Before I continue, I just want to recap a piece of what I wrote in my earlier blog....

"Moving ahead into the millineum, many things have change. For one, information is made widely available and market is now proactive. It is proactive because systems will trigger alert and alert will demand action. This is normally applied by the modern day dabbler (ie fund managers or syndicates). It is important to note that the fund managers and syndicate may be on different side of the court for a desired stock. So when the system trigger for a sell to the fund managers, the syndicate will wait for it to bottom out using the method of RSI and Volume to buy which I have shared in earlier topic. Though simple enough, low buy rate at high volume is a no buy in yet. So have a look at your current desired stock and see at various hours when the stock price and buying settles down to see if the time is right to buy again or sell."

If you hv read the above, you would also recall the tagline "Market Always a Want To Recover" which to some is already a clichė.  It is important to remember this because many hv made their money using just this opportunity. However this is NOT to say that all market declines are good opportunity for rebound. We should consciously remember that market is made up of a wide variety of players. There are

1. Institutional 

2. Retail 

3. Syndicates

4. Foreign Investors

Each of the play is very different. For example, instituitional play may include buying by investment arm of GLC & non-GLC, stake holding enterprises, sizeable treasury buy back while sometimes 1, 2 and 4 may fall under syndicate. Instituitional normally will hv to observe the by-law (policies) such as close period as they may be privy to unaudited financial reports or material/sensitive announcement similar to those by the top management needing to declare prior to trading (during close period.) As such instituitional behaving like syndicate under their own interest and company name is more unlikely. If they do it will probably be using a proxy to extend their endeavour. When this happens, some here claim they hv insider information is technically illegal if it breaches some of the by-laws and should be very careful when using this term. 

it is also good to note that in Malaysia, if a company is issued with UMA by Bursa, it is likely closed if the respondent claims no knowledge however in Singapore under SGX, a UMA which is found to be tied to a coming material announcement or merger or GO  prior to the announcement, the perpetrator will be named and shamed. 

Knowing this and knowing the behavior of the counter, instituitional buying from open market normally provides support to the share price rather than running up the share price. So don't expect a gap up following an instituitional buy-in unless a syndicate decides to ride on it. A syndicate normally will ride on it (if it so happen to be their chosen counter to play - coincidental) then the price may spike because the support is already provided by the Instituitional buying their stake. This is not desired because you are not in the know when they will sell and it is also the reason why some of the share prices fall flat after a large leap or gap up. If the gap up sustains until closing only to perform a gap down the following day, those reading the "evening star"may be too late. With this reason, always sell at 10-15% on single leap to avoid situations like this. You definitely do not want to be taken out by a sucker punch as you enter the stock as it will be devastating leaving you without a chance or a fight.

Last week we saw many market capital wiped out and this was mainly caused by foreign investors pulling out RM197M. The repartriation of our investment arm should have kicked in together with the SRR and this was seen as an opportunity for many experienced investors. In addition to that, I hv also shared the indicator of Gainer/Loser, Traded/Untraded to gauge this and predicted the rebound this week however it is not always this way. Just like a wave crashing on its path, it may pull you deeper into the sea or wash you ashore depending on your split second ability to read it. If you manage to ride on a free wave to shore, you are the lucky one.  Again, no right or wrong here because I know of many who survive the market base on defensive play while others who succeed only to failed later by just playing offensive all the way. My personal take is to develop the ability to play both offensive and defensive and this is the reason I am writing this blog to provide an alternative to mostly agressive play.

So in short what do we look out for?

During my 20 yrs experience in the market, I have only riden a super bullish wave which extended pass 3 consequetive days, a hand full of times. The highest being a 3 weeks run however only 3 in 20 years. It is good to note, my term super bullish here is in reference to stock price moving aggressively north consequetive daily and NOT bullish KLCI or market. And those times I was mainly an investor. For that reason and the reason of our current market, I am a trader looking for every sign in the market for pulse and movement more than an investor doing a fantastic stock pick as the market volatility demands a more defensive play.

For the current market, where known (QE, GDP, Financial results, SRR, etc)  and unknown volatility (Foreign Investors pulling out, syndicate etc) it is important to see that unknown volatility is actually a known volatility. WHY??

I have shared this in one of my other blog where i mentioned that because fund manager utilise system to trigger alert to sell and cut losses or sell to take profit, this has also become the tool for syndicate to buy during one of the sell. This is NOT to say that everytime a fund manager sells, the syndicate will wait. NO! You will still hv to be the chosen counter for syndicate to play and they will coincide with the system sell call. Using last week as an example, the more snowballing effect of a sell the better to collect.