Friday, May 8, 2009

Is the Bull Really Back!?

These few days, the stock market is trending upward. The market sentiment is getting better and more people are having more confident to invest in the stock market.

Is the Bull Really Back!?
One of the questions that most of us has in our mind is "Is it going to go up again?" or "Is the next Bull run really coming?". This is a tough question because no one knows what will happen in few months time in the future.

It is important to know where we are heading and what we must do when the market is coming down again. I have included my opinions and some technical analysis in this post. Hopefully it would be helpful for you to get an idea for some of the questions in our mind.

The Idea of Bull Run o Trend Reversal according to Technical Analysis:

Some rules of Technical Analysis for Trend Reversal as follows:

1. Trend Reversal for uptrend is created when the price is moving upward and dip(Down) a bit then go up again. If this trend continues and repeating, it might be a signal of trend reversal for uptrend.

2. The price of certain stock or index move up and crosses the Moving Averages(MA) of of 20-Day MA, 50-Day MA and 200-Day MA. Once it crosses the 200-Day MA, it might be a confirmation of long Bull run. Remember: Trend is Our Friend!

So, ask yourself:
1. Is our market having the Rules stated?
2. If Yes, Should I buy now or miss the chance?

The picture above is (taken from ChartNexus Software) a picture of KLCI on 7 May 2009. You can refer to the picture above to match our Rules of Trend Reversal.

According to Rule No. 1:
We can see that our market is going up and dip (down) a bit and then continues to go up again and then dip (down) again then go up. The trend is repeating. This might show that the market trend is reversing to a new direction. Trend reversal is taking place and now it is an uptrend.

According to Rule No. 2:
We can see that our market has crosses 20-day MA, 50-day MA and 200-day MA. It is a strong uptrend and crosses all the Moving Averages. This shows an important idea because it might be a confirmation of uptrend or trend reversal.

My Personal Opinion:
I think that more people are having confidence to invest in the market and due to good market sentiments, the uptrend might continues. So, it is good for us to pick some good stocks (At good price) when the price dip (down) a bit. We can position ourselves for the possibility of next Bull run.

1. Is our market having the Rules stated?
The answer is "Yes.". Our market matches the rules stated.

2. If Yes, Should I buy now or miss the chance of bull run?
Chances are always there. We can buy some but not holding for too long period time.

For me, I will choose to wait. I will wait for the market to dip and buy the stocks I want. I think that a correction might be coming.

Always remember our "Golden Rules". Buy During Bad News and Sell During Good News. *Note: It is my opinions and ideas about our market. It might not be true but it can be a guideline for you.


James Oh said...

Whether the market is bull or bear is not important, what is important is making money.

At the end of the day, it is very much depend on the strategy we adopt so as to make money in both short and long terms.

The above is my personal view only.

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