It's okay to be affected - negativity everywhere.
Posted by Book Eater
Daily Notes: 1/16/2008
Headline Events from MarketWatch, Bloomberg, ABS-CBN News:
- Wave of negative sentiment sweep 'fearful' Asia
- Nikkei down 3.4%, Hang Seng 5.4%; scores of blue-chips below 52-week lows
- DJIA fell 277.04 points, or 2.17 percent, to close at 12,501.11, to its worst level since April. All 30 Dow components ended the day in the red.
- Declining stocks were outnumbering advancing ones by a ratio of about 3 to 1 on the NYSE and on Nasdaq.
- Risk-averse investors reversed their carry trades, driving the U.S. dollar below the 107 yen level to 106.17 for the first time in more than two years.the
- Citigroup wrote down $18 Bil and slashed its divided payout by over 40%.
- Margin calls were triggered in the falling market, as the value of stock held by investors with leveraged positions fell sharply.
- J.P. Morgan profit falls 34% on subprime exposure, Investment banking sees hefty drop in activity, home equity fares poorly
Essentially the whole market sentiment knows that this sell off is not going to be just one day. Most headlines even wrote, "Tsunami of Selling on the Street", "US Stocks end at lowest level so far for 2008." Even for rangetraders like me, the only issues that may go up are those that are already going up, and might be good only for a ride for a day, as there's no assurance/ any catalyst for it to go up. Restrain for all the bargain hunters out there. It seems like you can get even 2 yr lows for discounts in the Philippines. The US and Hangseng equities have fallen even as far as their 2004 lows (Citigroup- the most badly beaten stock perhaps, 5 HK or HSBC Holdings).
Welcome tomorrow morning with the PSEI falling again by my guess another 90 points. PSEI has broken its 260 day MA anyway. Let it free fall and follow its natural course. While that may sound so negative and so unaffected, I know how it feels to have issues that are "ipit". For those undisciplined traders like me who have not cut when they should have, more so should we be willing to stomach all the negative news that can put us again to the next support levels of 3258 and should it not hold, 2874 (back to August 17 levels again).
Personally, however fundamentally "cheap" stocks are, whether you're a trader or an investor, there's not much difference. With this heavy market sentiment, yes we know that we're near bottom but knowing that it's near doesn't give any of us much help. We will all get whipped with our undisciplined trades. So the conclusion is really to restrain.
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However, here are the issues worth looking at your watch list, you can jump in and blindly trade but this is really a high risk/low reward proposition.
a.) BRN - everybody seems to be talking about BRN whose shares jumped higher than 20% today and even closed at its highs. Is this going to continue? Anyway, the market was down today but this still went up. Personally, I'm a really risky trader and I violated my own rules. I traded this on account of momentum and good volume. We all know this is not a healthy trend. The angles are around 70%-90%. It just went up and up and up so when anyone senses any weakness, let's just be disciplined to cut losses when we have to. Make sure position sizes are also good enough to stomach the risks. If this can go up by 20% up, then that same volatility can also go down as quickly.
- Nix