March 2011 Review, April Preview

March 2011 may have been the longest month on the trading calendar but it went by so quickly. It was also a very eventful month both in the market and socially.

On Friday, 11 March 2011 just after my lunch, I returned home, turned on the news and sat there in shock of the “live” images of one of the worst catastrophes in our lifetime. The northeat coastline city of Sendai, Japan was shaken by one of the longest lasting quakes in history and this resulted is a massive 10m tsunami that wiped out most of northeast Japan. It took more than 10,000 lives and left more than 16,000 missing. The 9.0 temblor was the worst in Japan’s history and the fifth largest in recorded history. Till today, magnitude 6.0 aftershocks are still being recorded. There have been no less than 300 aftershocks in the three weeks since the catastrophe.

The undersea quake was measured along a 500km long stretch which was 200km wide, 130km off the Northeast coast of Japan. The quake was so forceful that it moved Japan 2.4m to the east and moved the earth 10cm off its axis. The tsunami also took out the coastal nuclear plant at Fukushima. Several reactors melted down resulting in a massive radioactive fall-out. The government has since evacuated a 3okm radius surrounding the ill-fated Fukushima Daiichi plant and continues to battle the fall-out and contain the radioactive substances that have polluted the earth, air and water in the immediate area.

More than US$500B was injected into the economy in the wake of this disaster. The Yen spiked so high that the G7 unanimously agreed to work together to tame the rising currency. Markets around the world reeled for a week – most of them erasing a whole quarter’s gains in the process – as they watched the most televised catastrophic event in history.

For a while, the world forgot about MENA and a certain dictator named Muammar Gaddafi.

So much has happened and much more is needed before we see the end of these sagas in Japan and MENA.

Moving on …

On Friday 18 March 2011, the Pattern Traders had their monthly gathering and this was a big one. We moved the gathering across the street to Klapson’s Hotel and squeezed more than 200 people into the main ball room.

(Will insert pictures later.)

At this gathering, I introduced the Pattern Traders’ newest inclusion into its batch of teachers – Michael Woo.

Michael is a legend and a friend to whom I have always sent my graduates who want to learn more. His vast experience, knowledge and qualifications in the field of finance and trading are unrivaled in the region. I have always modeled him in terms of his passion, teachings and reputation. This was the proudest moment in my teaching career – to have my role model join my fold because he believes in what I do.

The man will be teaching from under the roof of AKLTG from April onwards and will be focusing on his favorite subjects, Advanced Options and Index Futures. This addition to the Pattern Trader (WAT) umbrella is the brand’s next move in expanding its educational tools to create the most comprehensive financial education package in the region. There will be more to come. (Details of Michael’s courses will be released at a later date.)

Then in K.L. Malaysia, after a solid weekend of education and mind-packing information, the 13th batch of WATMY graduated on Monday 28 March 2011 at 22;30 hours. And they are just getting started … baby steps, my young Padawans, baby steps …

You guys and gals really made it a memorable weekend and I would do it again in a heartbeat! Now I can’t wait to get back for their first gathering!

Market Matters

The market has had one heck of a roller coaster in March. It fell from 12,250 to 11,600 (and even became negative for the year on an intraday dip) in nine sessions and came back in seven. NASDAQ actually went negative for the year for a week after that dreadful March 11 Earthquake, Tsunami and Nuclear Meltdown in Japan.

Here’ something else worth noting – It took the DOW seven weeks from the start of January to get from 11,600 to the year’s high of 12.391 by 18 February. DOW just repeated that same 790 point bull run from 11,600 to 12,383 in only 10 days!! That’s right … it took 34 session to get up there before … and this time it only took 10 – that’s less than one-third the time.

The previous time the DOW went from 11,600 to 12,390 was between September to December, 2006. Then, it took two and a half months or 57 sessions. So is this market getting overcook real quick or is this a new norm? Some would say it was fund managers running in on Window Dressing to capitalize on the Quake/Tsunami downturn. Whatever the reason, I am not taking my eye of the ball now because as quickly as it goes up, it can come down quicker.

Wave practitioners would have spotted the current upside wave as Wave 5 after starting Wave 1 on the June-September 2010 Inverted Head & Shoulders break-out in October above the 11-year old retracement of 10.500. The market is now not that far off the year’s high of 12,391 on 18 February. So the inevitable fear of a Double Top is emerging especially with all the macroeconomic worries in Europe and unrest in MENA. And not forgetting the ongoing threat of a major nuclear crisis if the Japanese are unable to contain the fall-out.

Trivia For April

April is traditionally the most bullish month of the year and marks the end of the best six months on the DOW and S&P500. It is also the start of quarter 2 and has the best earnings season of the year.

Other April Stats:

Commodities;

Now that the market has had the best bull run quarter since the Tech Bubble, let’s remember where we are as we close out Quarter One;

As it stands, there is little to fear given all the bullish indications going forward. In spite of that, I would still prefer to wait for Q2’s earnings to get a better idea about where we’re going with all this. One thing is sure – I wouldn’t dare short the market in 2011.

Share

If you enjoyed this post, please consider to visit Pattern Trader Tools, leave a comment or subscribe to the feed and get future articles delivered to your feed reader.

Comments

Dear Conrad,

I would like to try out interactive brokers’ trading platform. But I read on the website that the demo version of its platform only offers delayed quotes and charts. A simulated trading account requires a Live trading account to be activated. So far, I do not meet the minimum account opening criteria.

I came across your blog and noticed that you are using interactive brokers as well. May I loan a simulated trading account from you?
I am very keen in futures trading with interactive brokers with live quotes.

Regards,

Anonymous trader.

Anonymous_trader@live.com

I don’t even let my closest friends and traders do that so why would I do it for an anonymous trader?

The virtual account shares the same login and password as my real money account so I am afraid you’ll have to forget about it.

Sorry I did not know about that. It’s ok. Oh yes. I read your blog and found that your knowledge on monthly market patterns really impressed me. Do you have any books to recommend regarding market patterns? Thanks for your time.

Regards

Anonymous Trader

There are none. None that are good anyway. All that you read on this blog is from my own research and experience. To learn market patterns, there is only one place you can go to … I don’t think I need to tell you where.

Sorry, the comment form is closed at this time.