About Diversification Strategy & Sector Rotation

One well-known principle of risk management in investing that we often heard is:�Don�t put all eggs in one basket�.What it means is that in order to reduce risk, we should be well diversified in our investment by holding different stocks from different kinds of industries for our portfolio.However, the question here would be, is holding different stocks from just any kind of different industries good enough to lower your investment risk or to produce satisfactory returns?Peter Navarro in his book When the Market Moves, Will You Be Ready? offered a diversification strategy in relation to sector rotation as follow:Traditional investor is taught...

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BEARISH PENNANT PATTERN � Part 2: Important Characteristics

Go back to Part 1: Bearish Pennant Formation.Important Characteristics of Bearish Pennant Pattern:Shape of Bearish Pennant:1) Flagpole:For Bearish Pennant pattern to be more reliable, there should be a very sharp / steep price decrease (almost vertical, and may contain gaps) on heavy volume that makes the �Flagpole� part of the pattern.Without a steep price decrease, the pattern might be less reliable and riskier.2) Pennant:A Pennant part of the pattern is formed when the price movement is contained within two converging lines, representing a brief consolidation after the sharp decline.This consolidation forms a small symmetric triangle (pennant).The slope of the Pennant is usually neutral.Volume:Volume should be heavy during the formation of the Flagpole part, then decreasing during the formation...

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BEARISH PENNANT PATTERN � Part 1: Formation

Like Bearish Flag pattern, Bearish Pennant is a short term bearish continuation pattern that occurs during a downtrend, indicating a pause / small consolidation before continuing its downward moves.This pattern normally appears following a sharp price decrease on high volume.The Formation of Bearish Pennant PatternBearish Pennant pattern is usually preceded by a very steep (almost vertical) decrease in price on heavy volume. This steep price decrease makes the �Flagpole� of the pattern.The sharp decline in price may occur due to negative market sentiments toward unfavorable events / developments, such as negative earning surprises, downward guidance,...

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BULLISH PENNANT PATTERN � Part 2: Important Characteristics

Go back to Part 1: Bullish Pennant Formation.Important Characteristics of Bullish Pennant PatternShape of Bullish Pennant:1) Flagpole:For Bullish Pennant pattern to be more reliable, there should be a very sharp / steep price increase (almost vertical, and may contain gaps) on heavy volume that makes the �Flagpole� part of the pattern.Without a steep price increase, the pattern might be less reliable and riskier.2) Pennant:A Pennant part of the pattern is formed when the price movement is contained within two converging lines (i.e. decreasing upper line and rising lower line), representing a brief consolidation after the sharp increase.This consolidation forms a small symmetric triangle (Pennant).The slope of the Pennant is usually neutral.Volume:Volume should be heavy during the formation...

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BULLISH PENNANT PATTERN � Part 1: Formation

Like Bullish Flag pattern, Bullish Pennant is also a short term bullish continuation pattern that occurs during an uptrend, indicating a pause / small consolidation before continuing the uptrend.This pattern normally appears following a sharp price increase on high volume.The Formation of Bullish PennantBullish Pennant pattern is usually preceded by a very steep (almost vertical) increase in price on heavy volume. This steep price increase makes the �Flagpole� of the pattern.The sharp rise in price may occur due to positive market sentiments toward favorable events / developments, such as positive earnings surprises, new product launch, etc.After...

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I�m Back!

Hi everybody,Although it�s a bit late, I would still like to wish you:A VERY HAPPY NEW YEAR 2008!I also want to thank all my valuable readers for your supports and encouragements all this while.I just came back from a holiday and fell sick after that. Hence, I was not able to check my blog and emails.My apologies that I still cannot catch up to response to your comments.Hope I can manage to publish some articles and response to your comments soon.In the meantime, take care and have a good d...

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