Friday, January 12, 2007

TR: neg. $6k

I'm still sitting on the sidelines watching because I can't trade.

Let me share with you my analysis on longcheer and hsi. Let's do the Longcheer first.

Longcheer has completed its exhaustion gap. What's a exhaustion gap? It exists when a stock keeps going up and up until it runs out of buyers, so there's nobody to push the price up anymore and it'll drop. It will drop below the trendline on low volume then resume its uptrend when it has rested enough. Looking at the price exceeding ema20 is not good enough for me. It must actually exceed the bottom of the channel trend line with heavy volume in order to classify it as a genuine breakout. The bottom channel trend line is significant support turned resistance line because of the no. of occasions the stocks rebounded from it and cheong after it broke out of it, so this breakout (if it happens) will be something I'll look out for. 1.26 will be the target to aim for in the next 2 trading day. If it fails to exceed with heavy vol, run.

Histogram shows sign of reversing. It has reached the bottom and is now on the uptrend, even though blue line is still below red. Stochastics - %K line exceeds %D line and %D line shows signs of reaching the bottom. Downside risk is very low.

Conclusion: Look out for breakout of bottom of channel trend line at 1.26 within the next 2 trading days. Look out for higher than average vol. when it breaks to confirm that it's a genuine breakout. Indicators are mixed, hard to say what will happen. If it fails to break 1.26, prepare for more downside. Quite unlikely though.

HSI analysis

Today it went up around 260 points to close at 19,613, effectively covering the gap it had around mid-early dec at 19,300. Once the gap is covered, there will be room to go up. To confirm uptrend, look out for price exceeding ema at around 19,700 with heavy volume. If it fails to reach, can get ready to buy put warrants again.

Stochastics - %K reversing its downtrend, going up, while %D line shows signs of slowing down its downtrend. Whether it has reached the bottom is too early to tell. Basically, it could reverse from here or go down. My bet is it'll go up.

RSI bottomed out and going up from here. Should see more upside.

Volume seems to be diverging from price, meaning that while price increases, volume drops. A bearish sign, though it's too early to tell. Must wait for a couple of days more to see confirmation.

Conclusion: Simple. If it breaks 19,700, buy calls. If it fails to break, buy puts. Even if it breaks, upside is quite limited since stochastics is at the middle, so before it can rise more, it must and will drop once it reaches the top. But the same goes for downside. Seems like more indicators are supporting the fact that hsi will break 19,700 then not. I'll bet on calls or buy nothing at all.

Market seems good today, though I'm not around to monitor closely. Longcheer went up by 0.020, bring up my total returns.

TR: neg $6k