Celestial Nutrifoods' setup was very beautiful with break out price ready at 30.5.

It has come a long way since it hit a historical bottom of 8 cents in Mar 2009. All indicators and signs confirmed Celestial’s bullishness so far (before today). Volume is substantial, price is trending upwards, Directional Movement shows strong up trend, MACD is bullish, etc.

All seemed well until this morning when it opened gap down at 20 cents. This bearish big gap altered Celestial’s fate in attempting to be the next Big Star.

Without much hesitation, Trader88 liquidated all positions held in Celestial with some losses. Exit price was at 20.5 cents. Trader88 first bought Celestial when it broke out at 20.5 cents on 6 May 2009 and accumulated more on its way up when it became clear to be the next Big Star.

It is after Trader88 liquidated Celestial that he found out from SGX’s web site the plunge was actually due to the “UPDATE ON FINANCING FOR THE POTENTIAL EARLY REDEMPTION OF THE S$235,000,000 CONVERTIBLE BONDS”. That means fundamentally, uncertainties are ahead of Celestial now, whether there could be more borrowings, rights issue or new shares issues. As a trader, Trader88 does not like “known” uncertainties to be in his trading equation. So liquidation is the only way to go. In fact, the gap down this morning was already a big hint (excuse) for him to sell off Celestial before reading the news.

It is not that all indicators were inaccurate, it is due to the “unforeseen circumstances” that happen all the time. Traders just have to be alert at all times for such events to happen.