Wednesday, February 28, 2007

The sky is falling

I'm seldom blogging at this time of the day.

Usually when I do, it's either I'm done trading for the day, or the website is down and I cannot access. So guess which one?

POEMS and dbs are down today. DBS sometimes can access, sometimes can't. I'll call it unstable then. Some conspiracy theory points out that when market is extremely bad, these brokerage houses cater to rich clients, so small retailers (like me) won't have a chance to dump your shares higher than those rich clients. Well, who knows such things other than those involved right?

As expected, Dow jone crashed 500 points down but recovered to close at 416 points down. Seriously, have you seen this kind of drop? I haven't in my one year of trading seen this kind of fall. Not even last May/June correction rivals this. I heard it's the biggest single day drop since sept 11 in 2001. Of course this kind of drop makes other world market fall a lot, otherwise dow j ones will have no face.

HSI opens -700 points, STI opens -160 points, nikkei opens -600. How's that for a start? STI..haven't seen this kind of magnitude since I traded too. My put warrants for STI shot up. Not too bad, I thought gone case already, still can recover less losses (overall still out of money).

I guess the question is: is there a cause for concern? Is the dreaded bear coming?

I think not just yet: Here's why:
1. Dow fell like bird shit because there's a computer glinch which causes a drop of 500 points. This causes panic which generates the actual dow jones to fall so much. Crap right?

2. China announced that they are not going to tax 20% capital gains for stock investment. This rumor which is flying around caused yesterday's china bourse (and HK) to crash. Since it has been challenged, I think there's till a hope left.

3. The selloff today is low volume. It dropped so much because it gapped down, it's not those kind of falls that sells until it falls so much. Basically it gapped down because in the morning, pple just sell at very low price. That's all. Look at the volume for the selloff for each stock, it's rather mild. Real crash would not be like that. In fact, some stocks are recovering already. Shit lah, genting opens at around 0.68 or something, would have grabbed it if I didn't chicken out and if dbs is more stable.

4. HK announcing their budget as I blog. Heard from newspaper that they might consider lowering taxes to compete with us and to improve Tsang's popularity. Both are valid reasons. If that happens, today might be an excellent day to buy call warrants. But I won't do that lah. In a way, I'm so glad I sold off my calls at a loss yesterday. Otherwise today can't even recover a decent amount of my invested capital. Alls well that ends well, I guess.

Here's what I think...if STI breaks below 3000, I think will be very bad sign. Psychological important resistance. For HSI, since it's way below 20,000 points now, it's a bad sign already. I remember long time ago (last yr Dec?) there's a gap to be filled around that region, might be covering that now. I wouldn't touch any HSI yet. Actually I wanted to buy puts for HSI when I woke up today, but nobody want to sell me. Hhaha, looks like market makers are scared too.

All the best, everyone! Losing money is not the end of the world. As someone I knew said, sometimes you should just sit back and think about what you have instead of what you have lost. Optimistic? hell yes, but either way still going to live, so why not choose the happier way?

One last thing, on hindsight, it's a bad idea to buy CDL call warrants yesterday. But I couldn't have foreseen this. Still can afford to keep, since it expires in Sept. At this kind of reactionary crash, no point looking at results. Good results also no use.