Wednesday, March 07, 2007

The calm before the storm?

Today we see a bear trap.

A bear trap is a fake rebound, tricking investors to think that the worst is over before plunging down, thus trapping more people at a high. It happened to HSI and it happened to STI. Tmr might see another selldown day, pending on dow jones.

HSI made a total reversal. Before market opens, puts are down by a lot. When market opens, calls are up as HSI climbs up to a high of +200. After lunch, it went down all the way to close at -140 and so puts went up. It's so volatile that even if you hit the right direction, you might also lose money. In the morning, I had a strong feeling to buy puts, so I bought small amounts. HSI proceeded to went up by a lot and I thought gone case already. But by afternoon my puts went up instead, a pleasant surprise. This is just pure luck that I made around 400 bucks today.

Overall, HSI didn't close +ve. A bad sign. It stands a good chance to reverse the downtrend but it didn't. This shows that the downtrend is very much in tact. Looking at MACD, it seems a little more downside is possible. RSI is still hovering below 50%, without any signs of uptrend, while stochastics is still trending down, if not trading sideways. Looks like HSI is consolidating. My plan is still there, if it hits 19400 (ema 100 days resistance) and rebounds down, I'll buy puts with possible target of 18500. That's quite a lot of meat to fall.

I thought today STI is quite strong after yesterday's strong rebound by dow of +150 points. It did went up +50 before closing at +22. Not a good sign either. A lot of stocks retreat from their intraday high, a sign of selling. STI now is hovering near ema50 days resistance, with possible downside to touch ema100 days resistance. Target is near 2950 like that. Quite a lot of meat to short too. Please don't be lured into believing that the worst is over. I believe that the beginning of worser times is about to come.

I'll begin to short the market with stocks that I have but cannot sell. Like longcheer. Esp longcheer. CDL warrants too.

Dow is +15 now.