August In Review, September 2013 Preview

No graduations, no major events, just the usual weekly classes, gatherings and whole lot of busy to make my August fly by like it only started yesterday.

On the 16th Singapore got its August Gathering in which I brought back an old familiar trading technique, the 5DPEG – the technique that made me famous for making $50 per trade consistently back in 2006. It is also the technique that started my teaching career. I find it so amazing that over all these years, the 5DPEG is still as reliable as it was when we first started using it. In fact, it has evolved so much that it went from versions 1 and 2 (the basic evolution with Call options), 3 and 4 (incorporating Puts), 5 and 5.5 (incorporating the Straddle and Strangle), 6 (incorporating the multi-directional strategies and techniques), and finally versions 7 and 7.5 (incorporating the Vertical Spreads and Combos). And the traders still love it till today … mind-boggling stuff.

Pattern Traders over the last year have not had this technique in the usual syllabus because I decided to make it a Gathering subject to amortise time during the Tutorial. So it was a well received crowd who enjoyed learning every bit of this simple and time-tested technique with low risk and consistent returns.

After the very satisfying session, the gang went out for Teochew Porridge …

The following Friday, 23 August, I did the 5DPEG Gathering in KL with the same reactions from the crowd. They too were denied the 5DPEG during the Tutorial for the last year. After that Gathering, it was K.L. food!! I forgot the name and place but the food rocked!!

Upon coming back to SG for the usual weekly class, we decided to go for porridge again … at a different place … something about Traders and porridge …

We did finish the month on a high note by having our Coaches’ and Trainers Workshop where we brainstormed, gave up great ideas and even had time to put Sam, Jason and Jay on stage to improve their performances and teaching skills. Kudos to all three for putting themselves on the line.

MARKET MATTERS

August 2013 lived up to its reputation of being the most unpredictable month of the trading year and the most bearish month over the last 20 years. In Asia, the Nikkei, KOSPI, STI, KLCI, SET and JCI all fell with the SSE (Shanghai Composite), Hang Seng, KOSPI, SET and JCI all in the red for the year. Singapore’s STI is barely above the red line and Thailand is officially in Recession. The Thai and Indonesian benchmark indices are also officially in bear markets.

In the U.S., things are starting to look better on the economic front but all this good news has not been god for the market as the threat of tapering became more and more real with each bit of dovish data. The Fed, however, has not been clear on its intentions nor its timelines. For all the rhetoric by the voting Fed members, none have made a solid statement on when and how much or if it will happen at all. This indecisiveness has cost the market dearly as investors run helter-skelter in fear so much so bonds have become a risk trade too.

The month of August saw all three benchmarks fall below their 10, 20 and 50 daily moving averages while volumes fell to levels so low you’d think it was the December holidays.

The DOW has done something we haven’t seen since October/November last year – drop four weeks in a row. For the record, DOW has not had a five week loss since June/July 2004 but in May 2011, it lost 6 weeks in a row. The DOW and S&P closed out the month below its 10, 20, 50 and 100 DSMAs and below their 10 and 20 week averages. It was the year’s second negative month after June and leaves DOW with a Bearish Engulfing Pattern, making September looking very ominous indeed.

SEPTEMBER PREVIEW

September is the last and worst month of quarter three which is traditionally the worst quarter of the year. September 2013 has twenty trading days and one public holiday. In the last 62 years since 1950, September has been the most bearish month of the trading year for the DOW and S&P. It is also the worst month of the worst four months (July to October) on NASDAQ.

Trivia For September

Commodities

SUMMARY

Now we face September – the most bearish month of the calendar year with the reputation of having the worst volumes of the year. If that is not bad enough, we still have October waiting – the month infamous for all the major crashes in stock market history.

Good luck and Happy Hunting!

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And don’t miss out on our Monthly Sector Report on Solar Power.

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