Friday, November 02, 2007

Funny stuff

STI dropped 88 pts down to close at 3715 with a volume of 2.4 billion. Most of the stocks that had big selldown are those banking and property stocks. This is after citigroup announced subprime losses which dragged Dow to go down 324 points last night. So much for the rate cut huh?

I'm not seeing panic selling over here. Most have buyers stepping in at crucial support points. After chatting with HH, I realised how little I know about FA though I keep saying I wanted to find out more. Came at the right work is starting to ease down and I have both the resolve and time to do what is necessary to learn more about this illusive FA. Knowledge begins when you realise you know nothing.

I've photocopied quite a number of resources about FA since May when I'm experiencing massive losses in the market and banned myself from trading. It's still with me, half read. Those range from definitions to applications, so I'll have lots of material to start me off. When I'm ready, I'll do some analysis and post it here. Confirm crap one, but who cares...look at my initial postings on charts. When I look back on it, I cringe too.

Talking about that, I made some notes to help me out when I first started entering the market last March/April. This are some things that I observed while in the market. Most are bullshit, haha!

This is just for laughs :)
[WARNING: Do not obey all these rules, some still apply though!]

1. Do not buy stocks quantity of around 1000 (1 lot), because the commission will eat up earnings significantly

2. Do not buy on emotion, analyse carefully before buying! You can always wait for an opportunity to enter again

3. Whenever there is a huge volume of pple trading the stocks, it will definitey FALL

4. When a stock rises above the 52 wk high price, it will most likely rise further

5. When a stock falls below the 52 wk high price, it will most likely fall further

6. Time your exit carefully. You can key in your sell orders the night before.

7. Stock prices follow demand and supply. Just look at the bid size and ask size to get a feel of whether the price will fall or rise. If bid size exceed ask size, price wil rise. If ask size exceed bid size, price will fall.

8. Buy stocks with valuation and price target set by known research companies. This way you will make sure that if your prediction is wrong, you can always wait out for the stocks to rise because of good fundamentals in the stock

9. Do not buy low and sell high. Don't exist. Try buy high and sell higher. Or sell low and buy lower.

10. Don't buy stocks around 9am, there is bound to be a price hike which will slow down. Get it after 930am after all the excitement has died down

11. Sell it in the morning though, due to the price hike

12. Buy stocks which cross blue line and have good fundamentals. This way if it doesn't go up, can consider holding on

13. Stocks which gives dividend will drop on ex-date, see Robinson, 2nd Nov06

I cringe when I read some of these pointers. So newbish :) Some points are more hilarious than others. I especially like pointer number 3 - Whenever there is a huge volume of pple trading the stocks, it will definitely FALL. Haha, crapshit lah, of course not true! Volume will decide the significance of the move, whether it will mve up or move down, it depends on the price pattern preceeding the big volume. No such thing as DEFINITELY FALL.

Pointer 7 is funny too - it's about bid size exceeding ask size, then price will rise. I think last time I don't even know how prices of stocks rise or fall. It's not the buy queue or sell queue that matters. It's the enthusiasm of the buyers to bid higher prices that causes the price to rise and the desperation of sellers to sell at lower prices that causes the price to fall. Buy and sell queue are just that...queues to buy at that particular buy/sell price. Of course, with market depth services, buy and sell queue can give a feel of the buyers waiting to support at a particular level, and the 'road block' that prevents the price from going up.

Funny right? It wasn't so last time, cos that's what I observed.

Dow down by 55 points. Portfolio gains around 3.4k (still decent). Have a great weekend ahead!