AC Alert and Market Post Analyses  

Posted by Book Eater in

Lines I Liked:

1.) What's noteworthy isn't who made it, but how they got there.-Michael Moe
2.) When wrong, admit it. The worst thing to do is rationalize a mistake. Be intellectually honest. Make decisions based on current facts, not what you had thought to begin with.-Michael Moe
3.) Be passionate about investing but dispassionate about the investment.-Michael Moe
4.) Don't trade when you can't afford to lose.-Michael Moe
5) Longterm investment success results from the strength of the investment strategy, rather than the individual wins and losses. - Hildy Richelson
6.) I just wait until there's money lying in the corner, and all I have to do is go over there and pick it up. - James Rogers
7.) If you can't take a small loss, sooner or later, you will take the mother of all losses - Jack Schwager
8.) Everybody gets what they want out of the market. - Ed Seykota

A Short Personal Reflection:
It's been a quick ride down and up, with little to show for it except some market experience. James Rogers tells us the wisdom of patience, and trading only when the odds of profits are with us. Richelson asks us to fine tune our trading system, our strategies. He emphasizes looking at the big picture of our strategy instead of the individual wins and losses. Ed Seykota reminds us that the market is a what you see what you get kind of person. If we have lost our discipline, market gives us what we deserve. Jack Schwager warns us on our inability to cut our losses short. Michael Moe shows us that trading involves losing. We have to face those facts, and be dispassionate with our investments. He also tells us that, who made millions in the stock market isn't important, it's how they became that's most important. So lesson is to learn that system. Whether you are a technical purist, a hardcore fundamentalist, or a hybrid of the two, augment and personalize your system to fit those that work in the market.

(I'll write my investment philosophy in the next posts.)

Market Post-Analyses :

Don't Fight the FED: The key to the rally was the Fed's determination to stem the downward spiral, and that should never be underestimated.

This week, we've seen many stocks that were extremely oversold that had gone ripe for a rally.

It's worth noting, that missing an opportunity is as bad as being on the wrong side of the trade.

So let us learn from what had happened and what worked

FGEN, FPH, MEG all rose pretty well this week as well as most banking stocks such as MBT, BPI, BDO and NRCP. Gains were as high as 30% and as low as 5% minimum for a week or less' trade. By the way, TEL shot up to 2805. Remember I bought TEL at 2610 last week? Am I spiteful? Kinda...but the lesson was I should have bought when I knew I was already wrong. I was late in buying into this market at around Tuesday so I only rode the FPH rally.

If you checked the charts I mentioned above, they all exhibited bullish divergences.

Lower lows, higher MACDs.

The key here though is liquidity. These stocks have done better than other companies in their respective sectors mainly because people are more interested in them as can be seen with the large volumes accompanied with them. For those who have observed the markets, when ALI went below 10 pesos, trading at prices of 9.4, 9.5 etc, most of the buyers were local domestic houses while most of the sellers were foreign fund houses. We've seen ALI go up to 11.50 this week and retreating to close at around 10.50, nevertheless it still made a good run up.

Stock Alert (3/28/08 -BUY: AC)

Preferred Entry: 382.50<=AC<=390

Cutloss: AC<=380

Reward; 425,430,450

On March 28,2008, there was an increase in the volume of AC, Volumes were at least 50% higher than normal average indicating a possible intermediate bottom. From charts, it closed at 392.50, formed a white bullish hammer. Risk Reward Ratio is good as the cutloss in price is a break below previous low of 382.50 (which by the way was retested as a support today) by the market. This has formed bullish divergence for quite some time now (2 weeks in the making). When foreigners finish their selling, this is bound to trade higher. RESPECT YOUR SUPPORTS. Remember, you shouldn't trade if you don't know how to cut your losses or follow your trading rules.

Bear Market Trading/Investing:

1.) Investors could tactically profit take into strength but position to buy back on weakness. Into any strength, investors need to position for profit-taking as markets recover.

Market Insights:

The recession call in the US is almost a consensus call now. That being said, quarter to quarter economic contraction in the US is likely to be limited to the first two quarters, with a gradual recovery thereafter. There are credible reasons to suggest some kind of bottoming and recovery in the second half:

  • Fed funds cut by 300bp bringing real rates to zero, and discount rate cut by 375bp
  • ABCP and MBS accepted at discount window
  • Paulson interest rate freeze program
  • New liquidity facilities for banks – TAF, TSLF
  • Raising of conforming loan limits
  • ‘Project Lifeline’ to halt foreclosure on mortgages
  • Extension of credit to primary dealers
  • OFHEO eases Fannie and Freddie’s capital requirements and permit them to expand mortgage portfolios.

-will post the chart of AC and other good stocks to buy (if there are any)-

- Nix

1 takes

good stuff with the quotations. :) my personal favorite is the schwager one regarding "the mother of all losses". being able to take a small loss emotionally and move on from it is a huge sign of progress.

Hope your trade is going well so far and that you make good money! :)

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