Nice up run

Hey Folk

http://www.businesstimes.com.sg/government-economy/singapore-must-prepare-for-economic-slowdown-pm-lee-0

Read this article, Prime Minister said to prepare for slowdown in the economy. I consider this ‘insider information’. They have way ahead information than we have. So embrace, tighten your belt. Sometimes it maybe way ahead of what is actually going to happen. But it is very useful information.

Let go and see this http://www.federalreserve.gov/newsevents/press/monetary/20151028a.htm

Fed meeting ended on 28 Oct Wed. Read what they say. No rate raise yet. In my previous entries I had mention that no rate raise so fast. GDP 3^rd Qtr in the US missed forecast, pending home sales dropped too. Will they rise rate in December? Let see the inflation rate.

Next let go into a COT chart so maybe we will be in sync

This is a weekly COT chart VS weekly Oil price

Red is the commercial aka the Big Boys. Blue is the funds. Green are the retail traders. Weekly price of oil is in black.

In 2011:

The commercial build up their long position about since the second quarter of 2011, buying when the oil price dip. Oil price went up again in about the second quarter of 2012,

Notice that the small speculator or retail are extreme seller when the price are low and extreme buyer when the price peaked.

In 2013:

Somewhat the same happen in second quarter of 2013, commercial max buyer and retailer max seller, and the price went up.

In 2014:

Notice in start of 2014, the commercial are shorting, they are shorting it for about 6 months, before the price of oil came off and stay down for the next one year.

At the same time, the small speculator or the retail in green are at extreme buying at the start of 2014, oil price went up abit and the retail sold. Then they are back to extreme buying again when the oil price is peaking while the commercial still are at extreme selling.

Now

Commercial are extreme seller, however the retail are selling into it as well. So there is not a ideal setup on the COT. We see price of oil rally on Wednesday night.

Positions

As the COT suggest from last week post, I am still short on EurUsd and took a good profit. This week COT suggest a good short setup for Gold. I am in too. I also still hold long position in the S&P500 and took profit. We are still in a downtrend in the stock market. On Friday it had a outside bar that close negative. This can’t confirm anything yet. Let wait and see.

Singapore stock wise, start to look at REITS. Not to buy but to short sell. Capital commercial trust, Suntec, Cambridge are in my list.

cheer

Some entries

Hey Folk

This is going to be a short one due to my travel schedule.

Past few weeks I am talking about the possible rise in the stock market. Here we are!!! I long the stock market on different price for quick trade. Net profit so far.

I had shorted EurUsd and AudUsd.

AudUsd I only make a scratch. As of now there is not a ideal COT setup for AudUsd yet, but let see this week.

 EurUsd has good COT setup for a sell last week. On Thursday( yesterday ) EurUsd had already down 200 plus pips from the open, so let it rest before the next entry

Next there are COT setup for Gold to short. Let wait for the price to be ready for the entry.

Oil too have a setup on the COT ( not a ideal one), let the price be ready for a short entry and let see the COT for this week. Last week I said that oil may have a big rebound, it still true. That maybe explain why the price are not ready for selling and the COT to sell is not ideal.

Trend is still down on the weekly in the stock market despite the market spike up. It is a uptrend on the daily already. No clear indication yet. It is more of a trading environment lately. May the trend be clearer.

**Pls note COT is not a timing indicator. It just tell us the next big trend. Seeing extreme sell in COT by the Big Boys this week do not mean that price will collapse immediately. Sometimes it take months for the price to realize and when the price realized, usually they will stay entrenched in that direction for sometimes.

Stay the same in your funds.

cheer

Showing some light

Hey Folk

We are approaching the seasonal low due in end of Oct which mean traditionally by end of October the market will rise. This time we have Fed meeting on the 27 and 28 of October, maybe this will be the catalysis. Also the earning season is in again, maybe this will lift the market up.

The COT data shows heavy buyer for many weeks several weeks ago. They are still heavy buyer last week. If we map them together, probably we have some hint on where the market is going. However, what I do not like is we are still in a down trend. So be nimble on the long position

I had spent every on finding a better way to determine trend in a faster way with high accuracy. However, I have not found one that has a higher hit rate and also a huge lift off when the trend change than the current one I am using. For sure my current methodology do not allow me to catch the bottom and the top. I also believe there is no such method that one can identify the top or bottom and profit from the market instantly and handsomely. Alright let get into the market.

Another things to look out for in the market is crude oil. Crude is a indicator of how well the economy is doing. A low price in crude oil mean the economy is not doing well. I mean economy and not the stock market. In the present world they are not in sync anymore.

Below is the weekly chart of crude oil

 

Notice where the cursor is at 53.95. I think crude oil is going to have a rebound to that range. Which mean to say high 53 to low 54 level. Also notice that crude oil trend is down. This is a deeply entrenched downtrend. So be nimble on your long position, if you wish to do a counter trend trade.

Stay the same in your funds. There is nothing to do yet but seem better than last week.

Short and sweet

Dilemma

Hey Folk

I came across this very interesting video by CNBC. They interviewed the former Fed chairman Bernanke. Please pay attention to what he said for the whole length of video and particularly on 40 second to about 58 second.

http://video.cnbc.com/gallery/?video=3000428960

40 to 58 second obviously tell us that these people, investment bankers, government, sovereign wealth fund etc knew things that we common people do not know. I wrote this before, saying that my personal experience with these people is that they know things way ahead the news are release. So they will have already be in the market. When the news released, common people will come in and buy or sell a position that the smart money do not want. So in other words we take the goods they do not want and give them the money. That is why again in the COT, the small speculator or the others are always in the wrong direction. Also news are extremely lagging.

Most of the time we try to second guess or think that the policy maker or some bosses made a dumb ass choice or decision. But slowly I realize that I think they know exactly what they are doing. The reason we do not get it is that we do not know the real reason behind what they are doing. Things always make sense once you know all the facts, even if is not to our liking. But what I know is I do not know what the real reason is and I do know that we do not know the truth.

China

In the video, Bernanke also said that the stock market in China and the economy have no linked. I cannot remember where and when, I read this from our local newspaper saying this as well. The economy in China is doing a transformation, all transformation have certain shake up thus the stock market had a dive. Having said all these are useless now as things already happened. So for me, the COT, seasonal, relations and trend are still my best tell signs of where the money is going.

Russia

Their economy are greatly hit since the Ukraine incident. Now they are in the middle east. The shocking part is nobodies know how on earth they transport fighter jets and tanks into there. They are so stealth. I think the fact is I do not think they are there to fight the IS. They are there to restore their economy.

By helping these countries except Saudi, they can come in talk about the production of oil. If they can cut the supply of oil, they most likely can let the price of oil increase. Which in a way will save the dying economy of Russia.

What I believe/ my opinion (may be dead wrong)

We are entering into a slow growth pace globally. Since the Fed is not printing money and coming into the market, the market had lost it artificial simulator. Thus the upward thrust movement of the market will not be as spectacular as the previous years. We are still in a 0 inflation environment which tell us very vividly that there are no spending activities. A lot of money are lock up and kept in stash. I really hope that the US would not go into a deflation like Japan. If so, the whole globe will most likely to suffer a extreme slow growth, which surely impact all individual life. I also think because of this the interest rate would not rise.

We are in a downtrend. But we have not break the low created on Aug 2015 and most importantly Oct 2014 lows. I see very strong buys in the COT, slight divergent of relationships between sectors. If you are trading, I guess is best to stay sideline until the coast is clearer.

There is still no need to change fund yet. We are still within a big range.

Untill next time….

Stacking the odds

Hey folk

Yesterday we saw a huge rebound on the intraday. Something promising???

Here we go, the disaggregated futures only COT on a 6 months comparison VS the weekly close price on the S&P500.

The important details to watch is the Net dealer in red, net others in green and the weekly close price of S&P500 in black. The net dealer are the biggest fund in this market. They can be government, national bank etc. The net others are the retails trader like us.

 The graph tabulate 2015 data, we can see that the net dealer are accumulating since the start of the year. The net others just pay attention to them, they are always catching the wrong direction. When the market is down in late March, they are long, when the market is at highest in mid May, they are short. When the market is falling in August, net others are long. When the market is falling more, they buy more.

So we can see that the retails trader are usually wrong, that why 95% of the participant lost money. The money they lost goes to the 5% which are the net dealer. So from here we need to watch this 2 category and we may roughly know where the big trend is heading.

Next we look at the other Net COT.

 

 

 

 

The graph is the Net COT VS S&P500 weekly close

We need to pay attention to the Comm net in red, the small spec net in green and the S&P500 weekly closing price in black. The comm net is the biggest fund and the small spec net are the retails trader.

Is obvious that the accumulation by the comm net is getting much higher, and is the highest since the start of the year as the weekly price fall. While the small spec net is trying very hard to catch the trend but fail most of the time.

From the above 2 fundamental data, the big boys are accumulating the market very heavily as the price comes off lower. That why in the last week whasapp, I did add on that buyers might be in the market. Bear in mind that COT is not a timing indicator, it only tell us where the big boys and the smart money are moving where the big trend will happen.

However the big boys can be hedgers at time. So much effort needed to spend on crunching these data further to determine their holdings. Other than the above 2 charts I still have 3 more using COT to analysis the positioning. Thus on the last post I said that we need a lot of effort to know what is happening in the market.

Anyway, currently we have net longs by the big boys. Seasonal are telling us that end of October is a buy point, it also tell us that year ending with 5 is a up year. But the weekly price is a downtrend still. Follow the price. Price rules!! Net Net no change of funds yet until further notice.

 

cheers

 

 

 

Let get statistic

Hey Folk

The market is indeed real choppy. It seems like everyone is waiting for the talk by Fed chairwoman on Thursday morning Singapore time. She said that they see rates rise by end of the year. We are left with Oct, Nov and Dec for the year. As I said in the previous post, the anticipation will still be in the market, which leads to uncertainty. We see more swings in the market day to day, the range are wider than normal. Like I said we are in a downtrend already since the week of 7 Sept 2015. However we are still bounded in a big range from 2100 to 1830 which is about 270 points boundary in the S&P500. You will also notice this in almost all the indices.

Let look into some statistic

On the left there is a S&P500 cycle base on 30 years. Notice that the volatility increase towards Oct. and then it will dash right up. On the right we had a 4 years cycle. We are in the pre election term now. Notice again there is drop in the last quarter then market will move up.

Next

The years ending with 5 is usually a up year.

These are statistic for reference. We cant follow them like a theory or formula that sure works.As I said before, price in the market rules, now it is a down trend so short more than long.I did short on 18 and 23 of Sept. Hold for 2 days and the other an intraday trade respectively. I made some little profit.  Market are still in a range and volatile, go for fast in fast out.

If you wish to look at Singapore stocks for bottom buy, look out for Singtel, Starhub and SPH. However I wont be a buyer until my indicators tell me is a uptrend in the general market and that individual stock as well.

Trading/Investment

95% lose money and 5% make money. I think this equation is very true. Out of the 95% some will quit but there will sure be fresh participant coming into the market to replace. Let make the assumuption that the 5% that make money are consistent. Consistent mean 5 years and above having profit yearly. Out of this group, to be above average is to get a 10% profit yearly. To be the crème is to have 30-50% profit yearly. To be the best of the best is to have anything above 50% yearly.

So isn’t Trading/investment real boring. It is not to get rich quick. It is quite confirm that in any casino games or buying 4D or toto have a higher chance, better potential and relative lesser effort to get rich quick. Trading is purely having a plan and stick to a plan. Sometimes I only have 5 trading signal for the entire year for a particular instrument. I just have to wait.

Successful traders just have to follow a set of rules that work year after year and nothing else. A lot of people that I know just wish to get rich and not wanting to know the process. This market in my view has made many participant believe that one can get rich or do well with little effort or knowledge. Also since there is no formal education on how the market works, a lot of participant went into the market without any knowledge and not even knowing their approach is entirely wrong. Please do not hear say if you wish to be serious about this industry. If you just wish to invest or trade to make money without making any effort, the least you can do is to entrust some funds to do it. I may have other plans coming out for interested traders.

cheers

No rise in rate.Uncertain

Hey Folk

I did some forecasting last few post that the Fed wont rise the rate. Indeed they did not rise. The unemployment is hitting a low, but there is visibly no inflation. I guess a lot of companies are keeping money in their stash, not willing to spend.

This move by Fed of no rising the rates ( in my opinion) also come from international pressure. The world is having ‘QE’ one way of the other. So having to rise interest rate too fast would not be favorable.

This will also result in the market having lesser urgency to determine the direction as there are presence of anticipation. However, for the stock market, base on seasonal is still a down move till October where the up move will be in. Remember that year ending with 5 is a up year for as long as the seasonal tendency have exist but maybe this year we will break the pattern. Well wait and see. Nothing last forever.

Look at the actual data of the unemployment rate in the US.

Year	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
2005	5.3	5.4	5.2	5.2	5.1	5.0	5.0	4.9	5.0	5.0	5.0	4.9
2006	4.7	4.8	4.7	4.7	4.6	4.6	4.7	4.7	4.5	4.4	4.5	4.4
2007	4.6	4.5	4.4	4.5	4.4	4.6	4.7	4.6	4.7	4.7	4.7	5.0
2008	5.0	4.9	5.1	5.0	5.4	5.6	5.8	6.1	6.1	6.5	6.8	7.3
2009	7.8	8.3	8.7	9.0	9.4	9.5	9.5	9.6	9.8	10.0	9.9	9.9
2010	9.8	9.8	9.9	9.9	9.6	9.4	9.4	9.5	9.5	9.4	9.8	9.3
2011	9.2	9.0	9.0	9.1	9.0	9.1	9.0	9.0	9.0	8.8	8.6	8.5
2012	8.3	8.3	8.2	8.2	8.2	8.2	8.2	8.0	7.8	7.8	7.7	7.9
2013	8.0	7.7	7.5	7.6	7.5	7.5	7.3	7.2	7.2	7.2	7.0	6.7
2014	6.6	6.7	6.6	6.2	6.3	6.1	6.2	6.1	5.9	5.7	5.8	5.6
2015	5.7	5.5	5.5	5.4	5.5	5.3	5.3	5.1

Table of % of unemployment in US

If you plot them on the graph, since 2010, there is a consistent drop on the unemployment. However, there is also a consistent drop in inflation too. The current inflation is at 0.2% now. Fed aim is that inflation in the long run can maintain at 2%. That is 10 times more than the current rate of inflation. So hang on tight for this period of time where volatilely will increase with much anticipation of the rise in rates.

My take is since on the weekly is on the downtrend and the COT have show negative holding in the big boys, I would be a seller more than a buyer. However, we are still bounded in a range, so be careful. Not just stock market. All other instrument like commodities and forex are in the undecided zone.

cheers