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Market Correction: What is my take on it

I didn’t monitor the intraday action. Never did but I was concern about this correction. Somehow when I see blue chips all being sold down in tandem it seems to indicate that these are not coincidence.

Here the STI ETF shows prices moving below the 200 day EMA. We seen how in Sept 2010 that this may not be a long term downtrend but the threat of this happening looks much higher.

  1. Fund Seem to be flowing out of the country.
  2. Market as of now have rebounded near 100%, the same as the last 2003-2007 recovery.

One thing working currently is that although the 20 and 50 day EMA is heading down it is still above. A cut below the 200day EMA by the 2 moving averages should signal a possible trend change.

My actions:

  1. Sold 65% of Singtel. No dividends. No gains. Not known for huge price appreciation. Why subject to volatility?
  2. Sold 60% of Cache Log REIT. No dividends. No gains. Do not want to be subjected to volatility
  3. Sold 100% Parkway Life REIT. Lock in gains. Yield on cost do not constitute to be extremely attractive
  4. Sold 90% of First REIT. Lock in gains. Should the market reverse and turns, current market price yield is still attractive.
  5. Sold 100% Noble. Lock in gains. Not a big holding
  6. Sold 50% of Starhub. Lock in gains. Should the market reverse and turns, current market price yield is still attractive.

To a lot of people this presents the last chance to get into the market. I choose to use the EMA as signals to reduce monitoring yet tell me the general price direction. There are definitely bargains and I will be going through some of them these few days.

In fact I repurchase 1 lot of Singtel at $2.87 today.

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Saturday 26th of February 2011

Drizzt it isnt true that i collected most of the stocks at the bottom. Some of my stocks are held since 2007 and i think the real courage is to try and average down those stocks that we have confidence in. Also at that time i do practice buying into the market regularly on a monthly basis. So of course i managed to buy some near the bottom. And recently i have stopped since the market is going up.

There is nothing wrong with reading market news on a regularly basis. But the real problem is to try and filter out the Good and Bad signs which i think is not easy and i dont think i am good at. Even though market is volatile in the shorter term (thats why its not easy to make money in a shorter time span), i still prefer to ride the longer term trend which has an upward bias.

Anyway there is a saying that there are many roads to Rome. So as long as we are comfortable with our own strategy, it doesnt really matter. Just stick to the strategy :P


Saturday 26th of February 2011

Drizzt im surprised you have made the decision to liquidate most of your holdings. I hope you have made the right decision.

Im still holding on tight to majority of my portfolio and picking up some beaten down stocks.


Saturday 26th of February 2011

Hi Mike, you are a stronger hand then me! But really it could turn out right or not. Do note that i didn't collect all the way at the bottom like alot of your stocks, so for me my profits are less but i am following some risk control signals. Its really independant of market news.

Who knows it could be a bad decision. I could possibly miss getting into First REITs, or STarhub again.

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