Thursday, January 27, 2011

Singtel post-action report

After posting the chart on singtel a couple of weeks back on 10th Jan, I was pleasantly surprised that it 'popped' on 26th Jan, with the price rising 2.3%. I had decided when I've posted the chart earlier on that I would not trade this counter. The reason is that the counter is too heavy, and I do not have a lot of spare cash. At most, I can only do 2 lots, but if I'm stuck with it, I do not have enough to average down nor do I want to lock up my capital there. Then, I've put up a entry price of 3.04 to 3.05 with expected tp of 3.19.

Even though I did not trade this, I thought it'll be useful for me to analyse what is right about the trade. Here's the chart on 10th Jan:

Here's the chart on 26th Jan:

Here's what I think about it:

1. The bullish descending triangle works out very well, with the price popping out of the upper trendline of the triangle with increased volume. It however didn't rose immediately after that. Instead it continued to consolidate before rising up . This might fake people out of the breakout.

2. There is not only a bullish divergence, there's a triple bullish divergence, with the price continually forming lower troughs and the macd histogram forming continually higher troughs.

3. Long term FI divergence.

My initial target price of 3.19 thereabout still holds, though I'll be careful about the resistance cloud of 3.15 to 3.17. If anything is not right, it's really alright to take your profit and live another day.

Another reason why I didn't trade singtel is because at the time when I was tight with cash, I was trading singpost. Even though my singpost trade has lesser ROC than the singtel trade, I can hold more lots because of the price per share, hence my absolute amount for my singpost trade is still higher than if I had committed my capital on singtel. Sometimes, getting the winning trade in terms of the highest percentage might not result in the best outcome in terms of absolute amount. In light of money management and the risk of the possibility of getting my capital stuck in a heavy counter like singtel, I gave up the trade. Come on, singpost, make me proud!


Dividends Warrior said...

I have waiting to load Singtel below $3 for ages.

With the turmoil in Egypt, I hope I have the chance in the next few weeks.

la papillion said...

Hi dividend warrior,

Haha, I think you might have to wait a while for that to happen :)

Good luck!