Singapore Land surged more than 6% in 4 trading sessions after I published the technical analysis report on the 14 Feb 2013.
Meanwhile, the Straits Time Index fell 0.2% within the same period.
This is one of the moments when many of the key positive technical signs converge at the same place and at the same time.
That was the reason why I issued a conviction buy call on this stock.
And from a technical trading point of view, this is also the moment when you need to have the courage to pull the trigger.
How Singapore Land stock trend was building up previously
Following my previous technical analysis report on Singapore Land back in September 2012, the stock went on to recover nearly 21% within a 5 months period.
During those 5 months, the price appreciation of Singapore Land was quite steady.
Over time, a clear parallel uptrend channel started to form with the stock bouncing off the lower channel boundary on numerous occasions.
After reaching another new 52-week high in December 2012, Singapore Land went into a consolidation phase again.
And by early February 2013, the stock was converging into a tight trading range where a price breakout on either side was due.
I was already waiting patiently for the market to tell me where it is likely to go from there.
What were the positive technical signs that developed on the 13 February 2013?
On that fateful day, I noticed numerous positive technical signs coming together.
Below were the positive signals that I observed:
Singapore Land initiated a strong rebound at the lower channel boundary for the fifth time in 8 months.
The stock also conquered the clear 2-month downtrend resistance at the same time.
The $7.40 price level where the stock bounced off was also an established resistance-turned-support level.
The trading volume on that day was very heavy.
The stock ended the day near its intraday high.
All of the above positive signs suggested that the market has taken a bullish stance on this stock.
The bulls have won the battle against the bears.
Instead of violating those key supports, Singapore Land’s price movement broke out on the upside.
The signals suggested that the uptrend is likely to continue from there.
The winning moment also invited the bystanders like me to act quickly.
That was the moment when trend followers initiate new buy orders or add on more positions to their existing trade in Singapore Land.
The key reason why this is a great trade
Actually, the key reason for this being a good trade is not only because the probability of being right is higher after the strong rebound.
The other vital factor is that the strong rebound provides us a clear guide when we could be wrong on this trade.
To put it simply, if the stock turn around sharply and falls below both the $7.40 and the firm lower channel boundary, we know that we are probably wrong on this trade.
That gives us the confidence to just take a small stop loss and get out of the trade because things are likely to deteriorate very quickly after the breakdown of the above key supports.
With the stop loss, this becomes a trade in which the upside is open ended and the downside is well contained.
What is the lesson learnt?
It is ok if you missed this trade totally.
From my experience, there are many stocks that will experience similar technical moments like this over time.
As long as you use technical analysis diligently and scroll through many charts every day, you will continue to see many opportunities like I do on a regular basis.
If I can do it, you can do it too!
Latest posts by Philip Teo (see all)
- Why you should not feel too bad about having a losing streak - September 12, 2019
- Edmund C. Lee, the President and CEO of the Caylum Trading Institute, a premiere educational facility in the Philippines that aims to develop successful traders of global markets. - September 12, 2019
- The risk of trading multiple highly correlated currency pairs - September 10, 2019