Sometimes I wish to know what is the investors reaction index, investors contra index, investors cash index even it is just some terms I come out myself. These are related to the contents of the article today.
First of all to STI, Reaction index is how much does a trader react to the market either deep green or red. This is mostly correlated to Dow Jones results the morning before, Nikkei opening and Hang Seng opening. As all of us know, market is affected by regional market's life performance. Moreover STI is a better follower than the rest.
More InfoComing back to the title nervous strike, there is a way a lot of people use to earn smart money. It happens when the Reaction Index gone wrong. Often like Dow Jones corrected 1-2% and STI gap down by a lot, the first thing within 5 min after market open a lot these so-called 'kan-cheong spider' (nervous herd) will jumps out of the wagon.
Contra index is more related to how many percent of the investors in the market are playing contra, leverage, margin etc. The higher is the percentage, the more dangerous is the market due to the so-called zero capital game of stock market.
Cash index is how many percent of cash vs stocks in the hand of most of the investors. Basically the more cash and the more investors are waiting at the sideline, the less likelihood that the market will go down without support.
Lately if you notice, the contra index come down because margin call going around and a lot of investors reduced their leverage rate due to unstable market. Therefore we can say that it is becoming less likelihood market to crash and also less likelihood to surge like before.
Cash index goes up because a lot of investors cashed out due to their nature of fear the market will go down more and affected by the negative news going around.
So, as a conclusion, greater crash/surge might not easily occurs (without sudden incident like 911, war) for time being. That's why you can notice that the 'up and down' is not so significantly seen even if bad news keep coming out.
It is easy to grab some cheap stocks within this 5 min and immediately start to queue higher. Without any worse news going, there will be a short technical rebound likely to occurs due to buy up from these nervous herd. That's why avoid to buy for the first 15 min after market opens not for this reason above.
Do take note of the current situation before execute the 'buy at dip for starting 5 min' strategy. Sometimes if the market sentimental is not good, or the risk vs gain is not good, it is not recommended to execute this strategy.
