Good morning,
It's a sea of reds. No, it's not Liverpool or Man United. It's the US stock markets. The Dow closed down 203 points, or 2.1%, to 9,509. The Standard & Poor's 500 Index was down 27 points, or 2.6%, to 1,030, and the Nasdaq Composite Index was down 65 points, or 3.1% to 2,057.
It was the biggest point loss for the Dow since July 2, the biggest decline for the S&P 500 since June 22 and the largest point loss for the Nasdaq since December. And the worry is the market could get worse, perhaps as early as Friday when the Labor Department reports on unemployment and nonfarm payrolls for September. The consensus estimate is that nonfarm payrolls fell by about 200,000 from August. Fears, however, grew today that the number might be larger and contributed to the market decline.
All 30 DJIA stocks were lower, and NYSE has 0nly 17% advances verus 81% declines, Nasdaq 17% advances versus 79% declines. Report from IMF raising it's forecast of the world economy growth has no real impact, and the market was focused on several other reports, including another disappointing jobless claims tally. Initial claims climbed 17,000 to 551,000, which is a higher count than had been expected and The ISM Manufacturing Index for September came in at 52.6, which is below what was expected, but the figure still indicates growth in the manufacturing sector. There were some positives though. Personal income and spending for August were up 0.2% and 1.3%, respectively with exceeded expectations, while core personal consumption climbed a mere 0.1%, as expected, and construction spending during August made a surprise 0.8% increase, while pending home sales for August surprised some by increasing 6.4% in August.
So how did my portfolio perform? Well, to be honest, none of them headed north when almost the whole market headed south. Citibank was down -6.4% to $4.53, PMTC was down -2.32% to $13.5, BKS was down -2.75% to $21.61, OSG was down -3.69% to $35.99, BHI was down -2.37% to $41.65 and Forest Lab down -2.24% to $28.78.
I am pretty sure there will be critics out there waiting to skin me if they have followed my blog and bought the shares I analysed. And probably others wanting to know what I had done last night to limit my losses and my strategies after the beatings. Well, let's take a look at the cycletrend charting again.
I was quite correct to predict yesterday that there will be a retraction in Oct/Nov using the Cycle Trig chart (as in the box below candle chart). The candle was telling us that the market was undecisive and looking for direction and we would need the next bar for confirmation. Only I didn't know that it came in the first day of the month! Well, today's candle chart is telling me that there were more sellers than buyers and there were no bull to push up the market. The red candle without the head shadow shows DJIA closed lower at the day's highest. Technically since the retraction occurs so early in the cycle trig, the market should still be retracting for a little longer, but should start heading north sometime in mid October or early November.
My stocks? I held on to them. Why? First, let me show you one chart, BHI (Bakers Hughes).
Technically I don't see any bearish signals for the next one month. The stcok seems to be trading within range and is not near the resistance of the bollinger band. Fundamentals are still good, and with IMF recent forecast of improved world economy, I do not see any reason why I should not add on to my position in this counter. I will sticked on to my buy on retraction decision for BHI.
Which leads me to the question of what strategy and style is my trading? To answer this question I need to emphasize that to trade in the stock market, you need to belong to either one of these group of belief system. Either you are a fundamentalist who believes stocks are mispriced, techinician who trusted in serial and auto correlation (ie you can predict next period using past data), market is efficient (that is no point predicting and looking for mis-priced, the price is all that it is) or you are just a punter. I am a believer of efficient market. I choose company based on their good fundamentals, that is, the balance sheet and cash flows must be fundamentally sound, and to clarify, I am not looking for mis-pricing. I buy to ride on the potential growth, and I only use charting to have a general feel of the market and the stock I purchase and try to understand the current participants' behaviour. I buy when the charts tell me so and unless I see a major correction, I will normally hold on to the stock because of its good fundamentals. In fact most of the time I buy when the market is selling if the company is good. I do not intent to beat the market every day, I try to beat it on the longer term.
So I am holding on, and actually bought into OSG again last night.
See you soon.
Francies Cheng
BBus MAppliedFinance
It's a sea of reds. No, it's not Liverpool or Man United. It's the US stock markets. The Dow closed down 203 points, or 2.1%, to 9,509. The Standard & Poor's 500 Index was down 27 points, or 2.6%, to 1,030, and the Nasdaq Composite Index was down 65 points, or 3.1% to 2,057.
It was the biggest point loss for the Dow since July 2, the biggest decline for the S&P 500 since June 22 and the largest point loss for the Nasdaq since December. And the worry is the market could get worse, perhaps as early as Friday when the Labor Department reports on unemployment and nonfarm payrolls for September. The consensus estimate is that nonfarm payrolls fell by about 200,000 from August. Fears, however, grew today that the number might be larger and contributed to the market decline.
All 30 DJIA stocks were lower, and NYSE has 0nly 17% advances verus 81% declines, Nasdaq 17% advances versus 79% declines. Report from IMF raising it's forecast of the world economy growth has no real impact, and the market was focused on several other reports, including another disappointing jobless claims tally. Initial claims climbed 17,000 to 551,000, which is a higher count than had been expected and The ISM Manufacturing Index for September came in at 52.6, which is below what was expected, but the figure still indicates growth in the manufacturing sector. There were some positives though. Personal income and spending for August were up 0.2% and 1.3%, respectively with exceeded expectations, while core personal consumption climbed a mere 0.1%, as expected, and construction spending during August made a surprise 0.8% increase, while pending home sales for August surprised some by increasing 6.4% in August.
So how did my portfolio perform? Well, to be honest, none of them headed north when almost the whole market headed south. Citibank was down -6.4% to $4.53, PMTC was down -2.32% to $13.5, BKS was down -2.75% to $21.61, OSG was down -3.69% to $35.99, BHI was down -2.37% to $41.65 and Forest Lab down -2.24% to $28.78.
I am pretty sure there will be critics out there waiting to skin me if they have followed my blog and bought the shares I analysed. And probably others wanting to know what I had done last night to limit my losses and my strategies after the beatings. Well, let's take a look at the cycletrend charting again.
I was quite correct to predict yesterday that there will be a retraction in Oct/Nov using the Cycle Trig chart (as in the box below candle chart). The candle was telling us that the market was undecisive and looking for direction and we would need the next bar for confirmation. Only I didn't know that it came in the first day of the month! Well, today's candle chart is telling me that there were more sellers than buyers and there were no bull to push up the market. The red candle without the head shadow shows DJIA closed lower at the day's highest. Technically since the retraction occurs so early in the cycle trig, the market should still be retracting for a little longer, but should start heading north sometime in mid October or early November.
My stocks? I held on to them. Why? First, let me show you one chart, BHI (Bakers Hughes).
Technically I don't see any bearish signals for the next one month. The stcok seems to be trading within range and is not near the resistance of the bollinger band. Fundamentals are still good, and with IMF recent forecast of improved world economy, I do not see any reason why I should not add on to my position in this counter. I will sticked on to my buy on retraction decision for BHI.
Which leads me to the question of what strategy and style is my trading? To answer this question I need to emphasize that to trade in the stock market, you need to belong to either one of these group of belief system. Either you are a fundamentalist who believes stocks are mispriced, techinician who trusted in serial and auto correlation (ie you can predict next period using past data), market is efficient (that is no point predicting and looking for mis-priced, the price is all that it is) or you are just a punter. I am a believer of efficient market. I choose company based on their good fundamentals, that is, the balance sheet and cash flows must be fundamentally sound, and to clarify, I am not looking for mis-pricing. I buy to ride on the potential growth, and I only use charting to have a general feel of the market and the stock I purchase and try to understand the current participants' behaviour. I buy when the charts tell me so and unless I see a major correction, I will normally hold on to the stock because of its good fundamentals. In fact most of the time I buy when the market is selling if the company is good. I do not intent to beat the market every day, I try to beat it on the longer term.
So I am holding on, and actually bought into OSG again last night.
See you soon.
Francies Cheng
BBus MAppliedFinance
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