Raffles Education – Testing its strong support of $0.535

Raffles Education closed at $0.55 with some heavy selling by unknown big institutions (two big transactions of S$ 500k & S$ 1million each).

Looking at the chart, the stock price is below 20D & 50D MA line and very close to 200D MA of about $0.52 and 61.8% Fibonacci retracement line of $0.535. MACD shows bearish convergence & 20D MA shows a short term down trend.

It will be interesting to see whether the stock price can hold above $0.535 and bounces back from this critical support level. If it breaks below the 200D MA, the selling pressure will be even greater and down trend may start. In addition, we are entering Sept period when STI may start a big correction and this may exert additional selling pressure to all other stocks. I will stay out of this stock for the time being.

Synear – Bearish Doji candles formed after 22% gain in a week!

Synear probably takes a breather after a week gain of 22% from $0.275 to $0.335. This bearish doji candles end the uptrend and the stock price may go into consolidation. If next Monday trading ends with a bearish long candle, Abandoned Baby pattern will be formed showing a reversal bearish trend. The stock price may retrace back support line between $0.27 and $0.28. If the Abandoned Baby pattern is not formed, the stock may reach $0.365 after a temporary consolidation.

Don’t chase the price!

A lesson I’ve learnt recently is not to chase the price no matter what the technical indicators showed. I chased the price of Hongguo at $0.34 (at the top) when I saw all Standard Six indicators showed bullish convergence, however the price retraced back to $0.27 within one week. Currently I am still at lost with Hongguo’s $0.31 today with thin trading volume. I will probably hold the stock for a longer term and wait to reach the my calculated intrinsic value of $0.85 (calculated before the recent Q2 2009 financil result).

The hardest part of the stock trading is to control the emotion, however I was able to control my emotion by delaying the action by one part after seeing Synear breakout from its triangle. I was very tempted to enter the trade at $0.285 but I kept reminding myself not to chase the price. Eventually I was able to enter at $0.275 and today Synear closed at $0.305, a handsomely 9% paper gain in one day!

Today I almost go to chase China HongXing stock price at $0.215 before the market close. Fortunately I was disciplined enough to wait for another day. Base on the candle sticks, the stock price failed to break the resistance and would probably retrace back to between $0.18 to $0.20. This gave me another opportunity to buy on a dip.

Lesson Learnt: It is OK to make mistakes but must learn how to prevent making the same mistake for the second time.