CapitaMalls Asia: Morning doji star?

You might notice that many charts are spotting reversal signals today which are in need of confirmation. After so many days of down action, many counters seem ready for a rebound. Of course, signals will always need confirmation.

Regular readers would remember that I said I would wait to see if the $1.83 support for this counter would be retested. If the support held up upon retest, I might increase my exposure to the counter. Today, I increased the weight of my long position at $1.86. Why?

1. A lack of selling pressure as exemplified by the low volume.

2. The formation of a doji which is a potential reversal signal.

3. An uptick in the MFI and RSI which suggests some underlying support.

Taking point number 2 further, we could be seeing the first two candles in a three candles reversal pattern which is known as the Morning Doji Star. If price opens higher tomorrow and forms a white candle that ends the day at $1.90 or higher, the set up would be perfect. This set up usually signals a reversal from a downtrend.

Like I said before, TA is useful in giving us glimpses of what might be and not what would be. So, always be prepared for two scenarios.

If price goes up, what do we do? If we connect the highs of 9 Feb and 17 Feb, we get a trendline resistance. On the weekly chart, the resistance shows up as $1.92. On the daily chart, the resistance could be at $1.93 to $1.94. So, in a downtrend, sell at resistance. What about retaining some shares to see if there is a chance of price retesting the 100dMA as resistance as it did on 9 Feb? Why not? This would approximate $2.00 this week and coincides with the upper Bollinger band on the daily chart.

What if price did not go up and went down instead? In such an instance, I would wait to see if $1.83 would be retested as support and if it held up upon retest, I would buy more.

That's all, folks. I have a very early flight to catch tomorrow and I am going to try to sleep earlier. So, this is the only blog post for tonight. Good luck and good fortune.

Related post:
CapitaMalls Asia: Support at $1.88 gave way.

At what age to start investing in the stock market?

A blog post at Bully the Bear has generated much interest and discussion: The youth and the stock market.

Although I have some ideas of my own, I was feeling lazy and didn't want to comment but a cboxer, Evolution of the "lobster taller than small girl , ak's t shirt older than evo" fame, put me in the hot seat and asked "Ak , whats ur view on LP's new post".

I said that I have introduced my 9 year old niece to investing in the stock market. Yes, she is in primary 3 this year. She has some savings in the bank which is paid a paltry sum of interest. 0.2% per annum for young savers? Maybe it is more, I am not very sure but still paltry.

Anyway, she has some shares in SPH for more than a year now bought using my account and she has collected one year's worth of dividends. It is quite a lot of money for a 9 year old and she's happy with the dividends, needless to say.

Getting dividends from investing in SPH has demonstrated to my niece the power of delayed gratification. 

By not using her savings on things she wants to buy and by investing for income, she is able to use the passive income to buy the things she wants later on without touching her savings at all. 

I heard from my sister that my niece is very frugal these days and I heard from my mom that my niece would sometimes ask her what's the latest share price of SPH.

Sound ideas in personal finance and investment, I believe, should be taught to children as soon as they are able to understand them. Teaching them the importance of thrift and savings is but the first step. How to make their savings work harder? 

Now, that's a big second step.

I remember how I would save all my pocket money when I was a boy in order to buy the toys I wanted. 

If only I had someone to tell me I should save all my money and how to make my money work harder for me then.

Related posts:
1. Teaching young children financial literacy.
2. Little book that beats the market.