojak, and what you have is a market you should stay away from. If you don’t like the taste of this spicy vegetable recipe, then don’t order it. If you already ordered it, cancel it before they serve it. If they already served it, you may choose not to eat it. If its in your mouth, chew it well and savor its red hot sensation. If its already in your belly, Good Luck to your a** in the morning.
I am not calling Friday’s direction. The only way I am approaching the market today is to be extremely cautious either way.
Direction for Friday 07 May 2010; VOLATILE!
2010 Daily Directional Accuracy: 51/77 (66.23%)
Some were hit bad yesterday and some took handsome profits in the same session. Whatever your result, your psychology was tested and in most cases, found wanting. The lesson we take from this is that no system, software or experience can prepare you for this kind of market behavior.
The only thing that bodes well is to be be prepared through research and the skill to manage your emotions and psychology and to work the trade without bias and assumptions.
To the many emails, smss and facebook messages that were sent to me, my only advice is …
When the market is Fearful, what do you do?
Draw your own conclusions. And if you still don’t know, come to my TA Masterclass this weekend.
Have a Great Weekend!
April 2010 In Review, May Preview
APRIL IN REVIEW
The month began with the Technical Analysis Masterclass in K.L. between 2 and 4 April with a Shareinvestor/CIMB event at Bursa Malaysia on the 3rd.
On Wednesday 14 April, WAT Batch 37 graduated after 8 weeks. I am going to miss teaching this class. The energy and camaraderie is truly amazing.
WAT37
On Thursday 15 April, I did a talk at CIMB in Singapore to about 80+ investors. I thoroughly enjoyed that session as the crowd proved to be very savvy and the questions and exchanges were really fruitful.
16 April saw WAT having the Scalp Night Gathering. 120 grads attended this gathering that was hosted first by Henry then by me.
That was a memorable night for everyone because it’s not often you get to see Goldman Sachs tank like this:
On the weekend of 16 to 19 April, Adam and I graduated 85 newly minted investors in Jakarta at the 6th intake of Wealth Academy.
Sunday 25 April saw my good buddy, G.M Teoh and myself conduct the “Crash” Course at CIMB in Malaysia. Sorry, someone forgot to take pictures of that event.
Yes, it was a really busy month. Between all those events, there were also the usual Candlestick Workshops and Breakout Patterns Workshops and the ongoing tutorials and gatherings in all three countries. I am not complaining … yet … because my May calendar is looking busier!
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MAY IN PREVIEW
This is what my May weekends looks like;
- 30 Apr – 3 May; Pattern Trader Tutorial in K.L.
- 8 – 9 May ; Technical Analysis Masterclass in Singapore
- 14 – 17 May ; Pattern Trader Tutorial in JKT.
- 22 – 23 May ; Wealth Academy Expo at Singapore Expo
- 28 May ; Pattern Trader Tutorial Follow-up Session in K.L.
- 29 May ; Pattern Trader Tutorial Preview Session in K.L.
And that’s just the weekends! I won’t bore you with the weekday engagements except for starting WAT (SG) 39 on 5 May and graduating WAT (SG) 38 on 19 May.
Now on to market matters … May - That famous sell-off. Before we get all bearish and everything, let’s take a closer look at the stats for this month;
- The first two days of May are traditionally the most bullish of the month (9 out of the last 11 years)
- This is usually followed by three of the most bearish days (that famous sell-off).
- May starts the worst 6 months on the DOW and S&P500.
- May also represents one of the most prolific months for short term gains as bargain hunters always pick up stocks after the sell-off and sends the market back up in a hurry.
- The rest of the month is fairly bullish.
- Expiration Friday is usually bearish.
- Grains tend to peak out in May.
- Precious metals get weak after peaking out earlier than grains.
- Copper also reliably tops out in May.
- Energy traders begins consolidating their positions in anticipation of the seasonal sell-down in June.
The last trading day of May will be Friday 28 May as Monday 31 May is a trading holiday in observance of Memorial Day. This makes the 28th an interesting prospect as the eve of a three-day weekend should rally and when the market returns on 1 June, the rally should continue as the first day of June is the most bullish of that month (9 out of the last 10 years).
Market Or PIGS Sty?
April 2010 will be remembered as the month Greece, Portugal and Spain hit the markets real hard and for the harder hit that Goldman Sachs was accused for taking America for suckers. So where to now?
Well China has been sneakily tanking without anyone raising alarm bells … yet. This looks like the start of a slow bleed. This is the kind of slow bleed that started the decline in the U.S. in September and October of 2007. I hope we don’t get the same thing from China.
Personally, I’ve been making on Puts in the U.S. and have taken all my short term long positions off the table and drilled my SG account down to the minimum. I am not taking chances. After all, I will be busy in May and will be taking a break in June so all the reason to not be in the market with so much risk.
So bring on May, already! I can still trade it whenever I have time and I love how profitable May always is.
Happy Hunting and Trade Safe!
Beware The “Top Of The Market” Gurus.
It has been one of the most profitable years in the history of the stock markets. Anything, well almost anything you bought a year ago is probably making a lot of money for you right now. I am quite please that so many people have written to me thanking me for “Profit From The Panic” because its release was so timely that they took the book’s advice and happen to buy the bottom of the March low, six weeks after the book’s release. But even without that book, a lot of money would have been made anyway because everything went up in the last year and this happened all over the world …
And now, as has happened in the past, the “Gurus” emerge. Claims of success in the market and proof of profits shout out from the newspapers everyday as more and more new faces come forth. There can be little doubt that such riches were indeed made and there can be no doubt that these claims are real. What doesn’t meet the eye is a very reliable chart pattern that tells us that this could be the market top …
As the market ran to the top of 1999/2000, there were several very prominent foreign gurus in Singapore and Malaysia. They faded as the market faded between 2001 and 2003. Only one stuck around at the bottom of 2003 (A) and was joined by two other locals as the market recovered (A to B). At the top of the recovery a year later, the market was flooded with all sorts of gurus promising wealth and easy money. I should know … I signed up for several of them with no results.
By the middle of 2004, I was wiped out while even more gurus came to the fore. By 2005, the market was no longer going up and some of these gurus faded away. I began my comeback by trading this volatile and sideways market (B to C) and managed to make considerable progress between the middle of 2004 till 2006. I started teaching at AKLTG at the end of 2006 (C). At that time, there were only a handful of gurus and a couple of them were already suffering from bad press thus leaving only three really credible ones including the foreigner from 2003.
By the time the market hit 13,500, there were approximately 4 gurus (less the two who suffered the bad press and not including myself because I am not a guru). A few months later as DOW hit 14,000 (D), there was a flood of newcomer-gurus claiming massive profits and more get-rich-quick programs here in Singapore, in K.L and very obviously in Jakarta.
The market tanked … and so did the newcomers’ numbers through 2008.
At the bottom of 2009 (E), I counted only 4 regular workshops not including my tutorial. At that time, “Profit From The Panic” was flying off the shelves to become the #1 Bestseller (FYI, proceeds from the profits of that book went to charity). The market then went into that most profitable one-year rally in recent history (E to F).
Today, if you open the newspapers, you can count no less than 12 different competitive gurus every week (not including me) teaching easy money strategies, get-rich-quick systems and claiming obscene profits from the market.
For the record, I have never made such claims because I know the market is a killer of dreams and dreamers. You only need to attend my Preview to know this to be true.
So when the new gurus emerge and my class gets difficult to fill, it only means that the easy money is about to end.
So will we go sideways in a volatile fashion like B to C or will it be another tanker like D to E?
Whatever the outcome, one thing is for sure … at the end of that period, there will only be a few gurus in the market and that will be the market bottom again.
And since I am not a guru, I guess I will still be around to write another market bottom book!
Happy Hunting!
Post your comments here: Beware The “Top Of The Market” Gurus.
Why Traders Fail – Lesson 3
This lesson looks at the most popular reason why most Traders get wiped out – The Hype
Through the years, trading has always been a pipe dream for most who wanted to get filthy rich. With the advancements in technology over the last decade, this pipe dream has been brought closer to home than ever before. Today, it is a very accessible dream to anyone and everyone. All you need is a computer and an internet connection.
And of course, you need the right kind of market.
This is where the hype starts. We have been over-exposed to all sorts of advertising and promotional rah-rah that makes us believe that it is actually possible to make that fortune a reality. We see ads with winners making really fantastic profits from a single trade and we hear of friends who make a living from trading and living the good life. We see the rich and famous on TV that have made fortunes in the market. We read about people making fortunes from the comfort of their homes.
We believe we can be one of them. Worse, we believe it is really that easy.
What we don’t see in most cases is the real ugly truth. We don’t get to see losers, we never see the many hundreds or thousands that get wiped out and we definitely never hear what happens to the few winners when the market turns.
We never get to see how difficult it is for those successful few to make that living. We don’t see how much studying, hard work and endless hours of practice it takes to achieve that “easy” life. We definitely don’t hear about how much losses were accrued before the wealth accumulation started.
When the market is rallying at full steam, you always get to see new gurus hyping up their courses, authors of all sorts publishing their version of making a fortune from the market and everyone rushing to brokerages to get an account open. Workshops of all kinds will be touting their software that makes profits without the trader having to put in much effort. Some gurus will adapt their classes to ride the trend of the market – if Options is the way to go, you’ll get Options teachers by the dozens … if Forex is the flavor of the trend, then that’s what you’ll get lots of.
The market in itself is a hype. When everything is running up the charts, it is so easy to make money from the market. Everyone seems to be getting in on the action when a bull run is in full steam. The hype worsens as these bull-run winners put more money into the market to help the rally climb even higher. Pretty much like what is happening in our property market today. The aunties and uncles at the coffee shop also seem to have the best tips and everyone in the neighborhood is an expert at stock picking.
Scandals also abound when the market is in full hype. Hedge funds and pillion-trading are two of the many ways these scandals begin. In some recent cases, the owner of the fund or hedge starts spending the money even before the fund is profitable. This adds to the hype. We see fund managers driving fancy sports cars and living it up in penthouse condos and sprawling landed properties. Everyone wants that life and the market can give it to you.
So the average Joe, or in our case, Ah Seng, joins the hype bandwagon and puts his hard earned money into a few bets in the market. It makes money for sure. The bull run continues. So Ah Seng buys more and grows his wealth. He tells his friend, Ah Huat about it and he joins the bandwagon. Soon, the market is flooded with Ah Sengs and Ah Huats who know little about the danger they just got themselves into.
The fact is, the market had already been running up like mad which is where all the hype came from. By the time the new gurus, workshops and books emerge, the rally is almost always halfway there. This is when the aunties and uncles get wind of the easy money and this brings on the Sengs and Huats. Next thing you know, the market is over-cooked. Yet it continues to rally, albeit on suspiciously lower volumes.
The lower volumes are an indication that the smart money is already sidelined and waiting for the inevitable. The smart money knows when to get out and stay out. They know because the ignorant money has started to flood the market.
When the market is greedy, you should be fearful.” ~ Warren Buffet
Then the inevitable happens – the market stutters and falters … the easy money slows down … volatility begins to rule the market … the ignorant money slowly realize that they have left their arses hanging in the wind without protection. But they’ll continue to live in denial because of the hype.
The market slides south. But not in a hyped-up crash, mind you. The market is a sneaky place that gives you more rope than you need to hang yourself repeatedly. It takes a slow and steady slide with the occasional bull-trap to keep the ignorant money believing that the correction is a “normal” thing in this business. After a brief reprieve to bring hope to those living in denial and possibly bring in more ignorant money, the market continues its sneaky slide south. This goes on for a while and before the ignorant money realizes it, more than half the investment is down the toilet.
By this time, some of the gurus quietly “disappear” from the press, some workshops cease to exist, software traders start complaining that the system is not working as promised, fund managers appear in the news for the wrong reasons and my class starts filling out with dozens of traders looking for a fix and a more realistic way to survive the market.
The market gets down to an impossible low. Gone is the hype and all that came with it. In its wake, it leaves a massive trail of destroyed lives and emptied bank accounts. The market is now “a dangerous place” when it was once a dream maker. The market is a “casino” when it was once an ATM. When the hype is all gone along with the money, people get serious and stay away from the market.
This is when the smart money returns.
And this starts a new hype cycle that brings in the new ignorant money.
The question you should be asking is not; “when will the ignorant money start to suffer?”
If you thought of asking that question, YOU are the ignorant money.
The only question you should be asking is; “How do I become the Smart Money?“
