My take on Nexttrade postings!

One of my regular readers recently told me that he did not see anything interesting in my blog over the past few months. He asked why I did not make more buy calls given the bullishness in the market. I explained that I was not comfortable with the market but he told me that the name of my blog being 'nexttrade' should have plenty of recommendations on what to trade. I was lost for words.

However, this is not the first time that I hibernated when the market is too high for my liking. I was relatively quiet in the second half of 2007 when I felt that the market was too frothy. Then, an idea hit me. What if I were to tabulate the number of postings in my blog & compare it to FBM-KLCI. Would my sub-conscious feeling tell me something about the state of the market?

Before I give my 'analysis' of the chart below, I will readily admit that this is not a serious study. My postings is pretty subjective & it is governed by my market outlook & my ability to spot a change of price direction in the market & the stocks. Since I have never given any thoughts to a possible connection between market outlook & my postings until now, the element of subjectiveness is not excessive. I can't say the same for future usage of this study since I am now somewhat aware of this connection and the element of objectiveness is lost. Below, I have appended a composite chart of FBM-KLCI & the number of monthly postings from July 2007 until January 2011.



Chart: FBM-KLCI's weekly chart & Nexttrade's monthly postings (overlaid with 4-month WMA & the 10-month SMA).

These are my observations:

1) The number of postings jumped to 40-50 per months after the market has peaked or bottomed (see point 1, 2 & 3). These could be due to follow-up posting to re-inforce the new market direction.

2) The number of postings remained fairly high when the market is in an uptrend (after point 1 & 3) but the number of postings declined to a minimal level when the market is in a downtrend (after point 2). The higher number of posting in a bull market is quite normal & one would find very little to write in a bear market.

3) The number of postings hit a low before the market peaked (see point A). I must have been ahead of the market & called a top prematurely. The top came later at point A1. Is the same scenario playing out again at point C & C1?

4) I have also plotted the 4-month Weighted Moving Average (WMA) & 10-month Simple Moving Average (SMA). It is interesting to see that at point A1 & B when the 4-month WMA cut above the 10-month SMA, the market direction changed. Now, the 4-month WMA is poised to cut above the 10-month SMA again. If that were to happen, are we about to see a change in the market direction?

Before I end this post, I would remind everyone to take my above comments with a table spoon of salt!