I can start buying

I may think that the STI is only half way through a correction, but stocks are stubbornly refusing to fall further, but instead clinging on to meaningful supports. Of the stocks on my radar screen, Noble is well supported at 1.98 (61.8% retracement), NOL at 2.10 (50% retracement). Genting, a stock I was initially not looking at, is becoming attractive. It is supported at 1.93 (61.8% retracement), and is rebounding from oversold RSI. The last time that RSI was oversold was way back in April and of course, we know, the stock rallied hard by 170% afterwards. So, Genting is my choice, and I will be scaling in my positions on this counter, with an aim to evenually build a 10-lot position for its next peak by April 2011.

Correction is not over

I reckon that the surge yesterday in our markets are more attributed to a technical rebound. Overall, I do think that the "broader market has further to fall over the very near term. We’re in that lull between earnings seasons, and investors are much more likely to pay attention to bad news. If we get a further correction in share prices over the coming weeks, then we’ll have a good entry point for new positions. My best guess is that we’re not quite there yet." (Ahead of the Street Column, by Mitchell Clark, B. Comm)

Stock Market to crash in May 2011?

We have read about many predictions on market crashes since the Great Stock Market Recovery of 2009, but of course, now we know that they are all proven untrue. But of course, now that the bull market is in a more mature state, the arguments for a fall seem more convincing. This article details the reasons that may precitate such a fall in the stock market. It is predicting this to happen by May 2011.

But then again, as a value hunter, it is our mission to hunt for good deals during a crisis like this. So, I await greedily for such an opportunity. But, I may be disappointed again, as so many times in the past, such predictions always did not come true.

Turning cautious on China stocks

Martin Lau's First State Regional China Fund has been generating top-notch performance in recent years. However, he is turning cautious on China. Why? One, the recent wave of optimism about Chinese stocks especially in consumer and pharmaceutical has become too euphoric for his liking. Two, many investors are so passionate about IPOs, and that is usually not a good sign. Three, further raising of interest rates by the Chinese government could cause Chinese stocks to tumble. Lau reckons there will be a series of rate hikes.

Lau has been cutting exposure to overpriced Chinese consumption stocks and remains light on property and financial counters. He is currently vested in property names like China Vanke and China Resources Land, bank China Construction Bank and consumption play Yantai. But all in all, he is not that excited about China anymore.

It is too late for me to take profit on SOHO (a property name) now, but I will sell it during the rally that follows this correction.

Update: I have sold SOHO at 6.32 on a brief rebound for a 29% GAIN IN 3 months.

What really is market timing

This article extols the true meaning of what is market timing. Often, we are taught to time the market by cutting losses (selling when market is low), and letting profits run (refusing to sell when market is high). This article tells us that contrary to popular belief, market timing is to sell at high, not at low (to cut loss).

What can I buy during correction

One of the best things is that the good stocks also gets whacked during a correction. Therefore, the most logical thing to do is to load up on good stocks. Definitely, to me, this means stocks in the Straits Times Index. I am looking greedily at SembMar ($4.50 -$4.60 will be good price, below $4.50 will be super bargain price), SembCorp ($4.50 - $4.65 good price, below $4.50 super bargain price) and Noble ($1.90 - $2 will be good price, below $1.90 super bargain) again. I am also looking at STX OSV (below $0.70 would be a steal) as I feel that it is just unlucky to be listed when there is a correction. This one is definitely unfairly sold down.
I am not looking at Genting as I feel prices have peaked, and may not rise very much in the near term. Finally, I am looking at gold ($125 - $129 good price, below $125super bargain).

The correction has most likely come, but it is time to buy

Given the massive sell off in equity markets, one can't help but conclude that the inevitable correction has finally arrived. But fear not, as I think this creates another good opportunity to load up on stocks. Prior to this correction, I have sold various positions in SembMar, NOL and Noble. For various reasons, I am still holding on to gold, BOA and SOHO. I have done an analysis on my performance, and found that there is much to improve upon. Of the counters I sold, I managed to garner the following "batting average", or percentage of the move.

NOL 38% for 7% gain
SembMar 33% for 12% gain
NOBLE 65% for 19% gain

Verdict: I sold too early.
AFI: Need to develop more nerves of steel in order to maximise returns from current bull market. Remember, before I know it, the bull market may be over, so make the hay while sun still shines.