Vectorvest Composite Singapore

As some of you may know, I have been a subsriber of (VectorVest) software for about a year.  I honestly think they it is an extremely powerful tool for any stock investor.  My involvement with Vectorvest has got to a point where I am now helping them to conduct free product training for new users of Vectorvest.

This coming Saturday, 2nd March, I will be conducting such as training at Bras Basah Complex at 2pm.  If you want a free look at the features of Vectorvest, do contact me, as the room size is limited.

I shall now leave you with the slowest timing signal given by Vectorvest - the Confirmed Calls.  One of my Singapore stock portfolio is based on this market timing signal for entries and exits.  This chart is based on Vectorvest Singapore Composite, an arithmetic average of 756 Singapore stocks.  Vectorvest believes this chart gives a more accurate picture of Singapore Stock market, compared with the STI.  12 stocks were bought on 30 Nov 2012 (green arrow), and still holding.

Hero with pop star wife to move markets?

No, I am definitely not talking about our home-grown Singapore pastor.

I am talking about Mr Xi Jinping, the leader of China's ruling communist party.  Since Mr Xi Jinping  was elevated to the general secretary in 2012, the Shanghai stock exchange rocketed from its low of 1900s to 2400s - an increase of 25% over less than 3 months!

The above is a SSE50 China ETF weekly chart.  Since breaking out from the double-bottom pattern, and with MACD divergence, its strength has also caused it to break out of the raff regression downward channel.  I can safely say that the intermediate trend is no longer bearish.  Have we seen the low?  Is this the start of China's super-bull run?

Mr Xi is known as a reformist.  He has called for strong economic reforms in his first speech outside china in Dec 2012.  Can he come to the rescue of the china stock market, where today, 95% of stock account holders has given up and stopped investing?  Going the market movements since his inauguration, that maybe a strong possibility.  I know for a fact that the market likes to go against the general consensus.  Mr Xi has 10 years to do it, starting from next month, where he will be installed as the China's President.

What can we do to profit from this?  Look at the Shanghai SSE weekly chart.  I suggest waiting for the current retracement to end before buying.  How do we know the retracement is likely to end? After a series of black candles, wait for the first white weekly candle.  Two consecutive weekly white candles will be a double confirmation to enter.

Which industry will do well in 2013?

At the moment, the strongest industries are:

1. Energy (eg. Ezion, Keppel Corp)
2. Real Estate (eg. Ho Bee, Keppel Land)
3. Food (eg. Super, Petra )
4. Telecom (eg. Singtel, Starhub)

It is always tough trying to predict the year's top industry.  I do not have a crystal ball.  But I am a believer of holding the strongest stocks in the strongest industries.
It is always prudent to re-assess your portfolio at least three times a year.  If you are holding stocks in the above industries, you are on the right path. These stocks have been consistently making new highs.
However, if you are holding stocks in underperforming industries, I seriously suggest that you start planning on liquidating and holding stocks in the above four industries

With exception of real the estate industry, these industries will likely to continue to do well.  I will be very careful with real estate stocks.  Although I am still holding them, I am ready to let go when the uptrend ends. Although the property Jan sales was healthy, it was likely due to the saavy buyers locking in their orders before the Jan 12 2013 dateline.  I expect Feb and Mar property sales to be poor for the mass market real estate players.  I favour construction related real estate stocks.

A few days ago, OCBC released a report favoring infrastructure plays (eg Tat Hong). That will be something to consider as I consider them the dark horse for the year.

In my decision making, I try not to make predictions, such as where Shanghai market will be, or where the USD will go.  But I do try to make sensible decisions to follow the strongest (or the weakest for shorts).

When in doubt, go with the strongest.  I end with two wise quotes:

• trade with the trend till it ends.
• dont fix it unless it is broken

4 stocks with strong fundamentals and technicals

For those who would very much prefer to buy rather than short, I am recommending 4 stocks to hold for the medium term (about 6 months).  They have strong fundamentals and their prices are making higher highs nicely.

Boustead is now making 3 year highs.  I know, most people will say "how to buy when the price is so high".  That is precisely the point.  I was a poor trader in the past, trying to buy low sell high.  Most of the time now, I buy high, and sell higher.

The 3 other stocks (other than those I have recommended in the past year) that are strong in both fundamentals and technicals are:

1. Great Eastern Holdings
2. Dairy Farm
3. CWT

These 4 stocks have 2 things in common : they are making 3 year highs, and they are fundamentally safe, and undervalued stocks.  If you think we are in a bullish market, you should buy them.

My recommendation is that these stocks are definitely worth buying, but buying right now is risky.  The market timing is not optimum.  Waiting for the correction to be over before buying is more prudent.  Of course, with high risk comes higher rewards.

Here are their charts, note that the prices are making higher highs.

Hedging Long Position

Happy and Healthy Lunar New Year to all.  After taking a festive break, I am resuming my blogging, although I have not been feeling too good lately.  Must have eaten too much junk food and drank too little water.

Now back to the market:

A few weeks ago, I increased my long positions.  As it was not a prudent to invest at high prices, I did not want to mislead my readers, so I did not put them up on my blog.

Over the last 2 weeks, the STI has been a bearish candle and a doji, signifying uncertainty.  I am preparing myself mentally and psychologically for a possible retracement.  I consider mental strength and strategic planning as the 2 most critical factors to my success in trading.

What is my plan if it happens? My plan is not to take profits, and to hedge my long positions.  The idea is this: I believe that I am holding on to strong stocks.  Instead of selling them, the idea is to short other weak stocks.

In SGX, it is slightly difficult to short stocks.  The 2 easiest ways are through Contract for Difference (CFD), and Extended Settlements (ES).  Even then, the number of stocks available are quite pathetic.  One of my brokers has about 100 CFD stocks.  From this list of 100, I have shortlisted the following for short positions:

The following are some of the stocks that I am eyeing for shorting (not in any preferred order):

1. Asia Enterprise
2. Gallant
3. Fragrance
4. Banyan Tree
5. Hi-P
6. Datapulse
7. CSE Global
8. Rotary
9. Stamford Land
10. Stats ChipPAC
11. STATSchp
12. Hwa Hong Corporation
13. Genting
14. Singtel
15. SembMar

Note that I will not be shorting all 15 stocks!  My plan is to short 5 stocks out of this list of 15.