Saturday, August 07, 2010

Time to SELL the overbought stocks?

KLCI : Let us look at the above daily chart of KLSE. The two blue-spots are the OVERSOLD period, in Mid-Feb and End-May. I have highlighted that KLCI in RED(overbought) region now and you guess - which have higher chances - KLCI continue moving HIGHER or will retrace soon?

So, is it time to short the FKLI?!!

Let us understand a little about KLCI. It is now comprises with ONLY 30 counters(BJToto and MAS are two of them). TanJong taken off, perhaps TopGlove to take over? Anyway, to support the KLCI, local funds just need to manipulate in few counters(CIMB is the hottest babe). But, if KLCI retracing many UPTREND stocks(which overbought) will be retracing too(due to profit-taking and fear of bear grips). In such a bullish period since beginning of July till NOW(1 month bull), we have seen many counters in OVERBOUGHT level. So, it is TIME to sell those counters, in my opinion. DO NOT talk to me about TA, I m using my stupid common-sense.

Let us also point out that during this ONE MONTH bull, there are these two sectors moving the opposite direction - Tech and Rubber. So, many of the leaders in these two sectors are in OVERSOLD region, with their indices in OVERSOLD region too. Doesnt make sense?? DO NOT use too much as sense here as THIS IS what we called goreng stock-market. Seriously goreng ... even HwaTai shot up without ANY sense!!

Do look closely at the above chart - if you look into 3-6 months time frame, we have profitted hugely TWICE. SELL when it overbought and buy back when it is oversold. LOGIC? But, I have discover that market is NO LOGIC, full with EVERY type of investors, traders, punters using FA, TA, LA, PA, HA, XA ... whatever. So, if we could distant ourselves away from the market noises, we could be a CONTRARIAN. It is difficult, I know. It is more difficult to do something NOT normal. It is a NORM to be NORMAL, the accepted community. Even if we know we are losing money, we FEEL COMFORT knowing that so many on our side. Surprised? Dont be .... 80-90% of them losing money. Please guess how many % of those in Chart Nexus losing money following those TA sifus there. I wondered ... they paid few thousands but only to follow the forum, a few self-proclaimed sifus to BUY ... and unsure with their own buyings??! I admit ... I was one of them. Am I stupid or intelligent? Hmm ...

This blog is NOT to be-little anyone, if I could ... I will say I m the one who being influenced and 'following' the herds. And as I feel uncomfortable with my own trades(using the 'actual' TA), I kept cutting small losses. Admitting mistakes is not easy. And DO NOT blame anyone for our losses. Ultimately, it is our decisions to BUY/SELL. That is WHY I believe 80-90% of those in markets LOSING money. IGNORANCE and ARROGANCE.

I m pointing these out as I analysed on my trades in June-July. It make senses to me now why I lost as I lost my directions. Losing a trade is OK ... but losing our self-esteem will dent our confidence in our future trades.

Hence, I will be my own sifu - in buying what make sense to me, away from the noise of CN's forum. I know there are few from CN who are reading my blogs. They will definitely be disappointed as I no longer want to use TA or punt into 'hot' counters. My love for 'waterfalls' has been very deep ... I m sincere and honest to my love.

With that said, I will continue to attend CN's tutorials and meetings, to learn the finer points. As I think it will be difficult to change my mindset(not to buy oversold counters!), I will only use TA to SELL ... hopefully when it is at overbought level I will NOT sell too early again. Any of my stocks which bought in oversold region, moving to overbought region DESERVE to be sold. But, at what overbought level should I sell? For that, I hope my trainer could help me to learn to see reversal at the top. Till I m more comfortable with TA one day, I will time it to BUY.

Yes, I prefer to be a CONTRARIAN. Period.


1 comment:

Anonymous said...

Bro TEH, frankly speaking, how do u find CNX trading course?? Is it really as great as what the trainer sound during their preview???
Pls kindly advise. and have u heard about F1 Trader by Fred Tham? Is there any difference btw these 2? which is better?