I shall now explain why I am bullish about the market. The above is the arithmetic average price of 750 stocks in Singapore. As of 30 Nov 2012, there is a signal to go long. This is a trend following trade signal. Meaning that if there is a trend, I shall make money. But if there is no trend, I will be whip-sawed, and thus lose money.
So far this year, this trade signal has been very profitable. Of course there is no such thing as a sure win. Trading is risky and not suitable for everyone.
People ask me why I am buying so many stocks, instead of putting all my money in a couple. The answer is diversification. I will never know which stock is going to move strongly, hence I spread the risk over about 10 stocks. I am trading based on market risk. When the market is moving up, almost anyone stock a person buys will make money. When the market is moving down, even the best stocks will come down. This trade signal is based upon the probability that the market will be taking on more risk and moving upwards.
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