Should I join the ride now?

Remember my previous posted - don't have to worry about the so called "meh", and do not listen to those so called analyst experts said.........

Shanghai market has gone up 10% over the last seven trading days.  If we base on the psychology level 2000 point, SSE in fact has gone up 34%.  How much more can she goes?  Some people asked me can I enter now?  To answer this questions, let's look at another index - Nikkei.

20,833 points, the highest peak in history for Nikkei which recorded in May'00.
After then, it crashed all the way to 7600 in Apr'03. 
Then the bull came and brought Nikkei to 18,300 in Feb'07
Global financial crisis, Nikkei dropped all the way to 7000 in Oct'08
After that, we saw Nikkei moved between certain ranges during certain periods.  After all, it has a strong support/psychology level between 8200 to 8300.
Then something implemented by the Japanese government which was similar to US QE stimulus.  By then Nikkei started to move upward in Nov'12.  With much hardship, Nikkei finally reached 17,520 points in mid Nov'14.
Nevertheless, since Y2000, Nikkei never has a chance yet to go above 20,000 point.

Now let us look at Shanghai index.
6124 points, highest peak in history in Oct'07.
After that, it crashed all the way to 1664 in Oct'08
Then the bull came, trying to bring the index back up.  Nevertheless the bull was not strong enough.  Apr'09 at the level of 3478 , the mama bear came and pounded the index southern.  
After that, what we saw SSE moved between certain ranges during certain periods.  We saw another similar case as compare with the Nikkei, by then SSE has a strong support/psychology level between 1950 to 2000. 
Then something came out which was the 沪港通.  With this it brought SSE till date to 2683.  An upward of 34% from 2000.  
Nevertheless since Y2007, SSE never has chance yet to go above 6000 points.  Another similar situation. 

Let's look at the zoom in charts.  The arrows that I drew.  Same pattern, isn't it?  So, will you buy now?  

We need to understand how big boys move the market.  The big boys understand how retail traders/investors trade/invest.  Do retail traders/investors know how the big boys move in and out from the exchange market?  The answer is "no".  By looking at the SSE chart, I see two things.  One the recent so called "meh", is only a retracement.  Those big boys are still holding on with their tickets/contracts.  Two, the retail investors are still standing at the sideline, watching.  Here is the problem with the retail traders/investors.  By the time they start to go in, the big boys start selling.   

Whether is indices and counters, it shouldn't keep going up without any retracement or pull back.  Lets look at Nikkei.  End May'13, when it came closed to 16,100 resistant level, at 16,000 Nikkei has a major correction of 22%.  Observe, which time when it come to close to it resistant level, look for signal, enter on retracement/pull back if you are confident and positive on SSE.  But I am confident that SSE can go up to 4000 point, now is only at 2683.  Ok, I enter now.  But make sure that I observe which time when it come close to its resistant level.  If there is signal telling me is time to let go, without hesitation I sell.  Remember this, trade what you see and not what you think.  Lastly, if you happen to see an index or stock which keep going up without a rest, worst with a very steep uptrend, the advise is stand by, put on your parachute.  

Potential signal for China A50 and SSE

Potential turn signal for China A50 Future and Shanghai index.  A50 shows a hammer and SSE shows a DDU signal.  Look out for trigger.

Hong Kong and Shanghai connect gets second day "meh"?

Finally, 沪港通 kicked off on 17-November.  The long waiting connection which allow the cross trading between the two cities, Hong Kong and Shanghai.  

Let's recap what happened over the past two days.  On the first day, the entire quota for purchases of A-shares was filled by mid afternoon and only 16% of the purchases of H-share was used by end of trade.  On top of the volume, let's switch to a piece of news on that day.  "Shocking Japan GDP".  "Once again Japan goes nto recession".  On the same day, Nikkei went down about 500 points.  Overall Asia markets were affected.  Shanghai index not excluded.

Because of panic, on Tuesday, the second day, 72% of A-shares still avaliable by midday and only 5% of H-shares was used.  After market closed, we saw numbers of articles like connection gets second day "meh"..........we even have so called analyst experts came out to say stay out from those A-shares because of this and because of that.......... 

Shanghai market has this psychology level - 1950 to 2000.  For 2 years, wherever it touches this level, it will rebound.  Before the actual launching, Shanghai index has went up from 2000 point to 2500.  An upside of 25%.  If you were to be China investors, what will you do on the first day of launching?  Yes, sell and take profit.  Let the price comes down before you start to buy again. 

As you can see from the trading volume done, foreigner investors concentration is on the A-shares.  I see the potential and opportunity on this 沪港通.  Things that investors need to watch out is the policies.  If you do watch how RMB moved, you will understand what I mean.  Last but not least, make sure you get a reliable broker firm to trade China A-shares.

Entertainment - Father vs Mother

Gaps are trend enemy

STI formed head and shoulder in somewhere mid of September.  It has a clear break out from its H&S neckline with a breakaway gap.  Subsequently it has numbers of runaway gaps.  16-Oct, it hit the H&S TP with an exhausted gap.  Two days later, it revert and have a reversal breakaway gap.

Gaps are trend enemy.  Gaps have the similar problem with "open high close low".  In the market out there, there are numbers of professional traders who love especially this kind of gaps (refer to chart).  They are specialize in playing gap and I called them "Gap Specialist".  They will find ways and tactics to fill those gaps.  Hope that the specialists do not create another set of gaps while they are patching those upper side gaps. 

Indoagri divergence and require to break two resistants in order to end the pounding

Simple introduction on 沪港通

沪港通 a door for us to buy China shares.  It is set to lift the trading volume of certain Hong Kong and Shanghai shares.  Shanghai-Hong Kong Stock Connect establishes mutual stock market access between mainland China and Hong Kong.

In total, 568 Shanghai-listed stocks (A-shares) will be available through Hong Kong while 266 Hong Kong-listed stocks (H-shares) will be accessible by mainland investors.  Out of the 266 H-shares, about 70 of these companies are dual-listed in Shanghai and Hong Kong. 

Share prices and trading of A-shares will be in Chinese Yuan while share prices of H-shares will be quoted in Hong Kong Dollars and settled in Chinese Yuan.  The arrangement will boost the use of the RMB in global trade.  Oversea investors and traders may want to take of this - share transactions are executed in Chinese Yuan, this poses a currency risk to overseas investors, who must choose to pay a fee to hedge their translation exposure or be subjected to foreign exchange fluctuations.

Both exchanges will impose a daily quota of RMB 13 billion (A-shares) and RMB 10.5 billion (H-shares) respectively.

Chinese institution and investors with a minimum RMB 0.5 million in their securities accounts will be granted access to Hong Kong shares through mainland brokerages.

The Stock Connect will not allow intraday trading while investors are required predeliver their orders. This means that purchases and disposals of A-shares must occur over separate trading sessions.  Intraday traders need to take note on this.