Buying more Chinese Tech stocks today.

I published a blog a few days ago on Lion-OCBC Securities Hang Seng Tech ETF and how I was using it to gain exposure to Alibaba, Tencent and some other Chinese tech companies.

I said that I was taking it slow with the ETF and that my initial investment wasn't even 0.5% of my portfolio in market value.

Why take it slow?

Although there were some signs that the dust could be settling, technically, the downtrend was clearly still intact and low could go lower.

Buying the dips in an uptrend would be buying as Mr. Market climbs a wall of worries but in a downtrend, Mr. Market flows down a river of hope.

Getting our hopes up in a downtrend could set us up for disappointment.

Also, most of the time when I went wandering out of my circle of competence in the past, I ended up hurting myself and pretty badly sometimes too.

Although I researched the ETF and some of the Chinese tech companies it was tracking before I made the decision to put some money on the table, I was very sure I only scratched the surface.

Anyway, consistent with my plan to limit exposure to 1% of my portfolio for a start, I nibbled at the ETF earlier today at a price 10% lower than my initial investment.

With this purchase, my total exposure to the ETF stands at around 0.5% of my portfolio now.

What do I plan to do next?

I will be waiting to see if the low of 15 March would be tested in the coming weeks.

If the low should be tested, I would most likely double my investment to increase total exposure to around 1% but I might add more if I should see a positive divergence.

I would look at the momentum oscillators like the MACD and RSI to do this. 

Positive divergence means higher lows in the momentum oscillators as price retests the low or forms a lower low.

A positive divergence would give me the signal to add more to my investment. 

It would suggest that the selling pressure could be easing and that the price could see a more sustained recovery.

Still, I would take it slow because we could also see lower lows in price and higher lows in the momentum oscillators for many months to come.

In the absence of a positive divergence, I would err on the side of caution and not add too much to my investment.

Been a while since I did some technical analysis.

Hope I am not too rusty. ;p

Related post:
Investing in Alibaba and Tencent now.

Source: CNA, 22 April 22.

"China's central bank chief pledged on Friday (Apr 22) to keep policy accommodative to support the slowing economy..."