Wednesday, January 17, 2007

Hello again, im SOOO happy that I have been disciplined to start posting regularly, and I truly enjoy every moment of it (except for the technical side). Alright, I'm gonna continue what I have learned the previous night, from the Wealth Mentorship Session at AKLTG.

I will be writing on sector rotation and something thats alien to me (still very alien though), Japanese Candlesticks.

For sector rotation, I have to be frank that I don't really know a lot, and the idea is still very novel to me (however seasoned investors sees otherwise...). In US context, sectors are what made up to become an economy. Some sectors are, Financial, Healthcare, Housing, Energy etc. So, funds flow into different sectors at different phases in the economic cycle, hence though an economy is registering -ve GDP, certain sectors may reap +ve returns. For example, right now in US, the financial sector is in the boom, however it may be ending soon. Next up will most probably be the healthcare plan sector. From what I know, in US, hospitals actually have the authority to reject treating patients if they don't have medical insurance (Luckily I'm in Singapore :) ) hence the need for insurance coverage is always needed. Thus the healthcare plan sector will be the next to experience the boom. To verify this, we can go to finance.google.com to check it out. Under 'Sector Summary', Google actually have all the sectors' performance and key developments.

For Japanese Candlesticks, it is still a mystery to me. I have heard stories that some traders trade only using Japanese Candlesticks, not relying on financial reports or any forms of technical indicators. Personally, I'm still facing challenges differentiating the 2 diff color candlesticks. Different formations can will result in different movements of the stock, and accuracy can be high til as high as 90%!!! Well I shan't bore readers with the details and the names behind different formations. They can be seen at patterntrader.proboards106.com, Conrad's explanations are far better than mine.

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