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Sunday, October 03, 2010

I m supposed to watch Liverpool's game ... but have to off if as they are pathetic. I think this is enough, 0 - 2 down to Blackpool(yes, many never heard of such a name) at home. it is too much for me to stomach. I can take 20% losses in a trade easier. I m 'controlling' my trades, but I could not in Liverpool's games. Yes, I DO NOT watch any other football games in BPL. So, bye BPL.

Learning Corner

Newton's Third Law : Anything goes down will bounce up with the same magnitude.

This Law needs to be editted when it comes to stocks. Many stocks go down and will never recover. So, they wont rebound and might be matter of time de-listed. And the magnitudes are NOT the same. More likely than not, it is easier to move down(thanks to gravity) and rebound may not be as strong. In psychological sense, when a stock moves lower or dive down, FEAR in play. Many re-act and most of the time over re-act to the FEAR around, compounded by lack of knowledge and experiences in stock-markets. So, the magnitude of a stock move much lower is greater than the rebound, if any.

So, the risk of buying into a downtrending stock is much greater. Many will try to bottom fish or trying to time its bottom. Using FA or TA, it is not possible no matter what many might claim. But if we could have a longer time frame with INVESTING in our mind, then .. yes, generally a good stock will rebound, a matter of time.

Let us look at the rubber-stocks which rallied for the whole year before decided to move down. It took a shorter period of time for it to move lower(diving) ... either taking profits or cutting losses, each rebound is short lived. Currently, SUpermax will try to rebound for the fourth time. Reversal or just a short hu-ha again? After three times failure, MANY bought into Supermax are less optimistic about its prospect.

Now, I have NOT seen any panic-selling in these rubber-stocks tho they are obviously in downtrend. I wont place a name such as 'mushroom of death' or whatever terms they like to make it dramatic. It is ridiculous to me. Let us be more objective and using those many indicators will only complicate things. Use COMMON SENSE, if u have any.

Panic-selling will trigger a panic-buying by contrarians. The pictures may not be so bright at the moment, with H1N1 taken out from the equation. It is a storm, but not a perfect storm yet. IF we could find 10 broker houses have SELL or STRONG SELL calls or selling pressure increases in HIGH rate, then we might see some panic-selling coming in. At the moment, nope. Many still nibble into rubber-stocks, anticipating a rebound!!

Do you think Newton's third law could be applied to rubber-stocks?

JCY : I m still watching. The first time it went below RM1, I remembered I was very excited. WHY? Because the rate of it DIVED was very steep and by applying Newton's third law, it could rebound in very fast rate too. Using the contrarian approach, it was a strong buy. Obeviously I sold off immediately after it jumped up so furiously. Anything move up in fast rate will come down soon too.

JCY at RM1 and below now. I m watching 0.98, and it touched 0.98 on Friday. I m not excited at all. WHY? Because it moves lower with such a slow rate. That is called 'drifting' and I imagine it as a dry-leaf drops from a tall tree. Once a while, the swooosh of a wind blows it higher but graivty rules. It will hit the ground anyway. So, I wont even be excited if it drifting to 0.88, a low level that I managed to catch it. It didnt satisfy one of my very nice waterfall's rule to trigger a buy. In fact, if it drifting in slower pace, I might even forget about her!! It is a bad sign to me now. So, it is a SELL at RM1 to me now ... as I believe it will drift lower before another round of wind blow it up again ... this time might go below RM0.880. So, 0.98 and 0.88 is my check point.

This is not a buy/sell call on JCY. It is a "Learning Corner" ... which I created 2 years ago to share what I was learning previously. Today, it is to share with novices who are following my writings. I prefer to discuss concepts and ideas rather than to speak if Faber can buy today ar? Or somone telling me to buy Keladi or Iris? How about Hwa Tai or Sinotop? Lets gamble in KLSE ... the largest legalised casino in Malaysia ... with a click of your mouse!

TEH

1 comment:

Jim Cheng said...

I should have follow you to stop watching after 0:2.

So sad to see Liverpool at the bottom instead of top 4. With current performances it will not be surprised to see Liverpool fighting for relegation in BPL.

You'll Never Walk Alone.