-Bonifasius Trading-

I met my old friend’s housemate today, an experienced 2 years++ trader at ISX (Indonesia Stock Exchange). Lets call him Andy.
He is a fundamentalist, but he does still use some TA indicator as well.
I Have been out of ISX for 2-3years now tho most of my relative still trade there.

Andy and I had a discussion on the FA and TA approach…. and he mentioned something quite hilarious

People say, if it is bullish , it is like climbing a ladder… slowly going up, but if it is bearish, it is like jumping off the window!! hahaha

I will not to look back to tell a story of my old time sake back in JSX (Jakarta Stock Exchange before it is being merged with other local bourse to crease ISX).

But looking at the chart of AAPL, GOOGLE and BHP last night, made me realize that this bearish trend is coming to STAY!

Lehman Brother has just filed for bankruptcy (the institution that survived for nearly 160 years, surviving 30’s depression and many more ) , Merrill lynch is sold to BOA after capital injection from TEmasek and Dubai Sovereign fund And asset sales cannot keep up with the asset writedown and bad credit.

Where is this going,…… i believe we’ll be seeing more red candlestick (if you’re not chinese in china) in the future.
This is the bear Cycle.. and the volume on OBV has confirmed that the distribution is HAPPENING!
Google OBV level and Apple is exactly the same as before they took off about a year or a little more ago.

if you’re a stock trader (especially a fundamentalist) with a ‘Long’ position and strategy, it will be wise to pack your bag as CASH IS KING now!
AUD plummet from 0.98 to below 0.8 (nearly 20%) in value in about 2-3 months. Where has those money flew into? Nobody knows, …. USD has strengthen, Oil is falling as the speculator realize that it is time for them to liquidate their asset and to keep it under a safe drawer.

Where can you hide? As for now, the smart is the one who would survive.

Is there still an opportunity? Fortunately, The answer is ‘Yes’…. =)

PDN being one of the largest Uranium producer in the world has been affected with the slowdown and bearish trend in the general market.

I believe it is a fundamentally sound company with its founder being the CEO, the stock price has gone from 1 cent to around $10 in the last 6-7 years.

Anyhow,.. enough about the fundamental. I recently traded PDN on my simulation CFD trading, and since has not traded at all anymore due to the uncertainty in the general market direction.

I just take a peek at PDN and intrigued with the OBV indicator.

Latest PDN CHART is below:

OBV analysis

As you can see, Currently PDN is at around $4.70 support price (DOUBLE LINE ON THE RIGHT HAND).
If it happens to breach the level, I’d expect it to go lower.

THIS IS NOT A TRADING RECOMMENDATION. As the chart is below MA 20, 50 and 200, only use a bearish Setup if you plan to trade.

What is interesting is because the STO indicator has registered D,K (11, 19) OverSOLD value (below 20), It could simply bounce back up. However, we need a back up confirmation.

So, I draw horizontal line on Early august (similar price level where the support is formed). and I draw similar line on OBV indicator.

Well, OBV indicate that from 8 to 13th of august, the price of PDN is remain on the same range, but THE OBV is increasing significantly (that should also be another reason for the strong bounce of PDN when it was previously traded LONG).

Second, while the price level on early august and today’s is at around $4.70 -4.80, the OBV of the early August is similar with today’s as well. ( Anyone who bought on early august when the chart is breaking through MA20,50 and 200 should pay attention to my correction interpretation on MA, only valid if it cross on UP slope!)

Third, the good news is that the OBV is still stronger than April-May 2008 period when it register a value below 0.

For now, It is a hold and see…. there is not enough evidence that it will bounce back up.

Today I found that I should have purchased more PDN before if I’d have paid more attention to the OBV indicator.

If we’re back in the same page like a month ago,… i believe PDN will go back up if the general market turns out to be bullish again.

But I maintain a Bearish look on the market for now based on the chart below.

I realized this suddenly just now that the only reason why I believed that S&P 500 chart may be bullish is
1. Making a higher low (which is a valid bullish indicator).

2. MA 20 is now crossing above MA 50.
This IS NOT always valid to indicate a bullish indicator.
ONLY IF RISING MA20 crossing above a RISING MA50, it will indicate a bullish trend is formed.

Recently, I have been putting more attention on William J. O’Neil book’s of Short trading. Well, the book is thin and mostly it is about a single short strategy of trading ( Head and shoulder formation followed by 2-4x failed attempts to break above MA 50).

To note that most of his charts is weekly or bi-weekly chart represented in a single bar. therefore, my analysis on the current S&P 500 is experimental. I would also assume a hermeneutical effect from reading the book recently, however, this is just an attempt to recognize a chart pattern. 

The figure of the latest S&P 500 is shown as below:

On the top left hand side, (sorry i couldn’t edit the picture on my mac), there are 3 horizontal bar, and I’ll call them A, B and C. starting from the left hand most of it.
A= Left shoulder
B= Head
C= Right shoulder
The pattern fits the criteria in which the right shoulder should be lower than the left shoulder. (It would simply explain the index fallt in the next few days afterward).

Then there on the right hand side, there is 4 lines pointing at one direction upward. Note that the blue line is MA50 lines, the 4 lines are drawn based on the daily chart of the candle stick trying to break the MA50 and failed.
On thursday, S&P dropped 3% below its support level 1253 ( draw a mental picture of this line).

The Question left to answer is,…. with the current fundamental of US market, it may not be long after the election that the crash may happen. I am still very very skeptical that the worst in the market has over yet. So,.. is this a signal to shift the strategy to bullish setting? hmm,…. we’ll have to see….

I posted the S&P chart few days back, and at the time, i believed that the chart does not show a strong trend of either being bullish or bearish. 

Though i note that the chart is making a “HIGHER LOW” and “the MA 20 is moving above MA 50″, which is a signal of a chart to turn Bullish. However, the gap between MA 20 &50 with MA 200 is so huge that this may just be a short lived bullish. 

I took 2 pictures of the current S&P500  for better view (Click on image to zoom in)

- The chart is not consistent on down trend line ( 5 trading days ago , a long green candle ) , however it is consistent with today’s closing. My gosh. 

- This is an unlikely Flag pattern, and anyone who would have assume it will have to bite a bitter pill if they do not wait for the next day confirmation. the chart simply punch out of the flag and fall down, “premature”.

- This was then followed by “Bearish Harami” , Doesnt look good eh? 

http://www.hotcandlestick.com/directory/Bearish%20Harami.htm  

-on 2nd September, it is a red candle with LONG upper head, the chart is opening so high that it was pulled down during the mid day…. CERTAINLY not a good sign! 

-This 3 condition in the last 5 trading days may confirm the existence of bearish trend, but…. the MA 20 that is growing the gap distance with MA 50 also telling a bullish trend…. 

-A final note that a head and shoulder formation is possible but  it will not be considered unless it is crossing below MA50 again. 

This is why I’m laughing… “Not entering market yet”, but I believe it may be a start of a Bearish again from now. 

As noted on the graph below (S&P 500) that the market has been very volatile

Green line : MA200

Blue Line : MA 50

Red : MA 20

The graph has been very volative since it is entering MA 20 and MA 50 last month on July.

on the first week of august 08 the chart break through MA50 but the up trend is weak while falling back down to below MA 20.

However, to be noted that although the trend is not strong, the graph has been showing:

1. ‘HIGHER LOW’.

2. Steadily increasing MA 20

3. MA 20 now higher than MA 50

This is indicating that there could be a short term tendency for the market to go up.

However, any trade should be limited as shown on 18-20th August how volatile the market can be.

I do not take any position for the last 1 week due to the extreme uncertainty in the market currently.  Let me know what do you think .

Trend line is drawn based on the closing price of the day

CFD Portfolio

Trading History

Trading Balance

Chart of PDN with MA, STO(5,3) and Volume

a. Saxotrader platform has been activated and will be a great assistant to trade in the future as it provides a more reliable data and charting than a combined yahoo finance (chart is laggard by 2-3days) and some charting websites.

b. Stop lost touched this morning at opening price of $5.20. I regret i did not sell it yesterday as the indicator shows it has shown an overbought signal (STO). However due to lecture and tutorial from 2-5pm yeserday, the stop lost may just be the best option while still booking about $3500 of profit this morning.

c. Expect the chart to cool down as it has gone up more than 15% in the last 2 days. No more trade until next week.

d. Overall system is still reliable so far. Indeed the idea of glueing one’s eye in front of screen at early morning may not be as intesting as the last trading hour. The trend of local and US market still a considerable force, however it is not that much of relevance on certain stock.

e. Similar test will be conducted until the next 5-10 more trading ahead to further test its reliablity

f. Near future plan is to identify and build a volatile stocks’ watchlist and to do trailing trade ( this will require quite some advance and tight stop lost price barrier). Need to experiment on Short more as Long strategy is improving.

Daily PDN.ax

Hourly PDN.ax