Friday, March 4, 2011
Double bottom for DJI
A double bottom has formed for DJI (easier to be distinguished on H4). Bullish break above the neckline will see it retesting 12400.
A horse’s odds of winning : Charlie Munger
Found this article by Charlie Munger online. Another wise man. Interesting analogy.
“A lighter, sleeker, well-trained horse with a stellar record is very likely to outrun a heavy, out-of-shape pony with a poor track record. Even a novice can understand this. But if the damn odds are like this, the inferior horse’s odds of winning are 100:1, and the better horse may be around 3:2 odds of finishing first.
"So by using simple mathematics, it is anything but simple to comprehend which horse is a better vehicle for making some money. The same can be said for share prices and market volatility... so it’s also difficult to outsmart the stock market most of the time.”
To Munger, the so-called “odds” are the price of doing business.
"If you stop to think about it, the racetrack and the odds you face when you place a bet are, in fact, a market. If more people play the ponies, the more popular picks will see their odds go up accordingly. Just like a stock, the more people buy its shares, the higher its valuation climbs. This is the nature of share prices – the more they get bought, the hotter they get. Some call this “overheating.”
So before placing a bet – or buying a share – buyers must first take into account both the underlying fundamentals of the potential investment as well as the value of the target at the current price. If the price exceeds the value, then it should be avoided. At the racetrack, when people approach the counter single file and place their bets, the odds increase steadily for the more popular choices and reflect a more long-term position, if you will.
However, if everyone places their wager within a short period of time, the odds quickly go through the roof for the most sought-after fillies, just as when there is a surge in orders for a particular stock.
Munger observes that the successful long-term investor fully understands his stock’s (or mare’s) core capabilities and potential, and he or she also very likely has a fundamental understanding of both mathematical principles as well as having a good head on his or her shoulders. And his disciples will do well to remember that a horse with a 50% chance of winning any race will likely have odds of 3:1 given it.
This, of course, makes for a great deal of difficulty.Munger said: "Some 98% of the time that we are 'watching' the market, we are in fact just waiting for something to happen and have no idea which direction things are headed. Only when we deeply ponder the relative price and value of a particular counter at any given time can we begin to see advantages, and that is when opportunities suddenly land in our lap."
“A lighter, sleeker, well-trained horse with a stellar record is very likely to outrun a heavy, out-of-shape pony with a poor track record. Even a novice can understand this. But if the damn odds are like this, the inferior horse’s odds of winning are 100:1, and the better horse may be around 3:2 odds of finishing first.
"So by using simple mathematics, it is anything but simple to comprehend which horse is a better vehicle for making some money. The same can be said for share prices and market volatility... so it’s also difficult to outsmart the stock market most of the time.”
To Munger, the so-called “odds” are the price of doing business.
"If you stop to think about it, the racetrack and the odds you face when you place a bet are, in fact, a market. If more people play the ponies, the more popular picks will see their odds go up accordingly. Just like a stock, the more people buy its shares, the higher its valuation climbs. This is the nature of share prices – the more they get bought, the hotter they get. Some call this “overheating.”
So before placing a bet – or buying a share – buyers must first take into account both the underlying fundamentals of the potential investment as well as the value of the target at the current price. If the price exceeds the value, then it should be avoided. At the racetrack, when people approach the counter single file and place their bets, the odds increase steadily for the more popular choices and reflect a more long-term position, if you will.
However, if everyone places their wager within a short period of time, the odds quickly go through the roof for the most sought-after fillies, just as when there is a surge in orders for a particular stock.
Munger observes that the successful long-term investor fully understands his stock’s (or mare’s) core capabilities and potential, and he or she also very likely has a fundamental understanding of both mathematical principles as well as having a good head on his or her shoulders. And his disciples will do well to remember that a horse with a 50% chance of winning any race will likely have odds of 3:1 given it.
This, of course, makes for a great deal of difficulty.Munger said: "Some 98% of the time that we are 'watching' the market, we are in fact just waiting for something to happen and have no idea which direction things are headed. Only when we deeply ponder the relative price and value of a particular counter at any given time can we begin to see advantages, and that is when opportunities suddenly land in our lap."
Resumption of uptrend for GBPNZD - Part 1
GBPNZD has resumed its uptrend after retracing.. in line with strengthening of EUR after ECB president made the rate increase comment, boosted by weakening of NZD. Currently attempting to break out of blue channel and possibly forming a much steeper green channel. See previous post on gbpnzd
Thursday, March 3, 2011
Short signal for GBPNZD
Toppish price action near 2.2000 at top of channel. This fellow likely to retrace down before going up.
Wednesday, March 2, 2011
Nice Channel formed for DJI Part 3
Dow has suddenly decided to U-turn and broke out of the uptrend channel. Will be looking out for potential chart pattern forming. A severe correction below 12000 level will see the bear taking control, especially if the oil prices keep creeping up by the day as the Mideast tension worsens and potential spreading of the crisis to other oil producing countries. See Part 2
Prime Minister Key Made My Day !!! Thank You !!!
Made a trade on gbpnzd based on 1. GBP will be bullish as market prices in future rate increase in the near term. 2. Speculation NZ will cut rates to alleviate the damages done by the earthquake to the economy. So looking to long this pair. Previous week GBP weaken and thus looking out for bottom out signal, same as per gbpjpy. Double bottom seen on H1, entry when PWP and neckline of pattern broken, as stock market begin the week bullish. Took profit manually yesterday for 250 pips as dow market begins to turn down again. Remaining position was triggered for 400 pips this morning. Kudos to Prime Minister Key for making the rate cut statement !!!!
Tuesday, March 1, 2011
Mirror Image : Trading the highly correlated
As USDJPY bottom out from last week selloff, I am of the opinion it will be worthwhile looking for LONG trade, keeping in mind JPY denominated pairs will continue their uptrend. Of these charts, GBPJPY has been exhibiting high correlation with USDJPY chart pattern. Swing trade executed on GBPJPY just by studying behavior of USDJPYcan be very lucrative.
Insider Trading ???
| This guy who wrote the below article is spot on. How many times have we seen such unusual share price and volume movement, not just in Singapore, but in all the exchanges all over the world? The financial world is fueled by HUMAN GREED, so no matter how perfect and stringent the system is, there is no running away from it. | |
| "Unusual share price movements need looking into I REFER to the report 'Audit woes bedevil China Hongxing, Hongwei' (BT, Feb 28) which once again highlights the corporate governance and accounting-related issues that are unfortunately all too common for Chinese companies listed on the Singapore Exchange. As part of their investigation of possible breaches in laws, regulations and listing rules, regulators should also examine the share trading in these companies surrounding the announcement of the significant audit issues. In the case of China Hongxing Sports, the company requested for a trading halt on Feb 22, and announced the audit issues after the close of trading on Feb 25, followed shortly by a request for a trading suspension. The company's shares started showing significant price and volume changes before that. For the one month before the trading halt, its shares had traded around a price range of between 15.5 and 16.5 cents. On Feb 18, the closing share price was 15 cents with 8.2 million shares traded. On Feb 21, the closing share price was 14 cents with 38.2 million shares traded. By Feb 22, before the trading halt, the price had dropped to 11.5 cents with 86.3 million shares traded. Hongwei showed similar trends prior to the announcement of the audit issues. It requested for a trading halt on Feb 24 and announced the audit issues after the close of trading on Feb 26. For the one month before the trading halt, its shares had traded around a price range of between 25.5 and 27 cents. On Feb 18, its closing share price was 25.5 cents. By the time of the trading halt, this had dropped to 18.5 cents. The enforcement of insider trading laws under the Securities and Futures Act has improved considerably in Singapore in recent years, after the change of regulatory regime and the introduction of civil penalties. However, it is disconcerting to find such unusual price movements which seem to suggest that price-sensitive information was available to certain investors before it was publicly announced, and certain investors were able to sell their shares before the public announcements. I hope the regulatory authorities will investigate fully these and other similar unusual price movements and take any necessary action." |
Monday, February 28, 2011
How True .. how true.. Warren Buffet.. Words of Wisdom...
Warren Buffet issued his letter to shareholders last weekend. 2 paragraphs which strike my heart.... How True they are... These shall be constant reminders for me.
"Commentators today often talk of 'great uncertainty.' But think back, for example, to December 6, 1941, October 18, 1987 and September 10, 2001," Buffett wrote, referring to the days before the Pearl Harbor attack, a stock market crash and terrorist attacks in the U.S. "No matter how serene today may be, tomorrow is always uncertain. Don't let that reality spook you."
"When leverage works, it magnifies your gains. Your spouse thinks you're clever, and your neighbors get envious. But leverage is addictive," Buffett said. "Once having profited from its wonders, very few people retreat to more conservative practices."
"Commentators today often talk of 'great uncertainty.' But think back, for example, to December 6, 1941, October 18, 1987 and September 10, 2001," Buffett wrote, referring to the days before the Pearl Harbor attack, a stock market crash and terrorist attacks in the U.S. "No matter how serene today may be, tomorrow is always uncertain. Don't let that reality spook you."
"When leverage works, it magnifies your gains. Your spouse thinks you're clever, and your neighbors get envious. But leverage is addictive," Buffett said. "Once having profited from its wonders, very few people retreat to more conservative practices."
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