Where is the market heading? How can we do Hedging to PROTECT our portfolio?
Last week, Dow Jones fell 1.1% and closed at 11370. It seems to have encountered a resistance at 11634. Like what I mentioned before, if 11634 can be penetrated strongly with significantly high volume, then Dow Jones will have a chance to experience further rally from this level.
NASDAQ rose 1.2% last week and closed at 2310. It seems to be always finding support at around 2252. Its next resistance level is 2385. If this 2385 level can be broken significantly, then it will be able to appreciate further.
S&P 500 dipped 0.2% to close at 1257 last week. It seems to have found cushion at 1256. If the downtrend line around the level of 1265 can be broken with good volume, then S&P 500 will have good chance of going higher. Its next resistance will then be around 1320.
STI closed at 2922, down 55 points last Friday. It seems to have met resistance at around 2993 of the long term uptrend line. If this level is broken, then its next resistance will be the psychological level of 3000.
Oil price has fallen to US$123 per barrel, down almost US$25 or 16% in 2 weeks!! In US, more companies are going to report their earnings this week. There maybe more bad news coming our way. If this rally can be sustained, it maybe a good opportunity for u guys to sell off your long positions which u bought last time at a good price, or what we known as “sell into strength” before the market turn ugly again.
Right now, the market is trying to find its direction, deciding its next move whether to go up or down. This is the best time to do “hedging” for our portfolio, which means holding both long and short positions. If let’s say the market tank, our long positions will not drop too much(provided that we buy really strong stocks) while our short positions will tumble further(provided that we short really weak stocks). On the other hand, if the market were to rally, our strong long stocks will go up while our weak short positions will not increase too much. In this either way, our portfolio is always protected. I strongly believe that we have to learn how to do SHORT-SELLING in a bear market, in fact it is a MUST if one want to make money in a down market. If one knows how to perform shorting, he/she can be his/her own hedge fund manager during periods of uncertainty. For your information, a person needs to have an asset of around a few hundred thousands before he/her can invest in a hedge fund in S’pore. There is little chance for ordinary folks to have the financial capability to invest in such hedge funds, which are only meant for the rich & wealthy.
Let me share with u guys on how to perform SHORTING in a correct and safe manner in my future post. Meanwhile, live and enjoy your life to the fullest!
Cheers 
Disclaimer: Please be informed that the above mentioned stocks/indexes/investment instruments are solely for the purpose of education; it is NOT a recommendation or an invitation to trade/invest. For trading/investment advice, please speak to your remisier, dealer representative or financial adviser. Please understand that there is risk in every trade/investment venture, know your risk first before you venture into any of them.
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Congrats on your new layout! Keep the posts coming, I’ve certainly learnt a lot about investing from them!