Great Profit Taking Point Detected

Genting Effect. After Genting won the bid in Singapore, it is expected CI will surpass 1100 on Monday. News, tips and opinions on the market are every where. Investors in forum and etc whom I met are motivated and emotionally charged with the great news. As Genting is a huge guy in the CI, its upward trend will be impacting the CI significantly, and thus, influences the emotion and publicity effect of the KLSE.

Monday effect. Although there are researches showing that Monday is normally a profit taking day for the retailers, but recent research is also showing that the rise or drop in Monday is highly related to the condition in Friday. Precisely, Green Friday produces Green Monday, and vice versa. The Friday before is a Friday with satisfactory performance, where many of the initial loss speculative stocks which are showing red in the morning are showing green in the end of the day. As such, it is predicted that tomorrow, will be a Green Monday as well.

Bullish Sentiment. During the weekend, it is obvious that stock market receive substantial publicity and analysts, those know-it-all cynics, are predicting this is a staring point of a great bull run. As we are not going to be newbie that are going to be contrarian just for the sake of contrarian; who want to be different and unique from the mass media recommendation, we long the CI. The bull is still young and in fact, it is highly possible the bull is just starting a month ago.

The trend is up. We do not wish to go against the trend; as such we go with the trend. It is very obvious that the price-to-volume reaction in the market recently is truly normal and encouraging, rising momentum is very strong and overbought is ended with another overbought. For this, we should keep holding stocks unless unusual market weakness is spotted.

The long term trend is highly possible an up; the things we should focus on is when is the correction coming. Anticipating correction is often an art, not a science. Many opinions are anticipating that the correction will be happening in March, after Chinese New Year.

While the long term trend is highly predictable, the short and medium term trend is hardly anticipated. However, as outlined above, an immediate up trend with spike, if happened tomorrow (which most probable stretched to Wednesday), investor overreaction, and a short term overbought will surely happen (how sure is sure? There is nothing sure in stock market, but the “sure” is used here for the sake of sure itself).

Then, the opportunity exist for all of us, it is time to take the profit (well, I recommend taking partial profit, particularly those stock which are having low publicity and negative earning) home and lock it. Only after the overreaction effect is being slowed down then only we reenter again and ride to success with the bull.