This is how you see the response of the market towards good news:

1. Intel 4Q earning up 875% (14th Jan)
The stock rose prior announcement but saw huge selldown after the announcement.
And it’s dropped around 10% from the day of announcement.

2, Apple 1Q earning up 150% (25 Jan)
Stock rosed briefly on the date of announcement but closed unchanged.
It starts to fall the next 3 days on heavier than average daily volume.

3. Microsoft earning up 57% (28 Jan)
Stock rose briefly to 29.90 but closed -3.36% on 3x average volume indicating fierce selldown.

Most technology bellwether saw the earning above estimate however the market punished those stocks.
Last Friday’s announcement of US GDP grew by 5.7%, the fastest since 2003 only managed to keep indices to stay positive for first 2 hours before the continual selldown.

The dance in the market sounds to me like bear tango instead of one step down, two step up bull-salsa.
The key of profitability is to dance the music played in the market.

The holy grail is in you

No mentor or course can give anyone the holy grail to the success of trading in the markets.

The main inventors of technical analysis such as Charles Dow with his Dow theorie, R. N Elliot who introduces elliot waves, W.Wilder with his known RSI (Relative Strength Index), ADX and other indicators such as MACD, Stochastic, etc are all important development of technical studies.

And then there are some swear by the accuracy of candlestick, reversal patterns, pivots and fibonacci numbers.

I went to a course teaching a holy grail by applying common indicators with his magic parameter. And then I went to another course which said he has predictive moving average line. And those courses are not cheap despite only a few hours long. I dumped aside the manual after attending the courses as all of them are bullshitting. I used those courses with the intention to measure myself to know how far I’ve moved ahead of others instead of looking for new holy grail.

Many books are written and multi million dollar courses are earned just to make author or course leader rich. The attraction to the riches are so great that it’s simply too easy to say that suckers are born each day.

The market is like living organism that learns to adapt to different events. It simply reflects the behavior of participants engaged in the market. Sometimes friendly and certainly are out of sound mind most of the time.

So the available technical studies are only tools to measure as closely as possible possible outcome of many unsound minds in the market.

So how do you read the unsound mind as a medical doctor? Some have suceeded after years of practicing but most of new doctors will fail to recognize what the mental health people are telling them.

Being a sucker myself I came to the realisation only after thousands of dollar lost, years in wasted time spent and spoken to the real trader that has amazed his millions from the market I stop seeking the holy grail tools of profiting from the market as the holy grail is in you.

TA isn’t holy grail

Many books have are written on technical probability or analysis (TA) of stock analysis since the advancement of computer system. TA is not new but yet the development in this area is hitting exponential growth only in the past 10-15 years.

Since joining as fulltime trader I came to realise that many of my seniors (with 20 more years of experience) aren’t good in chart reading.
Their sophistication of making money does not lie in chart but more of reading and manipulating the market momentum.

Personally I read countless books on TA subjects and practiced what is taught by the author with the given indicator.
I always hunt for secret formula which I believed the author formulating them for the best interest of their readers.
What I and many failed to realise is that all these studies (indicators) are basically statistical results plotted in a graphic as chart. This graphic should only be used as guide to assist traders in their decision process.

I would from many years of my study to say they all work or they all don’t work at all.
This may sound confusing because I use chart and it works for me, but my friend uses chart and it doesn’t work for him.

The problem with most technical traders is that they use technical studies as if it is holy grail.

Introduction

I have been trading for living for the past 2 years and have been consistently getting positive return from the market.
In my first year (2008) I have been a conservative trader due to the fact that the market was not very condusive and I need time to prove myself with constant profitability.

The conservative nature has become a habit despite my current ability to consistently deliver positive result. I need to come out from this comfort zone and expand myself for more profit opportunities.

My goal for 2010 has been to increase 3x or 5x my usual trading size which in result multiplying my profit.

The secret of trading is not found in the charts, it is found in you.
The ability for yourself to keep improving by knowing your weakness and strength.

I hate to write long story as it takes too much time and concentration.
In this section you’ll mostly be seeing continual short stories.

After trading sideway for past 4 months sembcorp finally breaking out from its resistance and could be heading to $4.50 on midterm target.
I’m rather bullish with its market action today.

Sembcorp chart

This stock moves along the BDI strength. And if you look at its chart, it’s still at the base and may breakout from current consolidation.
http://www.panocean.com/

STX and BDI charts

Singapore market can be segmented into 3 categories and these affect buying habits of the underlying investors.

The first segment is blue chips.
The blue chips such as major 3 banks (DBS/UOB/OCBC), Kepcorp, Capitaland, Citydev, Singtel enjoy strong institutional support. They’ve proven their sustainable earning over many bear market cycles and emerge stronger during positive economy outlook.
The movement of these stocks are mostly reflected in the main index, and inline with the macro economy of the country. Bluechips are mostly the least volatile as compared to other segments
(more…)

Noble Group Ltd: Best proxy to economic recovery
Summary: Noble Group Ltd (Noble) has recently strengthened its balance sheet via an equity placement and a separate non-convertible bond issue, raising net proceeds of over US$1.4b. The group’s enhanced capitalisation not only equips it with financial flexibility for acquisitions, it also ensures sufficient working capital in the event of a surge in commodities prices. Furthermore, the bond issue effectively extends the group’s debt maturity profile. We expect commodities to be key beneficiaries of an economic recovery and highlight Noble as our preferred pick within this sector by virtue of its diverse exposure to hard and soft commodities, coupled with a strong balance sheet and proven execution. We maintain our BUYrating on the stock and raise our fair value estimate to S$3.14 (from S$2.67) based on 17x FY10F PER.  (Lee Wen Ching)

One of the accurate indicator I use to look at mid term market movement is the price behavior of SGX.
SGX is the first to turn around during the March bottom and it’s also the stock to have stalling behavior over the past 2.5 months.

The midterm uptrend is still intact but the shortterm movement is heading down:
1. The price trades too long below 50 days MA
If we see the brief penetration in June/July, we could see it as consolidation.
The current penetration below 50 MA is far too long and the MA itself is bending down.

2. It is forming downward sloping channel.
This mini channel is mini trend. One positive note is that it’s currently supported by the channel which is not steep.
The slope will accelerate if the current support is broken.

as no one knows for sure the next minute of market movement, it maybe worth to look at leading indicators and stay defensively at this time.

SGX Chart

Once upon a time a man told a small village, “I will buy monkeys for $10 each.”
Since there were many monkeys in the forest, the villagers caught them and sold them to the man.

As the supply of monkeys diminished, the villagers’ efforts slowed, so the man offered them $20 each.
They renewed their efforts but the supply of monkeys diminished further, so he increased his price to $25.
Soon no one could even find a monkey in the forest.

The man increased his price to $50, but announced, “Since I must go to the city on business, I authorize my assistant to buy monkeys on my behalf.”
As soon as his boss was gone, the assistant told the villagers, “My boss has collected lots of monkeys. I’ll sell them to you for $35 and then, when he returns, you can sell them to him for $50.”

The villagers rounded up all the money they could and bought as many monkeys as possible. Then they had monkeys everywhere…
… but they never saw the man or his assistant again.

And now you understand the workings of the stock market!

Story reproduced, author unknown