Infrastructure TA

Dongyuan Global Water, Inc (DGW): Ichimoku Case Study


This is one of the case study to support the idea of why Technical Analysis  is important. Note, I am not saying that Fundamental Analysis isn’t

A little background on ‘water industry’. One of the themes that were sold in recent years were all about the importance of clean water in emerging market.

Within this space, Dongyuan’s role is that of equipment supplier; the rising tide lift all boats argument.


I am not a FA expert. So, if I were to take a quick glance at the ratios provided by Google Finance, I would have seen some pretty good positive figures as per the following screenshot.

Net profit margin in excess of 20% in Q4 2010.

But, if we were to look at the chart, it is telling us another story.

DGW start to break down way back in Jan 2010. We can see how it breaks down from the kumo support and from then on, it hardly go above the kumo again.

Along the way, it break down another 3 to 4 times until it is trading at less than $5 now.

When a stock starts to break down, will you be buying when it has retraced 50%, 75%

I believe  DGW provides a very good reminder on the following:

  1. Always wait for the setup. No Setup; No Trade.
  2. Have your STOP-LOSS in place. If you are wrong, Respect it and execute it.
S&P500 TA

S&P500 (SPX): Time to short?

What does S&P 500 chart says?

1. The time between retrace is getting shorter. From Dec to Feb (2 months), to Feb to Mar (1 month).

2. As the timeframe between the retrace shortens, the acceleration going upwards is getting faster.  Taking a glance at the chart, it seems to be that the market has move up a lot within a very short timeframe.

And this leads us to the next question. When the market runs ahead so fast in such a short timeframe, is it time for us to take the profit and take a break?

Or better, start observing for a short position?

What do you think? Long or short?


Musing : The Ichimoku Crocodile