Saturday, March 03, 2007

Market Report

That photo really says it all, huh? :)

Market is taking a real hard hit this week. That 400 point drop was the bomb in the room that was going to explode sooner or later. The Dow has been having a real good run by the past 40 months without any real drop. Its a bit like a glutton pigging out for two weeks without taking a big dump. Hee hee sorry.

The only question now is whether this big 400 point drop - followed by that 100+ point drop on Friday is going to carry on to next week and then next month and so on.

A big question on people's mind is whether China's growth is going to slow down and how will it impact upon the rest of the world's economy. Um... if you look at the rise of other great industrialized nation like Britain, Germany, America, and Japan is that they all went thru various stages of evolution.

None of them made a straight trip to the top. America went thru the Roaring 20s before hitting the Great Depression and later powering to Pax America in the 1950s.

Fundamentally, China is poised to make that same journey. Its got what it takes to turn the 2000 - 2100 into its Century in the same way that America made 1900-1999 its own. The Same way Britain made 1800 - 1900 its century.

The only thing that could trip China up is how it handles its foreign relations. All the major powers faltered due to disasters in foreign relations. France and Germany screwed it up by trying to create a military run European Empire. Britain allowed itself to be dragged into a major European war - losing the cream of its youth in pointless battles in WW1. America lost its war in the Vietnam conflict and now its war in Iraq. Some wars just can't be won and shouldn't be fought.

Anyhow, the main concern on investor's minds now is- will the Chinese Govt impose capital gain taxes on share investor's? If they do - then well- things may take a hard turn for the next 3 - 5 months.

Silly me. I got out all of shares and made a small nice tidy profit before the crash. But I got suckered back into the game like a fool. That's the thing you see- once you made your cash- its best to just walk out of the casino. And don't look back. You've had your turn. Now take the money and run.

I have positions on Aztec (43c), Sunvic ($1), and KS Energy ($3). The first two were simply daft. I didn't impose any stop losses and took a silly pollyannish view. WTF was I thinking. Boy I can do stupid things.

I had a position on Wilmar on Monday and was sitting sweetly on a nice cute profit - but when the trend turned against me- I decided against taking a profit. My only saving grace was that I sold when it hit my cost price (excluding brokerage). Cos the next day, the crash came, it fell like a rock. I tried to pick some up on the crash day- but even that turned to crap.

Rule 1 : Taking profits, even small ones- in times of volatility is no shame.

Anyhow I did something right... I got back into SUNVIC at 73 cents on Wednesday. The next day, I sold at 77 cents. I planned to get back in at 75 and put the order back on. But I had a surgery appointment to attend at 12. And the Nikkei was already down 188+ points. So I played safe and cancelled it. It touched 75 then bounced to 80 before closing the day at 74.

See the 240 minute chart. Most people are used to seeing daily charts- but when the charts are short- a smaller time frame sometimes helps.

The 3 minute chart of the last 3 days gives a better picture of the action.

Anyhow, its not breaking out of the trend line- so it may go much lower next week. Maybe pass 60 cents. However if China powers up, SunVic, which is a China Chemical company will have a big rally., maybe coming back up to the high 90c mark. If the news from China is positive, I'd be buying at 75 and going long for the week.

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