Friday, December 31, 2010

STI, Rally Over?

On my previous post, i mentioned that STI rally was going to be a weak one and it did indeed rally. To validate whether my statement was correct or not, i would require more evidence next week to support my statement. STI is due for a reaction and this reaction will happen tomorrow (31/12/2010) i believe. If there is no reaction, then it should be a year end window dressing effect where the upside is limited. I seriously don't believe that the big operators would continue buying without allowing a reaction to happen. This reaction is important as it would allow me to validate whether the rally would be a strong or a weak one.

Let's watch for tomorrow's action. I see some profit taking today but not a huge one. So let's await and monitor closely for tomorrow's action. The trading plan for tomorrow is no action. Watch until a significant sign/omen appears which allows for ameliorate decision.

Ronald K

Ezra, An Erratic Manipulated Stock

I was having coffee with one of my mates and he was giving me stories on Ezra and how it ran up so fast within a short period of time and how he made a fortune. That inspired me to check out the operation and do an analysis on it.

Let's forget what happened in November and let's start studying the operation from December onwards. Accumulation took place early Dec for almost 11 days, see the circled area. The were many clues that this was accumulation and not distribution. Since it accumulated for 11 days, one should expect the rally to be strong and sustain. On Dec 15th, it finally broke out of the accumulation range and starting to charge forward. Something unusual happened on this day, the volume was very high. It doesn't looked like real buying but instead selling. However, do take into account that since there was heavy accumulation, big operators wouldn't be unloading so fast and let the stock fall. Instead, they were first taking some profits, validating how much supply was left and buy as much as possible for the next few up move. And so the market retraced a little and they started more buying.

So Ezra went further up and the public started coming in. This time round, the stock was on its highway for further prices because it broke the previous resistance with strength. It went into validating and absorption mode for the next 4 days before ending where it is today at a close of $1.82. Manifesting at the whole operation, Ezra's upmove has not ended yet. It will dip tomorrow (31/12/2010) and continue it's rally towards the 1.84-1.88 range. The risk and reward is not there for now because there is only 3-6 cents more to go. I wouldn't short this counter too because i had not seen any real selling or huge profits taken by the big operators. Once it happened, I will then decide.

As for why i say that this stock is erratic? Look at the unusual price movement, there are time bombs everywhere. The moment you are caught at the wrong price, it's hard for you to get out. You will be psychology stressed and mentally strained. To punt this stock, you would need to study the operation prudently, practice good money and risk management so that you won't be slaughtered for nothing.

Ronald K

Wednesday, December 29, 2010

Crude Oil, The Sleeping Gem? Had it resurrected?

Since Crude Oil had been one of the most discussed topic by a lot of traders and investors in recent weeks, i decided to study the recent operation and posit down my analysis.

See the rectangle boxes? Those are areas of accumulation for higher price to come. See the first rectangle box? Big operators were checking to see if the strength around the support was strong. Looking at what happen previously around Oct 30 - Nov 12, big operators were not ready for an upmove yet, that was why prices retreat so that they could accumulate more to hide their true intentions of higher prices to come.

The second rectangle revealed that prices had hit a very strong resistance and it is in an absorption mode. Prices did not fall further after hitting resistance. This is a very strong clue that demand was overcoming supply. The market needs to absorb all of those who wanted to sell before all the selling is over for higher price. The longer it ranged, the expectation is higher for the price to trend higher.

Finally, the third rectangle box, the market is constantly hitting strong resistance. I judge the area of the third rectangle box as a lack of supply. This lack of supply is the over rising bullish factor. A close under the low of last Friday 24/12/2010 will be bearish for the near time. Otherwise, all evidence points toward the bull.

Are your prepared for higher oil prices that could aggravate inflation and hurt economic growth?

Ronald K

Tuesday, December 28, 2010

Genting Singapore, Start Buying

Remember few days back, i blogged about Genting not looking good and it looked bearish? I just got stopped out. I wanted to emphasize my point that the market is very devious, even though my analysis on Genting was bearish and i don't see any real buying in place during that period of time, it still managed to trick me and reveal its real intentions thereafter. From this lesson, i learnt to better spot the fine lines between the buying and selling activity. The next time, i won't be so easily tricked again!

I was busy the whole day today and did not get to see Genting until now, or i would have entered this trade. The risk is low and the reward is high. I was surprised that buying came in and gave the stock a lift. Genting is definitely a buy now. Wait for reaction first before entering the market, you don't want to chase the price and regret buying at a high price later. 

Ronald K

Noble Group Case Study - Double Top, A Classic yet Insidious Maneuver

Have you guys ever wondered why double tops are formed and it's significance? Anyone of you know the psychology and rationale behind double top? Is it a good time to short when you see a double top? Does chart patterns always repeat itself? I am going to put a case study to uncover this myth today.

Big operators are smart far sighted people. They have all the necessary statistics, tools, analysis, non public information, etc to determine the future trend of the market. I am not concerned about how they managed to get this info because all their activity is recorded in the chart and their evidence can be traced. For the public, if we equipped ourselves with the correct chart reading skills, we would be able to detect those important turning points way before the market is about to have a rally or reaction, thereby having a trading edge over those who depends on tips, news or gut feeling. By understanding these important turning points, we would be able to determine how strong/weak the rally/reaction, how much further upside/downside and where are the profit target levels, just so that we won't miss levels where big operators are unloading and cashing in profits and the public is still buying.

See the noble chart. After the 2008-2009 financial downturn, the big operators had been heavily cashing in on the shares during the selling culmination period. They knew that prices were dirt cheap and it's time again where huge profits could be made. They had successfully managed to frighten the public into liquidating and prudently planning their buying campaign. Of course, they don't buy all at one go, instead constantly checking the market for selling activity to see if any overhanging supply still exist. If it still exist, then they would absorb those supply so that further up move could happen. If the selling is strong then it is not time for an up move yet, else the up move is almost imminent. Of course, if you know how to read the chart like i do, all these can all be detected and amazingly after some time, you could even read their minds and decipher their true campaign.

Once the overhanging supply was absorbed, they would start to bring out some noise so that the public would start noticing it. You will know this because it will suddenly appear in the Top 20 volume in whatever brokerage house's platform you use. Before this stage, most of the shares were already in the hands of the big operators. The rationale for inducing the public was just so that they public could assist to push the prices higher, creating more hyper activity and making them as a victim to purchase these shares at a higher price. By this time, prices are starting to soar day by day. Those who still believes that this is a bear market, lost money in the market during the downturn and those who perform fundamental analysis will not buy. They won't believe that a bull market is in the making. They will only buy when good news starts to set in, companies are starting to make profits, broker starting to send out buy recommendations, etc, by then prices had already risen for some while. I call those mid bulls, where they are buying at the middle price.

Next few months passed and prices continue to soar. Those who had not bought cannot withstand prices were constantly moving up and started to buy, by that more activity was created. I call these people late bulls. During this period of time, everyone would be talking about the market's constant rising prices, news would be so rosy, companies are beating estimates, fortunes are made, etc..Of course, money could still be made during this period, however greed and fear also sets in. The public was hoping that the prices they got could rise non-stop until its time "they" think it's enough to take profits. During this whole process, big operators were quietly unloading and cashing in profits, however there were no signs of short sell yet. Do you think that the public will start taking profit if they got the share at $1 and it's now $1.50? I bet you 80% of the time, they won't be taking. As mentioned, the big operators are smart people and they could read the public's mind and so they were planning to slaughter the public big time. Not only they could trick the public into liquidating their current holdings, frightening them, make them lose confidence on the stock, but more importantly creating a false sense that a bear market is coming but hiding their true campaign that a bear is INDEED coming. And so prices start to decline slowly at first and sharply later on. On the first phase of slow decline, the public psychology was they hoped and prayed that the stock could move back up so that a little profits could be made or they could minimize their losses. The market was forgiving and gave them a chance, but trust me again, 80% of the time, the public would be thinking "come on, move up a little more, just a little more i would take profit/cut loss" and so they hung on and did not follow their trading plan. Of course some of them took profits/cut loss, however majority were still hoping and fear. On the next phase of sharp decline, the public was totally annihilated and no one was sparred. This time round, they gave up, liquidate everything and trust me their confidence was shaken and lost! They were in a despair mode and not wanting to punt on that particular market/stock again. Didn't i told you when the market corrects, big operators are secretly buying in? Their buying activity can be spotted if you know how to read the charts.

At a certain juncture, prices looked attractive again and big operators started to load in again. By this time, even if the public was not viewing this stock, his friends, brokers, news will induce him to check out this stock again, since it rebounded strongly. The public must be pretty fed up and dishearten since he cut loss early and now that it had rebounded. In his mind, he was thinking that he could have wait a little longer more before cutting losses. The stock price rose up for 4-5 days and started to recedes. The public believed that the reaction and the price level must be now attractive and it might be a good time to buy again. Didn't i told you he could not control his urge when he saw prices moving up sharply? And so he bought in again, of course the price level where he bought could bring him profits again. Now, from his first experienced, he lost money because he was greedy. In his mind, he was thinking that this time round, he is going to make back all his lost and not be greedy. And so prices continued to climb and reached a point where he found that his lost all turned profits now. He took some profits because of the first experienced, but still holding majority of the shares to allow him to ride further profits. This time round the stock reached the second top almost at the same level as the first top. He was on high alert this time, making sure he doesn't lose back all the profits. Didn't i told you that the public was not trained to read where big operators are unloading? So came the first day where the big operators started unloading, the public was hoping that this was just a small reaction, further up move will continue. On the second day, prices declined so sharply that the public knew what was happening but could not take profits/cut losses because psychology he could have taken profits way above, and so he prayed and hoped for a rebound. No strong rally occurred and prices continued to dip, he knew if he do not cut losses now, he would be in dip trouble and finally he managed to take a little profits which was not worth his risk/cut losses. By now, his confidence was totally and i mean totally shaken that he wouldn't want to ever touch this stock again! Well, as for the big operators, they managed to hide their true campaigns of bearishness by first tricking the public the SECOND time thinking that the stock is in a bullish uptrend where instead the stock is going in for a deep downturn. They had successfully manipulated the public's mind. See, i told you the stock market is not designed to allow you to make money. That's the way how all market works and how this double top analogy came by. Double Top is a stressful yet effective maneuver to emotionally tire and psychologically testing the public guts and endurance.

I would highly recommend not to treat double top as a pattern where if you see a double top, you start short selling. Don't limit yourself to chart patterns because everyone says a double top is a short or a double bottom is a long. There are certain cases where a double top occurs and the market went on higher. Understand the mindset of the big operators and their campaign is much more important that just blindly executing trades based on chart patterns. There are always evidence of strength/weakness when the market is about to reach the top/bottom and judgement has to be made on whether a further rally or further reaction continues. Remember the lowest risk is ALWAYS at the danger point.

This analogy is almost the unerring guide to Double Top and i hoped i gave you a strong insight on the psychology on double top. Now, it's up to you to decide if you want to continue using chart patterns to trade or be a student of the market and understand how it operates.

Ronald K

Monday, December 27, 2010

Wilmar, Window Dressing coming up?

I was writing my post on Capitaland and happen to stumble upon Charlie Lau's post on Wilmar and STI. The article can be found here:
Of course, i read the article and was once again studying the operations for Wilmar. Let's put STI aside now and focus on Wilmar. I have heard many news and media talking about Wilmar's recent price plunged and with the continuous feed of bad news from the press, this frighten the public and kept them out of this stock for the moment. To be frank, i have not observed this stock for quite sometime until i read this article, therefore i don't know what was the news that was released nor what was causing the price dropped. Anyway, i don't read news, so it really doesn't affect me. What got me interested was the price action in Wilmar before the plunged on 21/12/2010.

After studying the recent operation, i managed to spot some unusual trading range which offered some clues as to whether big operators are continuing to distribute this stock or starting to accumulate it. Per my analysis on that trading range circled on the screenshot, it is obvious that they are distributing. I will not go into what actually happened in 9/11/2010 back then although i know what was causing this huge fall. In my earlier post, i mentioned that trading range do offer very important clues on big operators activity and one should learn decipher and analyse it, as huge amount of money could be made from it. As in the case of Wilmar, supply was overcoming demand and the operators are luring the public to think that the price was attractive at $5.99 since it recorded a high of $6.93 on 9/11/2010. The difference of almost $1 of course lured the public in when the operators are doing some profit taking and at the same time distribute more stocks to the public. That's where the public got slaughtered and a major selldown occurred on 21/12/2010 which brought the price to a low of $5.6. Psychology the public is dishearten now and I am sure they are eager to get out of this stock. The next day, 22/12/2010, i saw buying from operators and this might temporarily support the price for a rally.

I replied to Charlie: "There are still no signs of real buying or accumulation for Wilmar yet. You are right that the rally might be window dressing or a technical rebound due to the huge selldown on 21/12/2010. Infact, I saw some buying coming in the next day to start playing for a technical rebound. However, more evidence is needed to support the price as for whether a real rally is coming or just a rebound because of the oversold on 21/12/2010. Also, Wilmar had broken many supports, which require some time to trend higher again."  So what is the strategy moving forward now? If i am trading this stock, i would have bought it between $5.58-$5.63 and my stop loss would be at $5.51-$5.53. Of course, if more evidence of buying appeared in this stock, this would raise a high alert for me to monitor very closely. I have to thank Charlie for posting his article which allowed me to put this stock on my watchlist.

Ronald K

Update: Wilmar today's action (27/12/2010) is bullish and is poised for rally anytime soon.

Capitaland, A good time to Buy?

I was browsing a list of stock for trading opportunities and happened to see Capitaland. I was reading the operations of Capitaland and find that something unusual was mounting in this stock. Capitaland had been sold down a lot and i saw many analysts were unanimously downgrading this stock. Seems like Capitaland was having bad coverages from the media. Inside the world of supply and demand, is Capitaland really a bad stock to continue to get beaten or is it poised for a rally? Are the big operators buying this stock now or are they distributing more?

Looking at the situation, i saw many signs of accumulation taking place. However i also mentioned in my previous posts that anything can happen in the stock market and maybe there might be another maneuver designed by the big operators before a rally should start. The stock market is a deceitful yet lucrative business if you know how to read maneuvered operations, envisaged it and act on it. The lowest risk is always at the danger point and not many people would dare to act on it. That's why the big operators always win big and the last minute public always get slaughtered.

As of writing now, i see that the selling is as of weak strength and not strong enough to bring prices down much further. There were many signs of buying from big operators and their evidence were manifested in the chart. Personally i think Capitaland is poised for a rally soon and this should be a position trade for swing traders. This trade is definitely worth the risk predicated by the risk/reward ratio, however be mentally prepared for another maneuver by the big operators to flush you out first or the rally should start anytime now.

Ronald K

Update: Capitaland today's action (27/12/2010) is normal and is posied for a rally anytime now.

Friday, December 24, 2010

SGX - A Typical Manipulative Operation

I wont be writing about the how the operation took place, see the picture as it speaks more than a thousand words. I particularly wanted to talk about the Significant Market Manipulation that happened in SGX. As for the markup and markdown phases, they are already included in the other posts on my blog.

After the summit point at 10.26 for SGX, big operators began to take profits but not all. The reason was if they took all their profits at one go, prices would definitely have a tendency to fall and they wouldn't be able to trap the public into buying this stock. Trapping the public is a MUST do maneuver that the big operators always use so that they could sell the stock at high price to the public who is willing to purchase from them thinking that the stock would go higher. If they would to take profits at one go and no trapping is designed, then how would they start short sell?

The Significant Market Manipulation was designed by big operators to take profits all at one go. You see, after that 2 days of manipulation and profits taken, prices start to trend up again. You know why? The reason is because public starts to think its cheap and starts to buy, however the big operators are not cashing on it until a attractive price level is reached. You might ask how i know? I will answer you cause i can read their footprints in the chart and i monitor they activity day by day on this stock and until i see real buying, i will definitely follow their action.

To sum up the Significant Market Manipulation in technical terms, the sudden whooping down of prices, after such an advance, suggests the frenzy of activity which, combined with a high and expanding activity increases the market's vulnerability to heavy realizing sales and likewise increases the danger of a general withdrawal of experienced operators who refuse to continue to sell at those levels. It is such conditions as these (created, by large operators who are managing the market) that are detected by floor traders and large operators and recognized as indications of a turning point. This turning point must be checked and determine on it's strength to validate if it will continue to move higher or just a technical rebound. If it is just a technical rebound in the case of SGX, this will add to the supply by getting out of the long positions and taking short positions, thereby not only helping to assure a turning point but also placing oneself in a position to profit by that downward swing.

Ronald K

The Significance of Selling Culmination

Selling Culmination is caused by the panicky unloading of stocks by the public and other weak holders which is matched against buying of experienced operators; the large interests of various stocks who either see an excellent opportunity to purchase at low prices the stocks they sold higher up, or wish to prevent further demoralization by giving the market support temporarily; and short covering by the bears who sense a turn.

Stocks thus become either temporarily or more lastingly lodged in strong hands. An abnormal increase in activity is one of the characteristic symptoms of a selling climax, since supply and demand must both expand sharply under these conditions, but the supply is now of poor, and the demand of good quality; and since the force of supply now will have been exhausted, a technical rally ensues.

Selling culmination had always been one of the best trade setup if you dare to buy when the news is bad and the public is all fear of the market. It is easy to determine selling culmination if you understand the psychology behind it. It takes a lot of courage to press the buy button because nothing looks good when it happened and it is almost like doom's day where you will observed a lot of people in depression mode and they will tell you that they lost a huge amount of money in the market. Moreover from the corporate side, you will hear news like companies bankrupted, collapsed, declining profits etc..The best way to buy at really low prices is refrained yourself from listening to the news because it will psychology frightened you and emotionally defeat your daring guts. I told you, the stock market is not designed to allow you to make money.

Ronald K

Thursday, December 23, 2010

APPLE, more upside?

I was looking at APPLE and decided to do a simple write up on it. APPLE had been on a steady uptrend since early Sep this year and of course the question is when will it retrace? Looking at the chart, APPLE is currently in a ranging mode where there had been a dearth of demand. No real demand came in since early Dec and the market had a problem moving higher with prices cluttering against each other. Buyers had difficulty pushing the prices higher with prices only moving in a small fraction after all their effort from mid Dec till now, I would say the big operators had already taken most of their profits and looking to bring this stock down. APPLE could be in a distribution phase now where big operators are looking to sell the stock at high price to you and if you as an investor thinks that the stock is going higher, you would buy it from them.

Now the question is, is this ranging a further upside or a downward spiral. Looking at the whole operation and assuming that i correctly read the minds of the big operators, they should be bringing this stock down since there are so much supply above. However, more evidence is needed to support this statement. Anything can happen in the stock market and i could be wrong. For now, i think APPLE has reached it's potential on the upside and its time for the stock to retrace so that more purchases could be made.

Watch out APPLE tonight as it will soon reveal its true color on whether a further upside should continue or strong selling is entering to flush this stock down. A trade could be taken last night or better tonight, if the signal is palpable.

Ronald K

BAC - Trading Range and their opportunity

Last week, i blogged about BAC and this morning when i saw the price, i knew that it is constantly in a uptrend and marching towards a new high. BAC had been in a trading range since the day it broke out. Trading range offered a very deep insight of how big operators work. These trading range could be absorption for the market to move higher or absorption for it to move lower. Well, trading range is formed because of the heavy selling that took place earlier on and the big operators would need to slowly buy them back bits by bits and vice versa. This process sometimes take a long time and it tire out the public. Trading range is also the transferring of stocks from the hands of the weak holders to the strong holders. When trading range appears, public is always saying that oh the market is not moving higher/lower and is in the trading zone, not much money could be make. I totally agree with that, however if you understand trading ranges and how to spot them to your advantage, you could benefit handsomely from it.

See the oval area that i circled? I know these trading range is absorption for the market to trend higher. I am a vivid fan of trading range because it offers such a huge opportunity for big money to be made. I had been practicing my skill on trading range and i agree sometimes it is really difficult to determine. However, this time round for BAC, it is very easy to spot. Prices are congested into one confine area for a further breakout to happen. Psychologically, the big operators are making this stock to appear that it has lose its strength and starting to turn weak. The reason for doing so is to get you thinking that this stock is going to tank and luring you to sell so that they will buy more and further push up the price. There will be a time when the big operators would encourage the public to buy and that is time where prices are sky high and the public will be trapped where greed and fear starts to set in. That's where the big operators would be slowly unwinding their holdings and start taking hidden profits, however this had not appeared in BAC yet.

For those who had purchased BAC, good luck, it is on it's way to cloud 9. Saw the closing price for the last 2 days? It went up almost 70cents! For today, I presume it will be in a absorption mode again for it to trend higher, which is to say that BAC needs to take a break before it will continue its uptrend.

Ronald K

Wednesday, December 22, 2010

Genting Singapore

Since Genting Singapore is a heavily traded stock in the Exchange, i decided to take a look at the operative actions of this stock. As of today, i have not seen any real buying coming in to try pushing the market higher. However, anything can happen. It might come tomorrow or it might come in a few days time? For now, i had posted my analysis in a screenshot where you can view how the operation progressed so far. As usual, there is no buy/sell call and there will come time where i see a significant signal and take a position.

Update: The day came when buying entered the market. My analysis had to be forgo and Genting is definitely a buy today (28/12/2010)

Ronald K

HS Strong Rebound?

I was working late last night and didn't have a chance to see HangSeng chart until this morning. I saw something unusual, it seems that HS is due for a strong rebound with big operators loading in. Its suspicious, but its true. Could this be a strong rebound or a weak one? I don't know, more evidence is needed to support it. See the oval circled area, that's where big operators are loading in. HS had been sold down since Nov 8th, so i presume prices looked attractive now for a short rally maybe? The market doesn't always spiral down or constantly moving up, there will always be rallies and reactions as the forces of supply and demand are in work. For now, we watch and trade with the activity.

Ronald K

Tuesday, December 21, 2010

STI Update 2 - Is STI continuing its rally ?

As mentioned in my earlier post, STI is due for the rally and the rally should be a weak one. How do i know? See the circled area on the STI chart, that tells me its a weak rally. Of course, i could be wrong. I was monitoring STI today and it appeared that there was no strong demand for the market to trend higher. For the whole day, the market had been mostly retail public buying and short coverings. I was also twitting to let those who follow me to take a position or watch the market with me. Two tweets were posted, one in the morning and another one around 2 hours before the market close.

I was watching the intraday chart and i saw a lot of retail punters we buying up, and not much big operators activity going on. There was just lack of interest in the market, everyone is in the shopping/holiday mood for Christmas and activity in the market was just listless. For now, we watch what will unfold tomorrow. Will it continue to trend higher or a sell down persists? You decide yours as i had already decided on mine.

As i am typing this post, the Euro is green. I just want to make a point. The best way to learn this market is to treat every market individual. It doesn't mean that if Dow/Euro/Hang Seng is green, STI should be green too. That's just a myth. Some may disagree with me but that is fine. Understanding the inter-relationship between supply and demand and it will bring your understanding and knowledge to the next level. Don't limit yourself to the myth, be like a parachute, open up and absorb the truth in trading. Remember, no limitation is the best limitation and you wont go wrong with that.

Ronald K

Supply vs Demand

I am constantly being approached on how to the read the fine lines between supply and demand. Well, i would say it is not an easy task because you would need to read the volume transactions to determine whether the buyers bought more or sellers managed to sell more. There are a lot of different types of volume indicators, like volume weighted average price, price and volume trend, volume oscillator, volume STD, etc, so which one is the best? Well it really depends on individual but i use none of those indicators for intraday trading or position trading. The one that i find it effective is the trade summary and the total transacted volume per day. These two tools are sufficient for me for my analysis. I used to draw trendlines, however i think it is very subjective. One could draw many lines but that doesn't mean he/she is accurate. So the question is which trendline is correct and which trendline is wrong. There is no answer for it and only the amount of money you made by those trendlines will determine its accuracy. I decided to give up everything and the best tool to beat the market is by understanding supply and demand and what the big operators are trying to do. Don't limit yourself to any one tool if you are taught to use that tool before. No limitation is the best limitation.

See the Genting chart above. These are the phases of supply and demand. I had not included any psychology aspect in it, but this is the way how market works.As for the specific details on the buy/sell call, i will not be posting here as that will induce much more controversy. As for how i know there is hidden selling, weak rally, etc, that's based on understand the minds of the big operators and how they operate this market. For those who knows me personally, they know i am accurate in my forecasting about 70-80% of the time.

Ronald K

Monday, December 20, 2010

Operators unloading on DJIA?

On 17th Dec 2010, looking at the closing price on DJIA, I believe some large operators are quietly unloading long postions on strength and actively taking profits. Such price tightness often precedes a sharp move. However, the longer the market stands motionless, the more suspicious the situation becomes. Transactions took place from the strong holders to the weak puclic holders. Public was buying thinking that the market is going higher and operators are constantly feeding them their offers. The market may be due for a correction before further rally can continue. Prices might be too high to sustain longer and therefore large operators would need to bring it down before they are allowed to buy more. There is no way that operators would continually buy at high prices unless the market condition favours the bulls. The following week's action shall verify this belief. Of course, i could be wrong, for now we wait and watch.

Ronald K

MapleTree Industrial Trust, Accumulation on going?

                                           Insider Activities

                                          Historical Prices

                                           Volume Distribution Chart

I had free trail access to ShareInvestor web portal and i navigated around to search for specific information that would be useful for trading. I would say it is a pretty decent, simple yet organized portal. I highly recommend this site for people who needs a lot of useful filtered information compared to some others which information is scattered around disorganized and difficult to extract.

I was specifically looking for this stock called MapleTree Industrial Trust. Months back, when this stock was listed in the Exchange, i saw massive selldown and distribution and of course that interest me. I had no idea who was selling or why did they sold, but i guess the IPO price was $0.93 and the trading price during the opening day was between $1.15-$1.20 and profit could be made, so of course as a normal man, we look to sell to cash in profit first and once profits is made, we look to buy in again to make more money. That's the mentality. Today, i managed to dig in further and discovered that a lot of insiders are selling as shown on the screenshot above. It shows the company which is selling and the number of shares traded. That proves my point on the mentality of the crowd on the first day of massive selling on Oct 21st 2010.

After the selling for the first few days, i happen to know a friend who was also buying this stock and i told him that MapleTree is now in a accumulation phase where big operators are buying. Although the price is very discouraging, that is the whole purpose of the campaign where big operators are deliberately trying to shift your focus to some other stocks. However, this stock had never been off my eyes and i am watching it everyday. Two month ago, i told my friend that this stock is building a good news and the news will be out soon. I don't know what the news will be, but i know it will be good news cause i managed to read the minds of the big operators and how they are operating this stock. See the historical prices of MapleTree and those that i circled. Those volumes are depressing volume for the public yet very encouraging volume for the big operators. These are the volumes of good news in the making.

Today, i can firmly say that MapleTree is in a accumulation phase in due of a strong upmove. I had already told that to my friend two months back and the more i see the progression of this stock, the more i am confident of this silent upmove. Look at the volume distribution graphical chart, you can see that more people and loading up this stock as compared to people selling it. This is a strong indication of accumulation. Before i managed to login to ShareInvestor, the only way to determine the buying and selling is by looking at the bar charts, and today all the homework that i did months back together with all evidences and facts that ShareInvestor provides point this stock towards a positive outlook. Have you got yours?

Ronald K

Sunday, December 19, 2010

Hang Seng Index Direction Dec 19th 2010

I was surprised when i saw the Hang Seng chart when compared to the STI chart that was posted earlier. HSI had already revealed major signs of weakness on Nov 29 2010 circled in oval. The rally was checked three days later and it lacked of strength to go higher. Simply put it, the rally was mostly short coverings and the big operators are cashing in profits. HSI is expected to continue to resume downwards until further evidence of real buying appears.

On the other hand, see the big oval circle. That's what real buying looks like and i managed to detect it when it happened during the May period. The strong rally from May is what i call a panic public slaughtering process and the transfer of shares from the hands of weak holders to strong holders. During that period, the market was in a liquidation mode where any rally was almost short lived and the moment HSI broked the 19431 support, the public thought that the market would continue to trend lower and panicking took place that caused the public to start liquidating their holdings. This is an elusive maneuver designed by the big operators where their real intention is to buy instead of sell more. If you ask how i know, i will say start learning to read the market bar by bar and understanding what the big boys are thinking, you will then gain extra knowledge and new understanding. Of course, sometimes i will go wrong, but so far, my understanding had never failed me.

I am constantly learning, challenged and gaining new knowledge as i practice reading charts everyday. I feel that knowledge has to be improved, challenged, and increased constantly, or it vanishes.

Ronald K

STI Direction Dec 19th 2010

I was screening some of my stocks and decided to do a write up on the Singapore Straits Time Index. Looking at the whole manipulative operation from the big operators, the short term STI should be expecting a rally. Based on my analysis and experience, this rally should be a weak one. Maybe its due the some short coverings and profit takings or maybe it is due to those fund managers are currently in holiday or maybe it is due to some window dressing to make the index looks nicer. We don't know the real reason, but based on last Friday's closing, i am holding my view that STI is not a time to buy yet. Profits can be made but the risk and reward ratio doesn't justify the risk. There are still overhanging supply above resistance levels and for the market to move higher, more evidence is needed to justify the buying action.

As i mentioned in my earlier posts, i don't use indicators or complicated trendlines. I judge the market based on every bar and the psychology behind it. The 3010-3015 mark is an important level that i will be watching for. It is not any support or resistance level, but the level that will check the buying/selling strength of the big operators. If it ever hits that level, my eyes will be wide open to judge the strength that appears or persistent weakness which will continue to drive the market down. 

The current support and resistance level shown on the chart is at 3119 and 3218 respectively. For now, we shall wait for next Monday's action for further verification.

Ronald K

Friday, December 17, 2010

Real Buying vs Artificial Buying

How do you profit from the market if you can't track big operators' action? Personally, i think that the stock market is a big deceptive scam yet a lucrative business. A lot of work is done to flush and tire out weak holders to make sure they profit nothing or profit a little instead of allowing them to ride the entire trend and cash in the big bucks.

See the chart above. See the ovals and phases i indicated, from real buying to markdown. All of these are not designed for retail punters to make money. During the real buying phase as you can see, the prices is neither up nor down. Not much money can be made from it. The purpose of this phase was to keep out retail punters so that they will shift their focus into something else. However, if you understand the mindset of the big operators like i do, they were secretly buying because they had some non public information that could allow them to profit handsomely from the stock.

True enough good news was released and prices start to markup. During this phases, the big operators created a huge amount of activity to entice and lured the public into this stock, so that the public will start buying which pushed the prices further up. So for example, if the big operators bought at 1.28, the public would help them to push the prices further to 1.5 then to 1.8 which was their final objective. During the whole processes of pushing, the big operators were also at the same time taking profits which was hidden from you. By taking profit, they were distributing/exchanging the stocks they bought at 1.28 to those who were willing to purchase higher from them at 1.5 and 1.8. That's where the public and mass came in thinking that this stock was going higher. Of course, i could read their mind that the bubble is about to burst. Psychologically, think about this, if you could buy the stock at 1.28 and now it had risen to 1.5, you are emotionally fed up. You must be thinking that you could have got it at 1.28. You hoped and prayed for a reaction and there was none and you were afraid that you might be buying at the very high point where the bubble was about to burst. So you wait and see.

So the stock dipped from 1.85 to 1.73, and that's where you thought its time to buy and you started buying and hope that the stock would continue to fly. The stock dipped a little next day and rally for two more days. Greed and fear sets in and you hoped it will go higher before releasing. The stock stopped moving higher and you are disappointed, so you continued to pray and hope. This is a phases i call artificial buying where big operators created a maneuver to mislead the public that the stock is trending higher. During this phases, the big operators had taken all their profits and started short selling, while the public still prayed and hoped that the price will trend higher.

A lot of buyers were trapped and boom, the stock spiral down. The public lost confidence in this stock and were very depressed. Margin calls, force selling start to set in and hard earned money was lost. During the selling phase it created a desperate situation where the public had to sell at all cost so that their lost was minimized and that's where the big operators started buying again because of the cheap prices offered during the panic selling and the cycle goes on.

I hope I offered you the insights of how an operation starts and ends, so you are able to profit from them the next time.

Ronald K

Thursday, December 16, 2010

News, Rumors and why the Public always loses

Just to show my point that why the public is constantly feeding hard earned money to Wall Street. On July 15th, 2010, JP Morgan earnings result was released and it beat estimates. Shouldn't the price go higher instead since the news is good? If you would bought the stock on that day and hold till the next 2 days, you would be emotionally drained and depressed and wondering did they really beat estimates?

The bad news was this earnings report was already out way before the actual date on July 15th. Big operators were already buying the stock up and started to take profit on the day the news was released. The psychology was simple, the big operators knew that on that day when the news would to be released, there would be a huge load of investors, retail punters buying this stock, so it would be great if they could unload some of their holdings and cash in some profits. There is always a good old saying "buy on rumors and sell on news" and i think this saying holds very true. The price action before the news was released already factored in that the earning report will be good. You would be asking how those people know that its earnings would be good? Well, I don't really care if they know if or not, watch out for unusual activity to the price is the key. Follow the action of the big operators and you won't go wrong.

If you had lost money buying based on news, sit down and think about it. Follow effective action with quiet reflection. From the quiet reflection will come even more effective action.

Ronald K

Bank of America, A Case Study

Last night i was at a company event and i had a chance to meet up one of my friends and we talked about the stock market. He told me he lost about $25000 in the stock market trading based on news and i felt sorry for him. $25000 is a lot of money if you ask me and if i were to use it, i will trade wisely and invest mindfully. My trading style does not involve in reading any news, and yes, i read none of the news in the media. Those news that i read, it is only for reading leisure to know what is happening around the world and will never be used as one of my trading basis point. I asked him, since he trades on news, what news will determine his entry/exit point and since there are so many news published everyday, which news will be the deciding factor to execute a trade. He could not answer. Remember the best news is no news and treat all news as bad news. If you can understand that, then you are on a highway to success. We were chatting and we mentioned about Bank of America stock and so i decided to give him a lift and study the big boys operation of this stock.

1. BofA had been sold down quite heavily since it reached a high of $19.48. I wont go into details on what happen during the selldown phase but instead channeling my focus to the highlighted areas. BofA found it's first support around the price of $12.15 and that's where the first sign of buying was detected. Big operators were buying this stock around at this price. The psychology was simple, the stock was sold down heavily and they felt that the price was a bargain then so buying took place, however the condition was still not ready for a big up move yet. So, the stock went up till $13.87 and starts to range.

2. Ranging is a difficult thing to decipher as it can move up or it can move down. From my years of experience, i was able to guess that this trading range was going to be a flush down and so it happened accordingly as to what i predicted. This trading range was a preparation to redistribute more stock so that it looked weak, breakdown and produce panic selling. You might ask, so if the price was going down further, what happened to those stock bought at $12.15 by the big operators. Well, some of them took all their profits around the $13.50 range and some of them were keeping it to buy more to average up their holdings. The big operators are smart guys, they knew what was the target price they were driving the price to.

3. And so true enough, the panic selling sets in and the share price plunged further. A lot of people were looking to sell and get out of this stock as they were afraid it might go lower and cost them more. Psychologically, this panic selling maneuver is created to flush out the weak holders so that the big operators can force those who were still holding onto this stock to liquidate. Therefore now, the stock is transferred from the hands of the weak holders to the strong holders, and that is the main objective. Think about this, wouldn't you liquidate if you had bought the stock at let's say $12.50 and now the price is $11.01 and you are not sure if it might go lower? That's the whole idea, get you into a panic stage, so that you sell and they buy.

4. Saw them buying the second time? They revealed their true colors. If that whole panic selling was real selling, why would they buy back again? This time round they were still not convinced that the weak holders totally flushed out. There might be some leftovers. 

5. So they created another stage where the selling was not so strong, but emotionally stressful enough for you to liquidate your holdings. Moreover, the price dip further below $11.01 and reached $10.91. By this time, a lot of bad news were in the press. Analyst started to downgrade this stock and the public seemed to be disappointed with the company. I saw the CFO and some directors were also selling this stock at $10.95. It was this time that the stock was going to sky rock.

6. The reason i said this stock was going to sky rock was because it went into a new low and did not dip lower. The selling was not so strong as compared to the first panic selling. The fact that it reached 10.91 was something to be on alert. The next few days of action was something to watch out for. If it continues to dip lower then all the analysis earlier on should be erased. However, if it holds, this might be accumulation for a breakout.

7. The stock did not dip and instead there was an influx of fresh demand. This was the time to buy as this stock had been depressed 2-3 times and the big operators decided that this enough as all those who panic sold had sold off and its time to mark the stock up.

8. And so you see today, prices were up. BAC is definitely on its highway to record new high and by that time good news will set in and you will see the media advertising about it.

9. Today prices were in the range where we first saw demand came in a point 1. Big boys are checking to see  if the selling is still strong around that area. If it is strong, they are willing to absorb the selling and it might take some time, else the stock is poised for a further up move. Observe the rectangle drawn, that might serve as a long accumulation area on a wider view of a bigger trend. What it means is instead of those points highlighted in ovals, the whole rectangle serves as an area of accumulation for a bigger up move. And the story goes on.

By understanding supply and demand, market psychology, we are able to see the footprints of the big operators, follow them and profit from them. :)

Ronald K

Wednesday, December 15, 2010

IDEH big operators selling?

IDEH revealed big operators trading activity, so is it buying or selling? IDEH (a company which specialized in parking management) is a penny stock listed in the NASDAQ OTCBB which stands for Over the Counter Bulletin Board.

Over-the-counter (OTC) or off-exchange trading is to trade financial instruments such as stocks, bonds, commodities or derivatives directly between two parties. It is contrasted with exchange trading, which occurs via facilities constructed for the purpose of trading (i.e., exchanges), such as futures exchanges or stock exchanges.

Well, it doesn't matter where the stock is listed, what we are looking for are big operators activities generated from the trading session which we can profit from.

See the big operators starts selling way before the market even opens? That's normal since a substantial amount of money could be made with the amount of shares owned by the big operators. However there are many other reasons for big operators to sell. They may need money to buy a new cat or house, or to send a kid to college. For some founding executives, the stock holding in the company they helped build may represent the vast majority of their net worth. In such cases it’s just prudent for them to diversify assets.

See the above chart. See the red circle on the left. That's mostly big operators selling to make fast money since the big operators are able to get a good price before the market even opens. There is no buy/sell signals here and we wait. Most individuals buy and sell their stocks in the open market with the bid and asked price for the shares and execute the trades in the open market. But big operators have numerous other methods for acquiring or disposing of shares such as private placement, exercise of options. Some of the transactions are not in the open market and therefore aren’t registered in the trading volume and other statistics. This is just common sense that if big operators can buy their company’s shares at certain percent below the market value directly from the company without paying commissions and trading costs, they can still make a nice profit even if the stock price moves only sideways over the next year. Such an advantage obviously influences big operators’ risk/reward calculations and their decision of whether to buy.

Next, see the green circle. That's where supply and demand are in equilibrium, the bulls and bears have yet to determine who is going to be the winner. The psychology here is this, since so many big operators are selling, the trading range resembles absorption. What this means is selling is still taking place however the buying power is stronger to hold the stock and not let the stock fall further. The activity here is dull, there is no excitement in terms of price movement. This is created to depress the public and make the stock look weak. Remember the stock market is insidious, it is not created for you to make money. It is created for the greeds and fears who will rush in at the last minute to lose their money. The big operators are not here to benefit you, instead they are here to make you to remove this stock from your watchlist. The general public are herds and have no relationship with the big boys, so why should they let you benefit from them?

Lastly, look at the red circle to the right. That's buying! Finally the big operators are showing their true colors. The are in to push the stock higher. Although the price have not breakout of the trading range or breakup of the first red circle selldown bar, we should just close one eye and buy as this is the lowest risk with the greatest return. Remember the lowest risk is always at the danger point. Why buy at breakout when you can buy near the low at support? If this stock did indeed breakup, your profit is locked in already compared to those who will be buying at breakout price. Some may ask, how do i know if that's real buying, and the whole trading range is buying as compared to selling. I can only tell you i look closely at the activity of each bar and their actions. Of course i might be wrong, but based on my experience, this is accumulation.

In my opinion, this stock should fly soon and breakout of the trading range. Once that happens, the big operators will then make this stock look active with lots of activity/noise generated to attract the general public to buy and that's where the big boys starts unloading bits by bits.

Ronald K

Market Breadth and Human Psychology

Hello World, this is my first posting on the stock market mechanics. I created this blog not to teach people how to trade nor giving tips, but instead revealing the true insight on how investment advisors, fund managers, insiders, portfolio managers, etc actually operate the stock market and how their actions can create an immense impact on the stock prices.

Giving tips and teaching people how to trade will make you money, but true education and understanding the minds of the "big boys" can bring you wealth. Follow the footstep of their actions and your risk is reduced to the lowest. It is not always easy to guess what they are trying to do, be it moving the market up/down, however all their traces can be found in the chart. The market is made up of minds of many men and if you can read their mind, the winning percentage is on your side. This will never be changed even for the next hundred years because every human has emotions, fear and greed embedded in them.

It takes time to master and learn the skill, and maybe many losing trades to get it right. Unless you are prepared for a roller coaster ride or please do not attempt to trade without knowing the background action. There is no secret formula in the stock market, just understanding supply and demand, accumulation and distribution, re-accumulation and redistribution phases will get you there. No indicators are as accurate as reading the chart bar by bar. Based on my years of experience, all indicators are lagging indicators and they don't give instant buy low sell high / sell high buy low signal. Worst of all they are mathematical calculations of certain formula to derive the indicators and they don't tell you where and what prices big boy are purchasing. They are useful for investors and for people who holds a longer trend and view of the broader market, but definitely not for short term swing/intraday traders who needs an instant answer if any unloading or purchasing are taking place. What most of us is trying to achieve is to put the winning percentage on our side with the lowest risk, isn't it?

If you really want to be a master of an art, technical knowledge is not enough. You will have to transcend the technique so that the art becomes an 'artless art' growing out of the unconscious and when that happens, nothing can stop you from reading the fine lines between supply and demand!

Ronald K