TradeVSA Digest Week 12 May 17, 2019

Editor Commentary:

The see-saw battle with President Trump with other power nations leader continue to baffle market and media. The market begin to rattle off from its peak to switch to a volatile market. US Market Fear indicator VIX Volatility S&P 500 index) move to high of 22.5 which is not seen since Dec 2019. The trade tensions has reeled off billion of US market capitalization from the stock exchange. The old stock market axioms “Sell in May, Go Away” maybe truth…

No nations will come out as triumph when trade tensions escalated. China now moving to off-trade tactics by selling US T-bonds which will drive US interest rate higher. A US interest rate by US FOMC in 2H 2019 is likely on a table more than ever!

KLSE Market Update

Bursa Malaysia KLSE Index

On 2019-05-16, KLCI is trading at RM 1599.19 and change % from last bar was -0.75%, ( -12.24, RM 1611.43). And also 3-Month low. This market condition is considered to be very bearish for stock counter KLCI. This bearish condition is despite, KLCI has strengths in the background in the last 30 bars. There are 7 SOS (Sign of Srengths).

SGX Market Update

Straits Times Index

On 2019-05-16, STI is trading at RM 3230.26 and change % from last bar was 0.35 %, (+11.49, RM 3218.77). And also 3-Month low. This market condition is considered to be very bearish for index counter STI. This market is LIKELY moving from Stage 3: Distribution to Stage.

DJIA Market Update

Dow Jones Industrial Average (DJIA)
On 2019-05-14, US DJI is trading at RM 25532.1 and change % from last bar was 0.81 %, (+207.1, RM 25325). And also 3-Month high. This market condition is considered to be slight bearish for index counter US DJI. US DJI has strengths in the background in the last 30 bars. This market is LIKELY moving from Stage 3: Distribution to Stage 4:

Stock Trade Idea

Mark-Up likely to continue in Memtech
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Case Study

CAB vs CCK vs Teo Seng

Facebook Live & Video Tutorial

How you can trade SGX market profitably?

VSA Lesson

Liquidation Objective

Bill Wermine’s Education/Market Commentaries

Weekly Market Report – 11 May 2019
    – See More

Choose Strong Fundamental Companies

Avoid investing in penny stocks and choose companies with strong fundamentals. This provides some assurance of the companies being able to withstand share market fluctuations. In addition, these offer better returns in the long-term and offer greater liquidity for the investors.

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VSA 101

– Everything You Must Know About VSA

Using Trading Volume to Understand Investment Activity

by Steven Nickolas of Investopedia

Trading volume, or volume, is the number of shares or contracts that indicates the overall activity of a security or market for a given period. Trading volume is an important technical indicator an investor uses to confirm a trend or trend reversal. Volume gives an investor an idea of the price action of a security and whether they should buy or sell the security.

Identifying Momentum
Trading volume can help an investor identify momentum in a stock and confirm a trend. If trading volume increases, prices generally move in the same direction. That is, if a security is continuing higher in an uptrend, the volume of the security should also increase and vice versa.

For example, suppose company ABC increased in price by 10% over the past month. An investor is interested in the company and wants to purchase 1,000 shares. They conduct fundamental analysis of the company and sees its earnings and revenues have consistently increased over the past year. However, the investor is not confident the stock will continue in this uptrend and may reverse.

This is where trading volume analysis comes in handy. The investor sees there was a steady increase in volume over the past month. They also realize it was the highest volume company ABC experienced over the past two years, and the stock is continuing in the uptrend. This signals to the investor that company ABC is gaining momentum and the trend should continue higher. The increase in volume causes the investor to purchase 1,000 shares of company ABC.

Low Activity
Trading volume can also signal when an investor should take profits and sell a security due to low activity. If there is no relationship between the trading volume and the price of a security, this signals weakness in the current trend and a possible reversal.

Suppose company ABC extended its uptrend for another five months and increased by 70% in six months. The investor sees that share prices of company ABC are still in an uptrend and continues to hold on to the shares. However, over the next few weeks, the stock continues in the uptrend but with a decrease in volume. This signals to the investor the bullish uptrend in company ABC is beginning to lose momentum and may soon end.

The following week, shares of company ABC decrease by 10% in one trading day after being in an uptrend for six months. The stock breaks its uptrend and the volume is very high relative to its average daily trading volume, or ADTV. The investor sells out of all the shares the next day because the reversal of trend was confirmed due to the high volume and a decrease in price.

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