Top 4 to 6th Stocks that I am eyeing

I am waiting in anticipation for the correction to end.  There following are my 4th to 6th choice stocks that I will be buying.  As usual, my selection is based on a combination of valuation, earnings growth, dividend yield, dividend payout, debt to equity, and most importantly, chart formation.

I have added a few indicators that is proprietry to VectorVest, a stock stock analysis software that I find pretty useful.  They are

a) Stop loss prices (white line that looks like an MA)

b) Entry and Exit for the year (red and green arrows)

c) Anticipated EPS as calculated by VetorVest.

The stocks are:

4) Tat Hong

5) Auric

6) Bukit Sembawang.

My Top 3 Stocks

The following are the top 3 stocks that I will buy when the current market retracement is over.

1) Ezion
2) Super Group
3) Far East Orchard

They are my top choices based on a combination of valuation, earnings growth, dividend yield, dividend payout, debt to equity, and most importantly, chart formation.

Looking at their charts.  Is their trend obvious?

Final quarter of 2012 will mark the beginning of an economic downturn that will last till 2015/2016 : Ray Barros

Could you guess what chart is this? Does it look familiar to you?  Give you a clue, some say that this index is the barometer of the world's stock market.
You are right.  It is the S&P500.  Each candle represents a year.  This chart spans 1928 up till today.  It captured this view from the ThinkorSwim broker that I recently signed up.  The data from this broker goes much back from any other software that I have.  Kudos to them.
I attended a free 1 day seminar by Ray Barros yesterday.  Mr Ray Barros is a multi-millionaire retired fund manager who is residing in Hong Kong nowadays.  He believes that the final quarter of 2012 will mark the beginning of an economic downturn that will last till 2015/2016.
Do you believe that?
Lets look at the chart.  What is the trend?  It is a clear up trend.  From 1999 till today, there does not seem to have any trends.  It seems to be caught in range.  Mr Barros, being bearish, thinks that it is possible that the S&P breaks the lows of 2008/9.
I tend to be bias towards the upside.  Newton teaches that a body continues in the same direction unless acted on my an external force.  Similarly TA101 teaches that the higher probability of any consolidation is to continue in its original direction.  This implies a breakout to the upside is more likely than a breakdown to the downside.  This is common TA foundational knowledge.
Now, how should we trade?  Up or down?
I am a trend trader.  I am not in the business of forecasting what is going to happen.  But I will and am preparing myself to react to the market.  Meaning, if the markets go up, I follow.  If it comes down, I cut loss and flip my position to the downside.  Along the way, I will be grateful for stocks that reaches my profit targets.  Of course profit target > cut loss.  This is the life of a trend trader.  No guessing.  Simply follow the rules.

Something new - US stocks

I am planning to trade US stocks as well as Singapore Stocks.  Another day, I will tell you why I am taking on country risk, and currency risk, in trading stocks from the opposite end of Singapore (clue: legally allowed to short). 

After more than a year of trading spot forex and forex futures (mainly AUSUSD, EURUSD, USDCHF), asian stock future indices (SIMSCI, HSI, TW), US equity indices (Dow Jones, E-mini, Nasdaq), Crude Oil futures, Gold futures, Singapore stocks, I feel that it is time I specialize and increase the position size in my trades.

My plan for 2013 is to focus on equities - Singapore stocks for longer term investing, US Stocks for long term trading, and Dow Jones futures for short intraday trading.

I have been using VectorVest to test my mechanical strategies for US stocks and it seems to work.  As such I will be opening a US brokerage account this couple of weeks.   Putting my money in a foreign brokerage will be subject me to counter-party risk - much like the "investors" who parked their hard-earned money with Genneva.  Hence, I am quite wary of the consequences.

Found a web site that really helped me.  http://www.stockbroker.com

They have a ranking of their many online brokerages in US.

If I cannot go too far wrong in parking my money with the world's strongest bank, i think i can comfortably trade using the "strongest" brokerage.  Think I will open an account with ThinkorSwim (TD Ameritrade).

EURUSD is bearish

I longed EURUSD futures about the mid of Oct.  My Stop loss was triggered this past monday.  Cutting losses is part of parcel of trading.  The age-old maxim - cut your losses short, let your winners run - is one of the key cornerstones of my trading strategy.

EURUSD futures is turning very bearish on my chart.  It is fortunate that I have my mechanical stop loss order.   Look at the daily time frame on the right.  Yesterday, it seemed to have broken down from a triple top, heading toward 1.2600.
Looking at the weekly chart on the left, the last candle has broken through the 13SMA, with all 3 momentum indicators indicating downward momentum.  Looks like a short is in order.
It is indeed ironical that the 3 month high of 1.3179 was reached on 13 Sept - the day that the fed declared QE3.  Now you know why trading on news alone is not enough.

Dow is below 13000 and heading towards 12500

Its 1235am, and I have been trend trading the Dow futures.  After updating this blog, I will be going to sleep.  Most of you will know that I am bearish in the short term.  My favorite time frame that determines the market direction is the weekly chart.  Until the price action shows more traders buying, I will stay on the short side.

Look at the chart on the left.  Dow is continuing its retracement below the red 13SMA.  The successive black candles are ominous. I am waiting to see successive white candles signal some buying interest. Before I take a small long position in USA stocks.  Note that all 3 momentum indicators are showing short term bearishness.
12700 and 12500 are the next support levels.  See the chart on the right.  If the "mighty" Dow drops below 12000, the long term trend will not be up.

Confirmed Down

I am subsriber of an American made software called VectorVest.  Yesterday, the system advocated by VectorVest issued a "Confirmed Down" signal for the Singapore Stock market market.  Look at the green and red arrows in the chart.

"Confirmed Down" is given by VectorVest when Singapore Stocks have closed lower for 2 consecutive weeks, and a proprietry indicator - Buy to Sell Ratio - goes below the 50% mark.  When this signal is given, VectorVest recommends selling and closing all long positions.
So far this year, this system has done well for the Singapore market, so when it gives this Confirmed Down, I will sit up and take note.  Of course note that there is no perfect indicator.
This "confirmed down" signal is inline with my view of Singapore Stocks.  I have stayed away from Singapore Stocks for the last 3 months.  I am expecting a greater pullback before I look for opportunities to invest.

I am a Trend Follower

I am bias towards the downside in the near term, more so for the US market.  Hence I am staying in the sidelines, being patient, and looking for shorting opportunities.

I get the question many times "Is the market going up or down?"  Although I am now bias towards the downside, I really do not know the answer.  That is why, now, I am a trend follower.

One of the biggest mistakes that I have made is having a pre-conceived ideas of where the market is going to go.  This inadvertently interfered with my decision making, which caused me to subconciously try to rationalize the market's behavior and continue to believe the market will go my way.

If the current market were to go up, I must be prepared to buy stocks at a higher price, if it goes down further, I might sell stocks short, at a lower price.  In other words, as a trend follower, I must never buy a stock that is going down in price and never sell a stock that is going up in price.  This way of thinking goes against my natural inclination.  However, trend following keeps the wind blowing at my back.  Losses are expected in the short term.  $ is expected in the long term.

Lets not try to predict the market.  Wait for the market to trend higher, before buying stocks.  If the market becomes bearish, the plan will be to hold, or sell short, depending on the severity of the down trend.