Warren Buffett suggests you read this 19th century poem when the market is tanking

The stock market has had a volatile year, and it's not over yet: The Dow Jones Industrial Average lost more than 520 points on Monday and the S&P 500 fell 2.1 percent. Both are in correction and on pace for their worst December performance since the Great Depression in 1931........

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So you Predicted the Parliament dissolution!!! You were right hah!!! Did you make money out of it!!! Yes or No???

Just like on the 26th, our politicians gave their beloved voters A SURPRISE again yesterday.  Just like the ASI moving up 60+ points on the 26th, we saw the market closing 48 points higher on Friday the 9th of November 2018. At this moment I hear a lot of folks saying that what they predicted is what happened. They say " Saw I told you so, blah, blah, blah ". If you are one of those, if you are also one of those who like short term profits in the stock market, tell me this, Just as you are telling me that what you told in politics happened, did you use that to make short term profits in the stock market FOR YOURSELF? Did you!!! If not, think to yourself, when these politicians are sucking you up and making billions, you are not even making 2 rupees in the market, by using your brains and time. What is the use of predicting what politics is doing, when you can't use that time to make money for yourself. Only charts will help you to do that. Practice to learn that, without wasting your time like a Naatami talking about politics, and confusing your self more than even a labourer. Chart will help you to trade, make money and be peaceful when all are talking of how to run the country.

The bullish close we saw will persist in the morning sessions on Monday the 12th due to the actions of the aforementioned politicians. How strong the momentum will be could test the resistance levels we see in the 15m chart as explained inside the image given below.
If you are a trader then you need to get into action and trade with your buy, sell and stop rules.
AEL, TKYO, COMB, JKH, SAMP, MGT, LLUB and TJL are the once which will show you more action. Hence better get busy with these counters.

If you want buy, sell and stop levels on the above stocks to trade on Monday, and you have an Atrad online connection, please WhatsApp me on 0773219506, today and tomorrow, I will be happy to share them with you.

ASI - Reversed around 5963 and 5912 points

ASI reversed after taking support at the zone I expected between 5963 and 5912, and it happened within 2 days. That is a strong signal for the traders. However selling above 6100 will be very strong. That will be absorbed only with very strong sentiments. We need to give another 2 days to see the strength of this renewed momentum. The behaviour we would see on Monday and Tuesday will certainly determine how far the rally is going to go. Till then 6100 to 6170 is very critical. AEL. TKYO, COMB, JKH,SAMP, MGT,LLUB and TJL will be the stocks that will keep the Traders busy. Therefore getting into short term positions on these stocks with strict stop loss rules will be a must for Traders.

 

ASI - 08.11.2018

ASI retraced as expected, moving down to the highlighted range. Let's keep watching how things unfold.

ASI - 07.11.2018

Retracement of the ASI broke down through my previous support levels, without any evidence of a reversal. The highlighted range in the chart below, between 5963 and 5912 is where the support needs to halt the fall. Heavy volumes and turnover persisted today as well. But that is not the case with traders, who will need to watch the turn with restrain.

ASI - Good Volumes, Heavy Weights GULP what the Foreigners Sell!!!

Some pundits say that the Foreigners are Selling both Stocks and Bonds due to Politics (This is only a part of the problem). These same PUNDITS 'said' that the Foreign selling is due to what Trump is doing to the US economy. They said this NOT SO LONG AGO. They said the same things to the USD too. If you are going to GULP what these pundits are saying, then there is something badly wrong with your brains. While you are Gulping what these pundits say, 'The Heavy Weights' are Gulping all the selling that is actually coming due to the Volatile Global Markets. Buying JKH is what they are doing while selling JKH is what the foreigners are doing. These Big Buyers are having a different plan for JKH, so they pump in Billions of rupees. Foreign Selling on JKH is not over. The Big Guns who are shooting all their cylinders into JKH sellers aren't done yet. They will absorb all what the Foreign Sellers are unloading. Pity that the Local Pension Funds did not absorb atleast a tiny part of the Foreign Selling. It would have been a wind fall for the Funds and their Contributers.

The stupendously large Turnovers aren't helping the Traders as much as the real fluctuations happening in the Market. If you want to see, think and feel the real fluctuations, start educating yourselves to read the charts. Atleast read articles as these and get informed.

Remember this!!! CHARTS CANNOT BE MANIPULATED. This you will understand only with enhanced Learning, Practice and Real Time experience. It is not easy to start believing in Charts. But you can.

As I expected, we see a SWING HIGH FORMATION in the ASI and the 7 stocks I mentioned in my last post. The image of the ASI you see elsewhere in this article shows you exactly what the formation is all about. It is a "Short Term Bearish" Signal. So you need to wait, until a trend change takes place. For the Short Term Traders this change must happen within a maximum of 2 days, or 3 days at worst. If there is no trend change within these 2 to 3 days, BE HEAVILY IN CASH.

Let the pundits talk their crap, Let us watch the Charts and make money. After all how many of your darling pundits ever helped you to earn an income with your hard earned money? Charts will help you and guide you.

Watch trend changing signals on : AEL. TKYO, COMB, JKH,SAMP, MGT and LLUB. Also TJL.

Tokyo Cement - Watchout for the Cup and Handle Break out

Watch out for Tokyo. Once a break out is established above 28/=, a re-test of the present high is expected. Break down below 26/50 will not be the best for a short term trade. Initiate a Buy at 28/= once the break out takes place, with a target at 30/60. Failure to trend in the short term will not be healthy, hence a stop at 26/50 is strongly advised. A plan to achieve this setup within a period of 2 weeks, would be a good idea if you are going in for a short term trade. If the target is not hit within this 2 week period you could close the trade.

ASI - Traders must see this

In my last post I expected the ASI to pull back to 5914 and 5858 points. It pulled back to 5920, then trended up to the expected highs between 6100 and 6200. This aggressive up move within a short period has its negative effects for sure. Fridays (2nd of November) behaviour confirmed this. Although it hit a high of 6168 points, closed below the Thursdays close. Long upper wick and a close below the days open, by all means is a bearish formation. This may end up with a swing high formation for which we have to see how the Market behave on Monday. Traders must be careful. Preferably should watch the morning session before getting into any position. I must also  say that the bullish trend coming from the positive sentiments in and around the market will certainly help the traders who will watch the pull backs well. Let me whole heartedly wish the traders good luck, as they had to face a major blow in their trading activities for a long period of time.

Short term Support Areas : 6066, 6057 and 6007.
Counters that must be watched for pull backs : AEL. TKYO, COMB, JKH,SAMP, MGT and LLUB.

ASI MUST TAKE SUPPORT BETWEEN 5858 AND 5914 TO EXPECT NEW HIGHS

ASI checked 6000 points but did not hold. Now the above levels of 5858 to 5914 must be the area to watch. A strong consolidation there will take the market to new highs and test 6100 to 6200 points. FAILURE TO HOLD THIS AMBER SUPPORT AREA will test the RED ZONE which will stall the short term uptrend. Let's hope for the best, ELSE be ready to Stop Loss at your price levels. THAT'S A MUST.

Is Mahinda the New Prime Minister - Are You Sure

The biggest mind blowing game happened on Friday the 26th of October 2018. Mahinda Rajapaksha became the New Prime Minister of Sri Lanka.
What will happen to the Stock Market Now?
As reported on the 7th of this month, RSI is in a bullish Divergence. Despit the index falling RSI DIDN'T. Last Friday the Market jumped 60 points with big volumes. This is a very strong signal.

How Mahinda Rajapaksha is officially going to be the Prime Minister is not the question I want to ask you today?
Are you a person with a stock trading account in the CSE? You need to get on board now. Start buying to a plan/strategy now.
If you want to buy tomorrow the 29th, Here is a strategy :
- buy the best stocks only.
- buy a maximum of 3 stocks.
- buy only 30 to 50% of what you want to buy of a stock in the morning. Between 9.30 and 10.30am. Thereafter cover the balance 50-70% during the day.

Market has re-acted to what happened on Friday evening, in the Morning itself. Market knew that there is a change of sentiments. RSI had reacted well before all this happened.
The expectation of the ASI testing 5982 will happen and it will become a strong support way forward. Who ever is still waiting will be those who do not want to do anything to a plan.

ASI respected the RSI bullish divergence - Heading to test the 2017 low

As indicated on the 29th ultimo, the bullish divergence in the RSI prevailed. But before that the index retested the 2016 lows of 5800. The week finally closed 5883 points, 81 points above the 2016 low of 5802 points. Now we must see that the 2017 low of 5982 points being tested. The tricky part is the way the index moved in the last 3 days of the week. After hitting a low 5792 points, it reversed 91 points in 3 days, but without much trades. This is something that we have seen in the Market on many occasions. This fragility could make the market fluctuate by retesting 5800 area before it hits and test the 5968 area. That would also be healthy for a stronger recovery which needs to be watched.
We can't expect many participants to come in just yet, as a lot of them want to COPY CAT the big players. They think they would find fish in the shallow waters. Those who are bold enough are fishing in the deep sea, where you get the best catch.

ASI trying its best to hold above 2016 lows......But???

The week just finished, tested the 2016 price territory. The worst day was the 25th as the market closed at 5833. Indications were to break down below the 2016 low of 5802. The market opened on the 26th with a point drop at 5832, and then the day closed with a breathing space. ASI is enjoying that space of breathing till yesterday to close the week at 5862 points, Exactly 60 points above the 2016 lows. However the RSI has a positive divergence, with the present low being higher than the previous low....THE ONLY SILVER LINING IN THE DARKEST PERIOD IN THE POST-WAR STOCK MARKET.

The monitory and fiscal policy handlers in present Sri Lanka has a strategy which is in action for more than 3 years now. They think that strategy will make Mother Lanka PROSPEROUS in the future. It's a strategy amidst many strategies in the ocean. Results will be known in the future. You may think this will work, OR not. That's the freedom you have.

One of those lessons I learnt during the present times of horrific selling is that the people who called themselves investors started selling LIKE CRAZY. So those so called SAFE MARGIN TRADERS, who normally top up to keep the margin % under control - GAVE UP, and are giving up one by one.
Investors who sold and are selling and these safe margin traders had a strategy of holding VALUE STOCKS. But they changed gears and started looking at the value of their portfolios. Value of Stocks and Value of a portfolio normally define the investor and trader, but the investors in this case suddenly decided to become traders, and executed the STOP LOSS STRATEGY, quite confusingly with heavy losses. This is why I always reiterate that you have to define your self. If you define to be an investor be bold and hold. When the Stock valuations are becoming attractive by the day - accumulate. Those who define themselves as traders, by all means and at all cost STOP LOSS. Whether you like to read that or not it is my duty to keep you informed.

Coming back to the market, we now see a pull back if it were to happen based by the positive divergence on the RSI, will test once again the 2017 lows, which now sit as the RESISTANCE.
Conversely if the present downward slope to pause, the SUPPORT at 2016 low of 5802 should be respected. Otherwise the fall would bring the index down to test the 2013 lows of 5600.

ASI fell below 2017 lows, now heading towards 2016 lows........

Many did not want to see what's happening to the Stock Market right now. So many Traders and Investors are running miles away from the market already. So many big names are not to be seen, as if they have gone out of the country, or hiding. The way things are unfolding it is most likely that the Index will test the lows of 2016, around 5800 points. Any stop and reverse at that will be a relief, but for how long. Some are thinking that the fall is due to the USD hitting higher against the LKR. But then how come the Indian Stock Market is following the Dow? Indian rupee has fallen 17%, while the LKR has fallen only 7%. The valuations of the Colombo Stocks are laughing, but no one wants to invest, NOT EVEN THE LOCAL FUNDS. When the big traders or investors are not in the market, even the small timers won't, WHY? because they are copy cats!!! Today the Politicians are telling how the funds should invest, as if they have made this country prosperous except themselves. If one was following stop loss the damage would have been so low, but how many did? Many are not bold enough, and have no back bone to do so. Do not ignore the market as the more the market falls the more valuable the stocks are going to be. Let's see how many would be bold enough to do so.......

 

ASI - Heading down towards 5972. The 2017 Low!!!

Nearly a month since I last posted a chart on the ASI, the index could not respect the uptrend. Instead it has now broken down the previous low of 6042 on the 20th of March 2017, closing at 6040 on the 21st of August 2018. Despite the attractive valuations, and bullish equity markets with corrections elsewhere in the world for many years running, ASI has struggled to keep pace. But reacted only when the world markets witnessed profit taking, and head southwards. This was mainly because of the lack of Participation by the Local Institutions and Local high networth Individuals. Except for a few Local high networth individuals who liked to buy when the Foreigners were on a selling spree, and the unprofessional Retail and High end Traders got forced sold there wasn't  any support coming from the most important local counterparts. If we do not see any change in this trend, we will not see a trend change in the Index anytime soon. If this dismal performance persist a test of the 2017 lows can't be ruled out.

Market Summary - Weekly Report - 26.07.2018

With a lot of hopes building up in the first 3 days of the week, the ASI ended 20 points above the previous weeks' open. Below are the Major Markets, that would impact the direction of the CSE in the week ahead.......

ASI - Remember my chart on the 11th of July 2018, and how it looks like now

11th July Chart is below

How does it look like now

As you can see ASI hit the red line on the 18th and made a pullback to 6160, then continued to move up, and just closed above the red line. We will now see the ASI basing itself strongly at 6200. To do that it must move higher to test 6250. Then re-trace to 6200 area. If we see that pullback diving lower then 6160 to 6150 must hold. However it is clear that 6042 will not be re-visited by the ASI anytime soon.

Alumex - Trade Setup

Alumex has a potential Trade and it is given in the chart below

If you are a trader please don't take this trade without the stop loss rule.You must be fit and bold enough to stop loss. Otherwise please don't trade.

Major Markets - Weekly Summary

ASI broke out of 6177 which was a major resistance level. Short Term Bullish. Time is ripe for those who have not got in yet.

LALU.N.0000 - Trade Setup

Lalu is not a liquid stock as such please buy only what you can stop easily.
If you do not want to stop loss, please do not Trade.

Major Markets - Weekly Summary

ASI closed the week above the present low of 6042. But there is a long way to go. Firstly a reversal can happen between 6150 and 6177. Need to watch that in the short term. Please go through all the charts posted here, as all of these markets have a telling effect on us.

 

 

 

LIOC - Target Hit - 34/- to 35/-

On the 8th of July I shared a post on LIOC. You could have easily made a trade buying between 31/- and 32/-, selling between 34/- and 35/- thereafter.

The chart I shared is below:

Only condition was a stop loss between 29/- and 30/-. If you had followed this trade you could have easily gained within a week.

But if you do not want to stop loss, or you do not know how to do it. Please do not be fooled. You are not fit to trade. Overtime you will be a sure looser.

ASI - If 6042 is supported, short term target will be 6187 points

ASI has lifted it's head up - Slightly. It must hold 6042 in the short term. Then we could expect a short term target of 6187. This is not a very big move, but will be good medicine to an ailing patient.
The voices calling out for the Local Institutional support to the market is on the rise, slowly but surely. Values are very attractive, they should not leave room for front running or foul play. The time is great to accumulate in the most attractive way. The valuations are so low, that if collected should be held for a very long period. Even in excess of 30 years. Only the Pension Funds could do so.

ASI - 32 points away for the BEARS to shred the BULLS to pieces

ASI is not helping the bulls at all. Another 32 point drop will bring the bears back to hammer the market down towards the support levels of 5900 and 5800. In this environment the traders can not do much. But the value pickers will be having a gala time. The Market and many stocks are offering them bargains every day. Unfortunately the LOCAL INSTITUTIONAL FUNDS are not to be seen. As I mentioned in another post the valuations are very attractive for the funds to start accumulating. The best way is not to pick large volumes from single parties. Instead you can keep collecting through all Broking Houses, at  the present prices and within a range which will be fair for the Funds and also to the Contributors of those funds. In the past buying from a few parties and broking companies had dismal and disastrous repercussions for all connected. Some of these colossal damages can not be corrected. The culprits, even if they are identified weren't brought to book. But the present environment is very promising for these funds to accumulate by using all Broking Houses on equal grounds. This would avoid the possibilities of front running the Funds as well.

If 6042 is not supported, only a little could be expected for the market to head higher to test the resistance levels.

     

LIOC - Possible Trade....Stop Loss is a must

There were many trading opportunities on LIOC for many weeks now. You can follow the same price levels presently as well. But you must have the guts to stop loss, else YOU ARE NOT FIT TO TRADE. Better to put your money in a savings account or an FD. Stop loss is the no 1 condition.
Next understand the amount you are fit enough to loose on the trade. Is it 100/=, 1000/=, 10,000/= or 100,000/=. Then calculate the loss per share for your trade. Eg. in this trade if you buy at 31, and stop at 30, then you loose 1/=. If you are fit only to loose 1000 per trade and the price loss is 1/=, then the position size/number of shares per trade will be 1000/1=1000 shares.