Wednesday, August 31, 2011

Those who know do't talk, those who talk don't know



From Chapter 7 of Stanley Kroll's 'Dragons and Bulls' book.

The title of this chapter is an old, respected truism in Wall Street. I first
heard it from an experienced stock trader over 50 years ago when I was
a neophyte Merrill Lynch account executive. It has been part of my
professional strategy since I first learned it, for it is one of the few
significant maxims in an industry where irrelevant slogans and sayings
abound.
lt's too bad that not enough financial operators practise this
strategy. It could help traders and brokers in their speculative opera-
tions, especially in Asia, where so much of what passes for stock and
commodity analysis depends largely on uninformed tips, rumours,
stories and outright gossip. I would always put informed technical
analysis over unconfirmed tips and stories.
I had an interesting experience recently, which exemplifies this
point. The research director of a large Hong Kong investment firm
showed me a price chart of some stock and asked for my opinion. 'If
you are a buyer or a seller of this stock,' he asked me, 'how far would
you project the stock to move?' My reply was simple and direct. 'I don't
know.'
The gentleman was persistent and repeated the question. My reply
was the same, but this time l answered in greater detail. 'I don't think
that anyone could give you a competent answer, merely on the basis of
a single price chart with no further information or technical studies.'
Then I proceeded to suggest what additional information and studies I
would want to examine before even attempting to analyse the chart.
'That's extremely interesting,' he replied. 'Do you know that I've
shown the same chart to at least six other brokers and analysts, and
every one of them gave me a definite answer with specific buy and sell
points and even price objectives. And all of them combined would
orobablv have less vears of trading experience than you have.'
All I could say was, 'That's not surprising; it's what 1 would have
ex ed.'
$2" Livermore had a similar experience some 70 years ago. This is
how he described it:
'I was at a dinner party one evening and was seated next to a
man who had heard that I was in Wall Street. Ar one point in
the conversation, he asked if I could tell him how one could
make some quick money in stocks. Without answering the
question, I asked what business he was in, and he said that he
was a surgeon. I then asked if he could tell me how one could
make some quick money in surgery.'
We are continuously forced to come to grips with the unique
relationship between market news (stories, gossip and tips) versus
actual market action. I-low many times has a company announce some
very bullish piece of news - an increase in the dividend, improved
earnings or some acquisition — and the public goes charging in to buy
the stock? Then, after a few days of relative strength, the stock is in full
retreat with all the recent buyers, having bought on the bullish news,
sitting with big losses. How could that be? Wasn't the news very
bullish? Perhaps the answer lies in the fact that the stock had already
been going up for some time, with the 'insiders,' who knew about the
impending announcement, having been big buyers of the stock before
any bullish news was known. Then, the announcement was made and
the public rushed in to buy. Who do you think supplied the stock for
this (uninformed) buying? None other than the insiders, who were
accumulating stock in advance of the news.

Stock buyers of IBM experienced this first hand, during the
extended price decline from 1987 to 1993, when share prices declined
from 175.00 ti} 40.00. At any number of times the stock was
recommended by advisory services and brokerage firms, only to have it
continue sliding relentlessly over a six-year period.
The sugar market, too, provides an excellent glimpse at the unique
relationship between market news and market aciton. The way the
news is released after every move should be studied by thoughtful
investors. During an extended bear market in sugar, culminating
around the 2.50 level in mid-1985, the decline was accompanied by

Figure 7.1 Long-term (monthly) stock chart of IBM, covering the period
mid-1984 to mid—l994. Note the extended price decline from 175 to 40
over the six year period from l987 to 1993. '

every type of bearish news imaginable. But after the market had finally
reversed and was moving north, the bearish news items were put back
in the desk drawer and suddenly the bullish items were trotted out for
dissemination. On 26 January 1987, following a protracted 200-point
sugar rally (equal to a move of US$2,24O pet contract on just a
US$600 margin), Tb: W/all Street journal noted the following:
'Reports that the Soviet Union had been a large buyer of refined
sugar in the world market helped futures to extend their
advance . . . . Analysts said Moscow had bought 500,000 to
700,000 metric tons of raw sugar . . . and one analyst said the
Soviets may buy as much as a million tons more. Analysts said
prices were also buoyed by a report that Brazil will push back
contracts to export 750,000 to 1,S00,00 tons of raw sugar to
1988 or 1989 and by reports that Cuba is having problems
harvesting and milling its cane sugar crop. In Brazil, diversion of
sugar to alcohol production, stronger domestic consumption, and
indications that drought may reduce the crop have created tight
supplies, analysts said.'
The analysts seem to have 'trotted out' every bullish item they could
think of after the market advanced. But you can be sure that, following
the first big price decline, the 'news' would suddenly become totally
bearish. One must wonder who these 'learned' analysts are who are
always able to explain why a market made a move after the fact, but
never seem to know, in advance, what to do.

Monday, August 29, 2011




Selamat Hari Raya Aidilfitri to all!!

20110829 Bank of America (hourly)........ what more can we say...


The Chinese characters for CRISIS 危機 are made of two words danger 危 and Opportunity 機. Where there is danger, opportunity arises, and there will be no opportunity to take risk and earn $ without danger. So don't be like the doomsdayers, forever crying wolf that 'The World is about to End. Time to give up.."


Gold....5 min collapses....

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20110829 ES futures, US market opening.... will be a gap up...

20110829 5 min Gold.... volatility takes a breather

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City flogged Tottenhanm 5-1 and Man Utd defeated Arsenal 8-s. Manchester teams ran amok yesterday in the EPL.... But missed the Man Utd match due to channel 817 reception on Astro being poor. A solution is found though, It seems Astro is aware of this problem, which is being caused by subscribers' cordless telephone units.... and they are 'tidak apa' and laid back. Astro please get your act together, or shift the EPL games to ch 816.

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20110829 If one were short gold futures on the 5 min timeframe, say at 21.00, might try to hold on for 45 to 60 mins to let the trade breathe.

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20110829 FBM KLCI 3 min, match down.(manipulation again) FKLI futures sep contract, a nice move up from opening today....

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20110829 On this 1/2 day of trade (settlement today), a picture perfect 'uptrend' on this timeframe on FKLI futures.

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20110829 FKLI futures Sep contract 10 tick chart, currently up.....

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Sunday, August 28, 2011

Wallabies beat the All Blacks 25-20 in Brisbane, to lift the Tri Nations trophy after a 10 year drought. Boring rugby by the All Blacks, but Australia's backline failed to disappoint....

Saturday, August 27, 2011

AFL

The Swans won for the 2nd straight time in 2 weeks, beating Geelong by 12 points... ending the Cats' 29 unbeaten home victory run. Next up, Brisbane Lions then the finals.

X marks the spot

Sime Darby was hit hard in May 2010, where the silly insto players (with the size to sell) drove the price down to RM760 in a state of hysterical panic. Last Thursday Sime reported record profits, with the price at RM8.80. CIMB parralel? Caveat is that the market is in downward phase right now.

20110826 The Gold story, as told by the 60 min chart....

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Friday, August 26, 2011

Bernanke quiet on next Fed moves, stresses job crisis






No QE3 ES rallies...

http://finance.yahoo.com/news/Bernanke-quiet-on-next-Fed-rb-2615614916.html?x=0&sec=topStories&pos=main&asset=&ccode=

U.S. Stocks Gain After Bernanke’s Speech

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Tri Nations Rugby

Apart form the EPL, this weekend sees the Tri Nations decider between Quade Cooper's Wallabies and Dan Carter's All Blacks.

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20110826 Daily FKLI and FCPO.

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20110826 They moved the aug sep fkli spread to 12.... that's how they  screw the retail traders. But spot fkli futures rebounds...

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Bloomberg TV is highlighting Bernanke's Jackson hole speech as catalyst for risk to be put back on in stocks/commodities.... Obviously Malaysia stocks/cpo are not part of this flow....nice looking.

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20110826 Classic downtrend on the 10 tick FKLI futures...

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20110826 FKLI futures 10 tick, on the down with no rebound....

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20110826 HSI futures 21 tick..... rocket ride!

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20110826 10 min S&P 500 Cash Index. You just have to wonder how they (like Marc Faber) knows the market is on an 'upwards bias' to 1250...??

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Be greedy when others are fearful and be fearful when others are greedy

Well, the scared are dog piling into 'safe' T bonds earning <2% p.a. for 10 years, or buying gold (and getting whacked on the reactions) but Warren Buffett sees opportunity in Bank of America.... I recall that he did the same type of deal with Goldman Sachs in 2008.... and the bears laughed at that deal.

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Thursday, August 25, 2011

EPIC, in this market they are willing to make an unconditional GO at RM3.10 per share. As usual, the insiders who bought on market meltdown (end of the world) profited...

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The end of an era at Blackburn Rovers, as Brett Emerton will move on to Sydney FC for the next 3 seasons.

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20110825 Gold 10 min chart, guess there is no safe haven....

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20110825 FKLI futures 30 min... once again the trend is down, but the regionals are pointing up this afternoon, making this market tricky.

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20110825 FKLI futures trends down against the regional markets.... best to boycott.

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20110825 CIMB..... so much for record earnings.

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20110825 10 min Gold spot chart...

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20110825 A couple of days ago, Bloomberg TV was blaring out a report.... Gold took 10 days to move from 1700 to 1800 and 5 days to move from 1800 to 1900. Now we can continue the story.... It took 1 1/2 days to move from 1900 to 1750...

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Wednesday, August 24, 2011

20110824 ES futures, some semblence of normality returning... for now.

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20110824 Afternoon sell off in FKLI futures.... A trader friend told me that there is some 'news' on Naji#...?? My response is th toss the hot news flash in the trash...There are always those who have the inside line, while we are at the bottom of the food chain. However there is hope, in the form of discipline, and the technical indicators to give an objective reading of the market's possible future direction...

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20110824 Nowadays, FKLI futures trading is a patience game.... 10 tick chart.

20110824 FKLI futures 30 min.... 1500 resistance, which coincides with the long downtrend line.

20110824 FKLI futures 10 tick..... a short setup.

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"There is the plain fool who does the wrong thing at all times anywhere, but there is the Wall Street fool who thinks he must trade all the time."J Livermore Manchester City FCl Crude Palm Oil

fcpo.blogspot.com

THE END OF AN ERA

From Dragons and Bulls by Stanley Kroll
Intro and Foreword
The Importance of an Investment Strategy
5 The Art of War, by Sun Tau (circa 506 BC) and The Art of Trading Success (circa AD 1994)
That's the way you want to bet/a>
Long-term v Short term trading
Technicals v Fundamentals
Perception v Reality
Part 1: Winners and Losers
Part 2: Winners and Losers
Sun Tzu: The Art of War
Those who tell don't know, those who know don't tell
Why there is no such thing as a "bad market"
The Secret to Trading Success
The Experts, do they know better?
Risk control and money management
Good advice
The 'good bets' business by Larry Hite
Don't lose your shirt
Ed Sykota's secret trend trading system