Friday, December 5, 2014

Just 1 Chart Today


I have purposely left out the name of this chart. The values on the right side will also throw people off. I'm just going to look at it for what it is.

Since July, this company has been steadily making lower highs and lower lows. This is a textbook definition of a change in trend. If it was me, I would have exited my position in mid September after a complete set of lower lows and lower highs.

The moving averages seem to agree and are all negatively sloped.

Although the company hasn't breached the mid October low, it looks possible.

RSI is signalling divergence, but the MACD has yet to confirm with a cross back over the signal line. Slow stochastics is calling for a short term bottom, but again cannot be confirmed without a cross back over the line.

With the chart set up like this, I would go long if I see confirmation from the MACD and Slow stochastics.

Seasonality could be a good narrative for a year-end rally which can make a new higher high and mark the change of a trend. I doubt it, but I am open to it.

So, what company is this? It isn't a company. It is the equal-weighted index of 98 stocks on my watchlist (excluding REITs and trusts). Only SGX stocks.

This is what bothers me. The STI is only a breath away from breaking its 52-week high, and yet, a big basket of stocks that I am watching is heading towards 52-week lows. I find it very odd, because a rising tide should lift all boats.

In any case, I see plenty of value stocks across the board reaching absolutely delectable valuations. Companies with pretty strong balance sheets and running profitable businesses. On top of that, I have screened them to make sure that they do have in place a rather shareholder-friendly dividend policy. Like I mentioned before, I do like my yield.

The only problem is liquidity, but that is where the small-cap premium lies. Bid-ask spreads on some names are huge! You can make 10% being a market marker if you wanted to, haha. I quite like theses stocks, since the big boys are automatically out of the game. Instead of playing Division I, you're playing Division III here. Other than the rare smurf, it's actually quite a nice playing field.

I am now just watching the STI to see how its move will affect the rest of the market. Or, at least my watchlist. If a rising tide raises all boats, will a tsunami also wipe out everyone? More value in the market for me then!

Update 6/12/14: Isn't it funny that this chart peaked out with Oil and marked a top for quite a few major indices around the world? Hmmm...

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