SPH’s lesson learnt – Exit trade without looking at the chart

Last Friday SPH closed at $3.70 and I started to regret that I exit the trade too early. I bought SPH at about $3.05 and sold all at $3.48. I should have hold the stocks for a longer period.

My mistakes from this trade:

  • I let my emotion to take charge of my decision. I had worries that STI would soon be corrected and turned bearish in Sept. I can’t control my fear and decide to off load my positions.
  • I did not look at the chart before making my decision to sell. I would not have sold my SPH shares if I plot the chart earlier. The stock price was moving inside the channel and on the up trend. I should have sold the shares when the price hit the upper channel resistance instead of sold at the dip!
  • SPH is a defensive stock with low beta which response slower to the STI correction. In addition, investors will switch to defensive stocks when there is a market correction.

Fortunately I did not lose money in this trade but this was a really good lesson for me to perfect my entry and exit timing in future.

XLK – Technology ETF on a nice up trend

XLK is a technology ETF (Exchange Traded Fund). The top 20 holding as of Sept 4, 2009 are listed follow:

Technolgy stocks normally bring the economy out of recession and performs better during the early economy recovery. It is impossible to buy those technology stocks individually because those stocks are very expensive. As of Sept 4, 2009, Microsoft cost $24.62 per share, Apple cost $170.31 per share, Google cost $461.1 per share!!  However, we can invest in these nice technolgy stocks by investing in Technology ETF for long term especially during this economy recovery. XLK is currently on a nice up trend and we can accumulate the stocks when there is a dip.

Momentum play with Freddie Mac (FRE) and Fannie Mae (FNM)

FRE & FNM have been heavily traded recently and this is a very good chance to do momentum investment. Both charts are very similar which showing “higher previous high, higher previous low” kind of up trend.

FRE has a $1.718 support line (61.8% Fibonacci Retracement)

FNM has a $1.472 support line (61.8% Fibonacci Retracement)

Both charts are currently bearish divergence and need to wait for MACD to cross the red signal line to enter the trade.