To invest only if you would be comfortable owning a stock even if you had no way of knowing its daily share price. - Benjamin Graham

Tuesday, May 31, 2011

TENAGA: Did you buy today?

If you buy Tenaga today following the tariff hike news, and you happened to buy at RM7.10~RM7.20. Good luck!

Let's look at the history. On 5th June 2008, tariff hike announcement was made. On that day Tenaga was suspended from trading. On the 6th June 2008, it closed 23.8% higher. Since then, it's been going side way.

News on the 5th June 2008:

After the professional money had done distributing, Tenaga begun to slide. Look at the chart below.

Today's news:

Today's chart:

Do you see any similarity? I have sold my Tenaga... because I trade in harmony with the Smart Money!

Friday, May 6, 2011

Gold: Statistical Analysis

On the 15th April 2011, I mentioned that base on statistical analysis (Quadratic Trend Model), Gold undergoes correction every 5 to 6 months (link: post). If the calculation is correct, the next bottom or buying signal would appeal in either June or July 2011.

Unsurprisingly, Gold has started its correction in early May, about 6 months from the top on 9th Nov 2010. Previous duration between peak (9th Nov 2010) and bottom (28th Jan 2011) was more than 2 months. So two months from now, the low shall be hit and that will be a beautiful entry point. So get the cash ready!

No demand bar

After months of watching webminars on VSA, either live or recorded, one of the many patterns I learned on charts reading was "No demand". What does it mean? No demand simply mean that there's no demand on a stock at a particular price. No one wants to buy it. So how do we know no one wants to buy it? Easy, low volume (relatively).

No demand is more important on an up bar. An up bar is a bar closing higher than previous bar. When a down trend is formed for a few days, suddenly one day it closes high (an up bar). Many would buy that share because we wanted to catch the bottom. We believed that was a trend reversal signal. But only to find out that on the following day or days, it continues on its down trend.

So what exactly happened? This was just a trade setup by professional money, to fool the herd so that they could sell their remaining shares at a higher price. They of course had no interest in buying the share. But they would spend a little money to drive up the price. It's easy when the price was so low and there was no selling queue (the herd didn't want to sell their share at huge lost), and once the price reached their target, they would then wait for the buying queue to accumulate, which may take hours or days, and unload their shares to the uninformed.

Example 1: BJFOOD

I cut lost when a down trend channel was formed. I knew that the professional money was not interested to drive up the price anymore, worse I suspected they planned to push down the price to trap the herd, so that they could accumulate at a much cheaper price. There's was very little buying queue on daily basis so driving down the price was very easy for them.

After I sold mine at a lost, BJFOOD had a no-demand-up-bar on the 4th May [1]. My friend who was was still holding and averaging down his position was very happy. He told me there was a support and BJFOOD will rise again. I knew this can't be true since it's clearly a no-demand signal. But I regret selling it so cheap as I could have reduced my lost by half if I sell 2 days later.

On the 5th of May, demand flow in and my friend was even happier. I was thinking WTF and "no-way".

As time of writing, BJFOOD has stopped its up move and last traded at 0.90 (-2.17%) from the top of 0.945 on the previous day. There was very little selling queue yet no one is buying. I believe that the professional money is once again waiting for the buying queue to accumulate.

Example 2: OSK

I sold OSK at a small lost when a down trend channel was formed. Never trade against trend channel... as I was told many times by VSA experts. On the 20th April, there were some buying and resulted OSK to close 3% higher [1]. I was upset since I could have broken even if I waited for this. Still I can't believe this is true as the bar on the 20th April was clearly a no-demand-up-bar. A bar closed higher than a previous bar, with volume lower than previous 2 bars. Now OSK last traded at 1.67, and a down trend channel was formed. Once again it's proven that a no demand bar is very bearish.

So what have I learned? When a down trend channel was formed, lost (and pain) is being accumulated, only sell on a no demand up bar. Very likely the lost would be greatly reduced.

Tuesday, April 26, 2011

BJFOOD: Weakness?

BJFOOD has been going side way for almost 2 weeks now. A low of 0.99 was hit today. At closing some buying came in and it managed to close at 0.995. Since the volume was low, base on VSA principles, this can be a test. A test to see if there's any panic seller out there. If this hypothesis is true, BJFOOD shall surge tomorrow. If this hypothesis is false, then this would be a start of a down trend.

Thursday, April 21, 2011

TOPGLOV: Approaching previous high

TOPGLOV continue to close higher today with slightly higher volume. This is a sign of strength. This shows that more people (smart money) are buying as the price goes higher. However there is one concern, which is the range or spread being too narrow. It seems that someone was having a big block of share queued at 5.19, unloading to buyers.

Graph above shows that a previous high: 5.20 was almost hit today. This looks like a resistant and a trader may had decided to unload their shares right before the resistant is hit.

Wednesday, April 20, 2011

TOPGLOV: Trade set-up

[A] Ultra high volume + narrow spread. Down trend in the background. This was an absorption volume. Note that 4.98, a previous low was hit. Professional money must be buying in huge blocks.
[B] Price closed higher with same ultra high volume as previous day. This was an evidence showing that professional money was still buying. Huge supply has resulted the price to close in the low.
[C] About half of the volume (compared with previous day) was enough to drive up the price. Supply has reduced tremendously. This also resulted the price to close high on the bar.
[D] After a 3% gain on bar [C], supply flowing in where many (including some professional money) took profit. However there were still a lot of buying, or else the gain on bar [C] would have been wiped off.
[E] Not much activity on this bar. The volume was low. Lack of selling pressure brought the price to close at high bar.
[F] Price continue to close on a high bar, with an increased of volume. Such increased of volume, yet not an ultra high volume, shows that the professional money is about ready to push up the price (slowly). Ultra high volume can only mean supply coming in.

A higher high and higher low in the following days would confirm this trade set-up and an up trend channel shall then be formed.