Many a time, Technical Analysis (TA) is very accurate and powerful because of the element called self-fufilling prophecy.

If certain aspects of the technical analysis are obvious and they are picked up by many traders, the so-called “prediction” will materialize.

For example, if a stock is obviously trending upwards, many trend traders will likely go long and buy up the stock. This buying pressure will therefore reinforce the uptrend further.

Another example, if a stock is heading down towards a strong support and many traders view that support as buying opportunity, the likelihood of it rebounding from the support is extremely high, thus reinforcing the strength of the support.

To ban or not to ban naked short, that is the question.

Before I proceed, let me clarify that I am AGAINST naked short, just like I am AGAINST naked long, i.e., contra trade.

If we are allowed to buy shares with no intention to own them (naked long), we should be allowed to sell shares with no intention to deliver them (naked short).

I guess Singapore Stock Exchange allows naked short because they want to make Singapore a vibrant trading place for international players. Naked short is still illegal in countries like Malaysia.

When the US market was trending up aggressively in 2006/7, the US government did not impose any ban on contra trade (naked long) to curb speculation, probably because everyone in the stock market including the law makers were happy making money. On the other hand, when the market was trending lower and lower, the authority tried all sorts of methods including a ban on naked short to rescue the market (or to rescue those connected few in the top).

In the local market during 2006/7, when it was super bullish with the help of syndicate players or big boys churning up stock prices, I did not hear small players complain about big boys' action. However, in the current bearish market condition, when the big boys kept shorting down the market, small players started to call for a ban on naked short.

I guess small players just have to learn from their mistakes and losses. They just have to swim along the big boys and play along their tactics. To do that, Technical Analysis is the way to go as cornering and fundamentals are already factored into Technical Analysis.

The Bear visited the local market after the 1996 Asia financial crisis and stayed for approximately 134 weeks (33.5 months).

Then The Bear came again after the 2000 dotcom bubble burst and it lasted for around 166 weeks (41.5 months).

The Bear was back again, courtesy of the US sub-prime crisis that began last July. It is only here for 37 weeks (9 months). It looks like it will not leave the market any time soon. How long will the Bear be here this time?

My guess is around 96 weeks (24 months). That means the market will only find its bottom some time in Oct 2009.

Yes, the bear has won the battle.

Like I mentioned on 27 May that the bear was eager to enter the stage, it finally did with a BIG Bang! Singapore Straits Times Index (STI) penetrated very far below the 50-day moving average (50DMA) and traded as low as 3057.

Refer to the chart above, the "Red Alert" on 23rd and 25th of May already hinted that STI is shaky. Those seemingly "bullish" sign in the shaded circle is a trap to catch those who insist on believing the bull is still there. Smart long traders would have taken this opportunity to run for exit instead of adding long positions.

Risk takers may take short positions now. But I prefer to stand at the sidelines until the following signs are clear:

1. When 20DMA crosses below 50DMA and;
2. When the immediate support at 3034 is breached.

How about taking long positions? I think you can forget about it.

Roughly, the term “big boys” refers to fund managers of hedge fund, asset managers, syndicate players or operators behind big bosses who help manipulate stock prices.

It is every trader’s dream to know the big boys, hoping that they will release tips before they push up stock prices. In reality, how many retail traders know of these so-called big boys? Even if small traders have the connection, will the big boys inform them before they push up the stock?

There is one simple way to identify big boys’ action though. If you have the access to the market depth of the stock like the one shown below, you might discover their action.

If single transaction of huge volume to buy up sell-queue (or to buy from seller) is rampant, it probably suggests the share price will move up. Likewise, if it is to sell down buy-queue (or sell to buyer), it means the share price might weaken.

BUT BEWARE that big boys might create artificial appearance to trap small boys.

Before trading, ask yourselves why you are in the stock or futures market? To make profit? To have excitement from trading? To trade for the sake of trading just because you are trading full time?

I would say the ONLY reason to trade is to MAKE MONEY. And the best time to make money is when the general market trend is clear. When the the trend is unclear i.e., sideways, there is not much to be made. If the trend later becomes clear, whether up or down, traders might get trapped if they bet on the wrong direction.

Patience is the key to a successful trading. When the market is unclear, traders should take the opportunity to research on stocks so that when the time comes, they will not miss the opportunity. If the trend is clear, coupled with picking the right stocks, a few trades a year is good enough to cover the whole year's good performance!

Put it simply, amateur traders are always grumbling about their trades.

If they pick the right stock, they will regret not buying enough.

If stock price rises after they sell it, they will regret selling too early.

If stock price drops after they sell it, they will be happy for making the right decision, but if the price subsequently rebounds to higher than their selling price, they will grumble.

When they see stock price escalates or plunges and they did not take any position, they will grumble for not taking any position.

I feel that it is pointless focusing on what has already happened. The most important thing to do is to learn from "mistake" and move on. The market is always there. Another opportunity will emerge in the future. We just have to be alert at all times.

How to define consistent profit? 5% return in 1 month? 30% return in 1 year? $10,000 per quarter? $500 per day?

The fact is, it is very difficult to make consistent profit in a given period. Some gurus that claim they can make consistent profit are actually lying.If traders pay too much attention in making "consistent profit" in a fixed period, their decision in trading, which is supposed to be objective, will be irrational.

If traders would like to determine their performance based on consistent profit, they should lengthen their time frame to at least 6 months, preferably 12 months or even 3 years.