Monday, September 1, 2014

2014 July-August Review ~ & ~ Sneak peak into my current trade (which did not go the way I like)

2014 July-August Review


Did 3 trades between Jul-Aug 14, with good luck, hopefully my last trade SembCorp Marine could turn out profit soon. So far, my profit to loss ratio is about 2:1 for every 3 trades. Somehow trades that I put in writing on my analysis tends to do better, which reminds me of the importance of having a detailed trading plans and reminding myself why I am in the trade in the first place.

My trading capital is roughly $50-60k and I prefer to "one shot one kill" instead of spreading it (I'm not a believer in diversification). Also, trade amount of $50K+ attracts 0.22% commission instead of the usual 0.28%; of course there are drawbacks such as higher stress (but greater focus, only 1 chart to follow), all eggs in a nest (definitely not to be used in penny stocks, any stock halt will result in all the capital vanish & gone)... Year to date, I am managed a rough 10% profit, which hopefully could improve with experiences.

SembCorp Marine
Trading Plan first written on Tue, 12 Aug 14, and finally entered on Thu, 14 Aug 14 (5c dividend ex-date on 15 Aug 14).



















Let's take a look at the chart now.

Daily wise, it breaks below the support trend (due to ex-div of 5c), the support trend has now become a resistance waiting to be broken. Various indicators have shown rebound & bullish signals, but the price is struggling its climb upward.
One notable observation was the price seem to move strongly in the morning, but often lose the strength & closed lower (sometimes becoming a drop).

















Weekly wise, price is near its previous 2012 breakup point, a strong support ($3.89) which it did not touch.
My initial hope was to grab 1-2% within the week, but now it has drag to 2 weeks, hopefully it could hit my targets within Sept 14, if have to, this could turn into a longer term play with a few catalysts in 2015.

At times of uncertainty, such as my SembCorp Marine, I would re-look my initial trading plan why I have gotten into it. The near term Technical analysis did not pan out the way I like, but the indicators still ticks.

And if I have to hold much longer, at least there's a few catalysts I can look forward to and how some of the current "negative variables" should be negated.

1) Anaylsts' negative views; weakening margins, growing competitions
While I agree partly (but prospect-wise I beg to differ), firstly, the Brazil shipyard has commenced initial operation in 2H14 & will reach full operation in 2015; thus completion rate will increase & also the lower cost of labour in Brazil (as compared to Singapore) should help in cost savings.

2) Poor market sentiments
When I entered the trade, the sentiments were poor, with Ebola outbreak, Ukarine tension, Israel-Hamas fighting, oil price drop to US$100; now, things just worsens, Ebola continued to spread in Africa, Ukarine lose ground to Russian-backed forces, Oil price at US$95...
Apart from the sentiments, the only direct variable is oil price, which I've noted rigs orders will continue to grow as long as oil price stay above US$90. I found a 2013 investing article where it was praising oil rigs as "bright investing spots" saying the sector will grow as long as oil stays above "break-even" range of US$70-80;and that was only less than 2 years ago.
Other articles such as http://www.forbes.com/sites/jessecolombo/2014/08/31/why-the-energy-markets-may-be-at-a-turning-point/ where Jesse Colombo observed a turning point for US Oil's fall.
Together with the seasonal winter seasons coming, the oil price should return to US$100 soon.

So much were written, guess I should stop now...
To end, much thoughts have been made for each trade, after all its our hard-earned money at stakes...
May the trend be with us...


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