An interesting month..

October was an interesting month for the Bulgarian Stock Exchange. Volatile and struggling.. At the beginning of the month the values of SOFIX on the monthly and weekly graphs flew away and above the Bollinger Bands. Stochastic indicator showed the index was overbought. So normally things /the growth/ started to slow down. The first shot was a big red candle on the daily graph. The next day it was followed by a huge gap and the index closed about 4% down from its absolute height formed the previous day. This was unexpected from some of the participants in the market /as usual/ and the index started to go up again as the buyers got more active. After a week it attacked its previous highest point but didn't succeed. At that time MACD crossed from the above the MACD trigger line. So on the daily graph the trend started to show negative attitude. From then till the end of the month there were two more upward movements. After the last one followed a sharp decline again. The fear spreads wider... :)

The weekly and monthly graphs still show positive trend /the MACD line is still above the trigger line/. Till these graphs are positive there are still chances for the bulls to try to stop a deeper decline. Will this be just an opportunity to sell at a higher levels? Time will show....

The month was full of interesting news from the investment market also. The IPO of the construction holding /the company works on infrastructure projects/ TRACE PLC. was 1480 times oversubscriben /!!! - a record for the Bulgarian Stock Market and maybe amoung the first 3 or 5 biggest in the world./ The shares are expected to be listed for trading in the midst of December. The money for that IPO was not to be deposited when giving orders for participating in the IPO so many people gave orders for sums that enormously exceeded the money they realy had. The players on the market expected the money released for taking part in the IPO to be poured back on the market. But according the conditions of the IPO there were not so much money drawn from the market and obviously not so much money to be put back in it. That could be one of the reason for the sharp declines that happened.

There were publications from some of the main investment intermediaries about the high prices /according the fundament/ at the market that stirred the spirits also. Some considered them as a manipulation of the market while others said it was fine that at last someone is brave enough to say it loud.

But as a famous person said "As one seeks the reasons, another one eats the fruits"... :)) Sometimes the reasons remain unknown. Or uncertain.. A newspaper says something, persons give interviews... The strugle is on its way.. :) The mind has to be free.

Greed and Fear

Fear and Greed.. The two most important emotions on the trading floor. When the greed is more than the fear, the prices go up. People are buying more and more expecting the prices to go even higher. The self-fulfiling expectations... For some period of time they work. As long as they are sufficiant number of people /and the MONEY/ to support them. When the stocks are bought, the money spent.. people start to look around. When will it start falling??.. When shall we run?..

At that time the smart one take their profits. They might miss a slight future explosion but protect their capital! The smart investor /or trader if you prefer/ knows that the main point is to NOT LOSE your capital. Your money. When you do the things right way, the profits will come. Protecting your funds means to sell when you suspect someting and to take your profit. After that, if your suspections shows to be wrong you might get on the train once again. But keep your motives clean :) Do not buy just because you have sold your shares before. Consider the deal as a separate deal. Investigate it the way you like and take it because you want it and you know what you are doing. If you are uncertain in some way, it's better to let it go...

So we fear... and we do nothing. The normal reaction is to run. But here comes the hope. The hope that the prices will go in "our" direction at least slightly more. The point is that this same hope is not only ours. Hundreds or thousands of other people hope the same thing. Yet lesser and lesser of them support their hope with money... So it comes the time when more people start to give up their hopes. The problems is that you don't know when their hopefull spirit will be broken and they start to sell. In the most cases you are left behind... That's why it's not a smart move to be long when you suspect you should be short.

One of the hardest things is to do what you think you should do. Sometimes traders /investors, players, etc./ are like the most unrational creatures. Stunned by their hopes and fears they think one thing and do just the opposite. Strange place is the stock exchange....


Look at the graphics, use your indicators, compare the volumes, the prices... Make your dessicion and bet your money on it! :)