I could not decide if today was the pullback that we were waiting for, because there was numerous times whereby the market quivered, only to strengthen back on renewed buying again. STI was trading within a relatively tight trading from between 1,827 and 1,788. Closing at 1,820, STI gained another 17 points today on a second day of similarly high volume. The turnover was 1.84 billion shares worth $1.62 billion.
For the most of today, STI was basically tracking the strength from the regional markets closely. There were several times when STI went negative, only to attract more buyers into the market. This is an encouraging sign because it has been a long time since I last experienced such a steady market. For the last few months, people were basically playing hit-and-runs. Now it seems like there are some serious buying going on. Though this might mean bad news for those who miss the low point entirely, the truth is – nobody got the actual low too, other than the market-makers. It is more about how low we managed to get or will be able to get, but more importantly, I will see things as whether we will make profits or good investments at the end of the day or not. Clients who believe and follow my advice and recommendations will understand for themselves how much risk I have minimized for them already, especially when trading short to mid-term counters.
Right now, I understand that for the price conscious investors, seeing how "high" the prices now will make you feel heartache because they are a far cry from just 2 weeks ago. I agree too. But I just like to be realistic as well to remind everyone that at current levels, most of them especially the blue chips, are still trading at their 3 to 5-year lows exactly during the SARs period. We never know maybe another 6 months down the road, the prices will go even higher again. So as long as you have a 3-5 year investment horizon, start nibbling every time the market pulls back.
If you are a trader, basically there is no issue here because we will be able to trade as long as there is volatility in the market, regardless of whether its contrarian trading or trend trading.
Chart wise, STI looks quite set to go towards the 1,880 gap soon. For the traders, that is the region whereby you should just take profits and wait for new confirmation signs of possible upside before re-entering the market again. I am not too sure if the market can continue to rally should STI crosses above 1,880 because if such a case happens, our previous view that the recovery will be a U-shape one will become invalid.
The strategic support levels for us to buy on pullbacks are at 1,780 and
1,730.
Safe-haven stocks:
I notice that today the defensive stocks were sold down particularly hard as the market consolidated briefly. As like what I mentioned before, the institutions are offloading their defensive stocks to get more capital to play up the markets. For the contrarian traders, having missed the ride for the higher beta stocks, we have to start collecting the safe-haven stocks as they get sold down badly.
Note: Kindly read my first post, About Myself, on my disclaimer. Thank you.
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