Has STI really bottomed out ?
Mis à jour
The truth is : I don't know.
It has taken out the important and psychological support at 3000 price level and is now at 2960. This is a support zone where price action in Jan 2017 and Oct 2018 were and they rebounded strongly.
Is history going to repeat itself again OR will we witness another slaughter in the coming weeks to see it falling to 2763 level ?
Thus far, the Feds, central banks of the world had committed to lower interest rates to help the companies to borrow cheaply. That does not seem to prop up the market, in fact, it had gone from bad to worse.
With the world so interconnected these days, the supply chains intertwined, it is inevitable when a epidemic like Covid 19 hit hard , every countries suffer. Not a single one is spared. And now even pets can get infected.
The media , I a'int sure if they are helping with each day greeting you with more and more sombre news of how many new cases there are and how panicky consumers are rushing to stock up the groceries from the supermarket.
My take for newbie traders is :
1. If you are not confident, watch the market and learn from it. Although years back, when I was a newbie, I jumped straight into the pool and had pay tuition fees to learn the hard way. To each his own, some can learn better from studying others mistakes, others like me need to get their hands dirty to "feel" the pinch. No right or wrong so long you don't dump your whole fortune in , thinking market is going to crash, and you sell hard or expecting a major trend reversal and loads up on long in large volume. Such gambling mindset is often suicidal as you are depending on a stroke of luck and if the Angel aint on your side, then you are stucked. That is a position you want to avoid.
2. Stop loss - why do I always emphasize this ? it is the rule, the most important rule in trading. You can take profits early , it is fine but not the other way round. The mind will play tricks on you to wait a while more and you keep adjusting your SL to avoid being stopped out for fear of suffering a real loss. You probably think paper loss is fine , it is not real monetary loss. Stop kidding yourself when you messed with the rules of trading. When you do that, you have to pay a heavy price. Just see the DJI chart and you see how punishing the market can be with its near 1000 points down! It has no emotions but we do and we are afraid to face the consequences, we felt embarrassed, angry with ourselves and sometimes ashamed. So to protect that, we do the irrational thing and widen the stop loss level , pinning on false hope that somehow magically it will not reach the level. Yes, I had been there before and know how it hurts emotionally and financially. PLEASE ALWAYS EMPLOY STOP LOSS NO MATTER HOW EXPERIENCED YOU THINK YOU ARE !!!!
3. Cut Loss - I had to cut losses closed to 1000 dollars last night as the market kept tumbling down. It was painful but I did it as fast as I could not because I do not feel the pain. But because I dare not cut loss in the past and had to pay back Mr Market even more and that bleeds the heart. Don't try any of these stupid, irrational tricks I did in the past :
1. Pretend it is not there - that is denial. You avoid looking at the chart , somehow going into a self denial mode. You probably feel better for a while yet feeling guilty that you should have done something but fear pulls you back.
2. Hasty decision - make sure you know your own portfolio well even without looking at it , you should roughly know by hard. In event like this crazy sell down and if you have to cut loss FAST, you better know which one to do it in doubly quick time. If you have to pull out a calculator , the market might turn against you or you may faced margin call sooner than you expected. Use the Pareto principle I shared before to help you. 80% of your losses is also attributed to the 20% of your entire holdings. Identify them and reduce the position here is much more effective than going through individual stocks to reduce your positions. This is not the time to worry about the losses but capital protection is your objective. So long as you are in the market, there will always be another opportunity to make it back. But if you bust your account, no matter how small your capital base is, it will dent your confidence level. Some will bounce back fast while others may take weeks to recover emotionally before coming back. Others who risked too much too soon will think that this market is too brutal and is not suitable for them. It has nothing to do with the market, it is all in our mind, how we perceive things and draw a conclusion from it.
Trade safely, guys . Always use a Stop loss, employ appropriate capital and risk management.
p/s: attempting to take revenge on the market because of your losses is a futile endeavour. You are better off taking the money to donate to charity or even better, treat yourself or family to a good meal. Going to the market with rage, fear and envy is not the way. It is a way to death as it controls you to get even, to beat the market and you will not be able to think clearly and do the right thing. WARNING - DO NOT ATTEMPT THIS EVEN IF YOU HAVE MILLIONS TO PLAY WITH. IT IS A LOSE LOSE GAME. YOU HAVE BEEN WARNED
It has taken out the important and psychological support at 3000 price level and is now at 2960. This is a support zone where price action in Jan 2017 and Oct 2018 were and they rebounded strongly.
Is history going to repeat itself again OR will we witness another slaughter in the coming weeks to see it falling to 2763 level ?
Thus far, the Feds, central banks of the world had committed to lower interest rates to help the companies to borrow cheaply. That does not seem to prop up the market, in fact, it had gone from bad to worse.
With the world so interconnected these days, the supply chains intertwined, it is inevitable when a epidemic like Covid 19 hit hard , every countries suffer. Not a single one is spared. And now even pets can get infected.
The media , I a'int sure if they are helping with each day greeting you with more and more sombre news of how many new cases there are and how panicky consumers are rushing to stock up the groceries from the supermarket.
My take for newbie traders is :
1. If you are not confident, watch the market and learn from it. Although years back, when I was a newbie, I jumped straight into the pool and had pay tuition fees to learn the hard way. To each his own, some can learn better from studying others mistakes, others like me need to get their hands dirty to "feel" the pinch. No right or wrong so long you don't dump your whole fortune in , thinking market is going to crash, and you sell hard or expecting a major trend reversal and loads up on long in large volume. Such gambling mindset is often suicidal as you are depending on a stroke of luck and if the Angel aint on your side, then you are stucked. That is a position you want to avoid.
2. Stop loss - why do I always emphasize this ? it is the rule, the most important rule in trading. You can take profits early , it is fine but not the other way round. The mind will play tricks on you to wait a while more and you keep adjusting your SL to avoid being stopped out for fear of suffering a real loss. You probably think paper loss is fine , it is not real monetary loss. Stop kidding yourself when you messed with the rules of trading. When you do that, you have to pay a heavy price. Just see the DJI chart and you see how punishing the market can be with its near 1000 points down! It has no emotions but we do and we are afraid to face the consequences, we felt embarrassed, angry with ourselves and sometimes ashamed. So to protect that, we do the irrational thing and widen the stop loss level , pinning on false hope that somehow magically it will not reach the level. Yes, I had been there before and know how it hurts emotionally and financially. PLEASE ALWAYS EMPLOY STOP LOSS NO MATTER HOW EXPERIENCED YOU THINK YOU ARE !!!!
3. Cut Loss - I had to cut losses closed to 1000 dollars last night as the market kept tumbling down. It was painful but I did it as fast as I could not because I do not feel the pain. But because I dare not cut loss in the past and had to pay back Mr Market even more and that bleeds the heart. Don't try any of these stupid, irrational tricks I did in the past :
1. Pretend it is not there - that is denial. You avoid looking at the chart , somehow going into a self denial mode. You probably feel better for a while yet feeling guilty that you should have done something but fear pulls you back.
2. Hasty decision - make sure you know your own portfolio well even without looking at it , you should roughly know by hard. In event like this crazy sell down and if you have to cut loss FAST, you better know which one to do it in doubly quick time. If you have to pull out a calculator , the market might turn against you or you may faced margin call sooner than you expected. Use the Pareto principle I shared before to help you. 80% of your losses is also attributed to the 20% of your entire holdings. Identify them and reduce the position here is much more effective than going through individual stocks to reduce your positions. This is not the time to worry about the losses but capital protection is your objective. So long as you are in the market, there will always be another opportunity to make it back. But if you bust your account, no matter how small your capital base is, it will dent your confidence level. Some will bounce back fast while others may take weeks to recover emotionally before coming back. Others who risked too much too soon will think that this market is too brutal and is not suitable for them. It has nothing to do with the market, it is all in our mind, how we perceive things and draw a conclusion from it.
Trade safely, guys . Always use a Stop loss, employ appropriate capital and risk management.
p/s: attempting to take revenge on the market because of your losses is a futile endeavour. You are better off taking the money to donate to charity or even better, treat yourself or family to a good meal. Going to the market with rage, fear and envy is not the way. It is a way to death as it controls you to get even, to beat the market and you will not be able to think clearly and do the right thing. WARNING - DO NOT ATTEMPT THIS EVEN IF YOU HAVE MILLIONS TO PLAY WITH. IT IS A LOSE LOSE GAME. YOU HAVE BEEN WARNED
Note
Let's see if this morning there will be a rebound.Note
This morning, the STI shares will rebound , excellent time to get in .Note
reuters.com/article/us-usa-stocks/wall-street-bounces-back-as-stimulus-hopes-soothe-recession-fears-idUSKBN20X1AJWe know how influential the big brother is, US stock market. When it comes down, the world stock market will suffer as well and vice versa. Some are saying the fiscal stimulus is too insignificant but nevertheless is a good start. I hope they will top up more as they assess the situation. This will drive our local stock market higher. The blue chips stock will rebound
Note
3000 is an important psychological level for STI. Once, it is broken down, it will take some time to recover .Unless US market starts to rebound, STI will stay negative for a while more. Be extra cautious now as I believe many retail traders and investors are forced to liquidate their positions due to margin call, heavy losses. Panic is the key word and the herd instinct takes over, following what others are doing and thus accelerate the selling, much to the delight of the big boys like the crocodiles awaiting below to scoop up.....
Note
if you condensed the chart, you would see that the current price has revisited the support on Jan 2016. Due to last Friday US announcement on its fiscal policies, I expect STI tomorrow to have a possible gap up or turn around. Can this be a dead cat bounce or the beginning of a recovery ?Note
wow, we have even break the support of 2016 at 2592 and the price now is 2492. Those who are looking at the long term of STI and can utilise their CPF - OA to invest may want to watch this chart periodically and await a good time to accumulate. The banks are now badly hit but once the COVID-19 is over, they will be the first to shoot up.
Note
This is bad news for STI. The banks along with many blue chips are down , some 40-60% from its peak and especially the REITS which many value investors are advocating to average down. I am still waiting and waiting to come in , but judging from chart and current macroeconomic situation, I probably might have to wait a bit longer..........
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