Is The Correction of SOFIX Over?..

OK. As expected the downtend took place. Already almost everybody admits it. The main question now is for how long it will last.

These days good results came from some of the market leading companies. That's fine. Will it turn up the trend?..

Two things:


This is a daily graph of SOFIX. Its value fell to its first support. Today the index started to go up. MACD is very low /but still negative - MACD line stays below the trigger line/ so the market might be oversold. As it is showed by the black horizontal line the index touched the support at 1636/40 and bounced back. The hope says it might continue to go up and the correction might be over... But that says the hope.. ;)

The second thing:
This is the "bad" graph. MACD is still very high and moreover the MACD line crosses the MACD trigger line from above. On the daily graph the fast MA is below the slow one. All these might show the correction has some more way to go.. The first aim is the second support marked by the red line on the daily graph and the black line on this graph. The red circles shows that level - around 1536/40.
The two MAs show the whole trend is still upward, even though the value of SOFIX for the last week fell below the fast MA.

Given these thoughts we might experience some more downside movements, even not in such a fast way as the movement till now. Time will tell... :)

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! :)

How to trade on the Bulgarian Stock Exchange

This is supposed to be some practical post about the things a foreigner has to do in order to trade Bulgarian stocks. I'm not going to cover the process in details, just give you some hints and links.

The first thing is that you need to sign a contract with an Investment Intermediary that is allowed to trade on the Bulgarian stock exchange. Here are two lists of such Investment intermediaries:

http://www.csd-bg.bg/EN_site/index.php?menu=4lenove
http://www.bse-sofia.bg/?page=List+of+BSE

The first one is from the Central Depository and the second one is from the Bulgarian Stock Exchange itself. There should'n be any diferences between them anyway...

You could ask any of the members about their specific conditions. One could prefer a bank ( like Raiffeisenbank (Bulgaria) EAD or UBB /a Member of NBG group/ , etc. ) or chose some of the Bulgarian Investment Companies ( like Karoll, Elana, First Financial Brokerage House/FFBH/, etc. ) Statistics show that banks make the biggers turnover while the investment houses take the prize for the number of trades. FFBH is known to have the biggest number of foreing clients through the investment houses but don't take this as granted.

After the contract is signed one has 3 options in order to trade on Bulgarian Stock Exchange.

The first is every time he or she decides to trade to give a call to the intermediary and to place the order. For someone this could be an unconvinient way...

So here comes the second one - the online trading platform /COBOS/ provided by the stock exchange. Ask your intermediary to make you a client of this platform and you can see in real time what trades are taking place, the quantity and the prices of the deals. Moreover you can place your own order electronically by this platform and they go streight to the stock floor. It's a flash application so one should be able to access it everywhere there is Internet. The stock exchange issues to you a certificate that identifies you as the person that made the contract and secures the connection between you and the stock floor so it's considerably safe.
One of the many advantages of this is the ability to do day-trading. If you place your orders by phone and not using COBOS you should wait the 3 days period for the settlement of the shares to be done. By COBOS this obstacle is gone.

The third option is to place your money in one of the many fast growing mutual funds offered by the asset managing companies in Bulgaria. The theme of mutual funds in this emerging market is a vast one and it deserves a separate post but to make it short - this is the fastest growing financial industry nowadays here. For only the last month it accumulated almost 150 mln leva and its assets are expected to surpass 1 bln till the end of the year. Still this makes only about 3 percent of the savings in banks. In Europe the figures are about 50-60%, and in Eastern Europe - about 30%. So imagine the growth it has ahead...
The main nonbanking financial institutions tha strive here are again Elana and Karoll - both managing more than 250mln assets in their mutual funds.

These are the main ways a foreign person could take part in this fast growing market. The last week Bulgarian Stock Exchange bought a new trading platform from Deutsche Boerse so we could expect new and easier ways for anyone willing to participate. So keep following the news.. :)

some calculations..

The long-awaited debut of DEVIN on the stock floor brought to the owners of the IPO shares an increase of about 23%. That is if they sold their shares on the first day of the trading. This is a profit for a two months period. For these two months the main index SOFIX rose with about 15% so compared to it the buying of DEVIN was a successful decision.

It's important to make such comparisons because this gives us an idea where an investment stays in the whole specter of alternative opportunities.

For instance if we compare this one with the debut of another well-known company on the Bulgarian Stock Exchange - MONBAT - the debut of DEVIN could be a disappointment to some players. MONBAT brought an increase of about 35% to its shareholders on the first day /3rd January 2007/ its shares were traded.

There are also some companies whose prices rose with more than 23% for the given period. These are underestimated companies that just were not in the main focus of the public.

So compare this particular investment with the growth of SOFIX and it comes to be a profitable on. Compare it with some alternatives and closing much money for a two months period looks not so smart move. So viewing and understanding your investment always has at least two sides.. It depends on the person making the decision, his/her risk profile and his/her trading principles. The important thing is to not let these numerous possible viewing points of your investments /and the results of it!!/ lead you to think you are always a winner. Because sometimes not seeing that you are might have had a better deal and not understanding where and why you are wrong /I don't mean the emotional meaning of 'wrong' but rather the meaning of "not taking the best decision"/ will prevent you from seeing your mistakes and learn to trade in a better way in the future.

It's always a matter of calculations and choices... and of desirable income return...

Happy New Record!..

The main index of the Bulgarian Stock Exchange SOFIX rose today above the 1700 level for the first time in its history! Apart from the doubts if this will last or not, it's worth mentioning. So congratulations to the players and don't forget to stay alert :)

There are technical indications that the trend could continue for a longer time but this is about to be tested.

A major event this week will be the trading of the shares of DEVIN PLC. which is expected to start on September, 20th. This is a food industry company, maker and distributor of Devin Mineral water and some other soft drink brands. The IPO of DEVIN which took place about two months ago produced some very interesting results. So the trading is expected with great attention.

SOFIX - Up to a New Record

Last two working days were marked by new heights of Bulgarian stock indexes. Yesterday all the four official indexes of Bulgarian Stock Exchange finished on positive side. The growth of SOFIX was less than the day before, yet BG40 continued to grow in more than 2%. As BG40 usually /because of its structure/ never drops for a long period of time /except when there is a veeeery major down trend/ I personally consider its movements more like an extra tool used to confirm the main conclusions made when analysing SOFIX.

Here are some pictures:

The first one is a daily graph of SOFIX and the second is a weekly one. On the daily graph I see a MACD divergence /the red line!/ which is followed by a fall in the prices and the MACD. The prices fell to the bottom line of the bolinger bands. At that point they started to go up again. The value of SOFIX passed its previous highest point and now it could rally for some time. The reason for that could be found on the second graph where the up-trend of SOFIX is still alive. The MACD line is above the trigger /signal/ line and moreover - the trigger line has positive values. MACD goes very high which possibly could mean the end of the trend is close but for now the up-trend is still active. The red line shows the point when the MACD divergence appeared on the daily graph.

Given this analysis /and some macro economic conditions/ one could expect higher points of indexes and new records in prices. We'll wait and see. And try to never forget that hope sometimes is our worst enemy!.. :)

This is just an analytic point of view and not a recommendation to buy or sell anything.

an interesting story...

There is a story about a man who followed the stocks only by the papers. For several months he lived up in the mountain with no TV or Internet. After that, when he had decided the time has come and the moment was right he was going down to the town and was making his trades. Depending on the trade he was buying or selling. He constituted his portfolio and went up to the mointain again. He was not in a hurry. That gave him the freedom to see the big picture.

Sometimes you have to stop. To get back from what you are doing and to relax. To keep some distance between you and your work, so you could get a better view of it. Eagles fly high! Because from that point you could see farther and wider. Predict for a longer period and at the end collect the better profit.

Sometimes we all get so close to details that we miss the whole thing. We strive to win, going up and down.. And we think we are a part of the winning team, not realizing how small our profits are and how much we lose only for the thrill of being in the midst of everything. The commission eats away much of the profits we make, the chance takes some other part and we a left with just enough profit so our desire to play do not get burned out forever. That small profit is our enemy! Forget that it pretends to be a friend.. :)

Actually it depends on what one is looking for - the thrill or the money?.. There are cases when both are closely connected but such cases should be really worthy! Otherwise what's the point in putting money in someone's else pocket?!.. If you would do so, you'd better give them deliberately to the ones in need. At least they can't make them on their own..

So don't forget to relax. Take your time and get back so you could see the bigger trends, the macro reasons and the economic conditions as a whole, not just a part of it. See wider, predict wider, think longer...

"Think global, act local" :))

These days the main index of the Bulgarian stock exchange SOFIX /one could follow its movement on the official site of the BSE - www.bse-sofia.bg or oninve investorbg.com / made its new record - 1627.09. That's 0.49% higher than last working day /here it was the last Wednesday/. The previous highest point was achieved near the beginning of August this year. After that some sort of a refreshing decline followed. Now this previous high is gone. Will it become a new bottom?.. Possibly. That's what we are waiting for. As part of the big game... :)

The tax on the companies' profit for this year has been dropped to 10% which makes it one /if not the only one/ of the lowest in Europe. This fact urged many of the companies to show more or less the real profits they have. This justified and filled up some of the high ratios at which some stocks were traded before an year.

Another interesting fact is that only 0.05% of the population of the country trades online on the stock - that is about 3000-4000 people. Of them may be only half are active traders. Could you imagine what will happen if the number of the people involved goes up to 10%? With all the money the bring?... I'm far from the thought that all these money will be put in this particular market. The main idea is that there is still a free space to be filled. A demand to be fulfilled!..

So what holds the future?.. Hardly anyone knows. We just guess, make conclusions, read, learn... Follow the market as it goes its way. In Bulgaria we don't have short selling so more or less that makes it a one way market. For now. In more long-term period...

..waiting is a big part of the game...

The Bulgarian floor is opened and the game begun. These days we are in something like a floating state.. Very few of the shares go steady up, others are traded at a relatively high volumes but the price stays the same. The players are relocating their money. Making their folios and wait.

Much of the game is to wait. Patience. Including the time when you fear. You can't escape the fear and you shouldn't. Sometimes fear is our friend. It's like the pain to the body - it says that something is wrong. But one have to teach him- or her-self to recognize the panic. When you haven't done your homework, it's normal to fear. You don't have a good foundation. But in other cases you shouldn't let it torture you. Patience. And good food. :)

So we wait.. To see what will happen. At this movement. When it begins...

Getting into the game..

Finances.. Dealing with them seems very hard for many people. But usualy it depends on the person and his or her perspective in viewing the matter. Stocks, options, mutual funds.. You don't have to be a financial guru to be succesfull dealing with them. You can just follow some simple steps:

• watch
  
• think
• see
• connect
• act

But before you even start, don't ever forget the most important spice - LEARN. Always. Be open to collect information, to analize it. To work. "Easy money easy go"... It doesn't have to be hard, you just sometimes have to be consistent. To continue when you feel like you have no more strenght, no hope. To get up when you fall. There will be falls but view them like a lesson you might learn. Think about the money you've lost like the price you've paid for your education. There are no free lunches. And as you already have paid yours, you better learn it. Remember the saying - "it's not foolish to make mistake, it is foolish to continue in making it"!! :)

So if you see the world of finances as something very far away from you - try changing your perspective. You could learn to be succesfull if that's your innermost wish. :)

I don't have in mind to convince you in working with finances on your own. Sometimes the better deal is to let someone else taking care of your money. Usually they do it well. And in the most cases there is no particular reason why someone should leave the well organized world of pension or mutual funds and start growing his or her own fortune. But there are some people that are not satisfied with the average growth. Or they just have the need to test themselves. To see what they could do. To escape from the masses. It's risky, yes!.. But walking on the street near a construction place is also. So it depends on the person...

See you high in the financial sky! :)