Political tsunami, stock earthquke, opportunity in disguised.

8/March/2008 marked a very important date in the history of democracy of Malaysia after 50 years of independence. On this day, the Malaysians witnessed what was described as the political tsunami in Malaysia where the ruling party was first time in the history of Malaysia denied 2/3 majority, and saw five states falling to the oppositions. Of course on the following Monday, 10/3/08 the KLSE also experienced a very strong earthquake that sent the KLCI -130 points down (-10%) to 1166, which triggered the circuit-breaker for the first time in the history of KLSE. The market was suspended from trading for one hour. When market re-open, the KLCI plunged further down to 1157 which saw the selling climax in term of volume. As seen on the KLCI chart, the low of 1157 has seen the completion of the target when the neckline of the Head-and-shoulder chart pattern was broken (indicated by the pink color line).

The market rebounded on Tuesday to close at 1206. On Wednesday, the market gapped-up 36 points on opening in response to DJIA's 416 points gain overnight, however, the bear immediately surfaced and sell down the market, and KLCI closed the week at 1194.84, down 101.49 points week-on-week.

The question on everybody's mind now would be "has the KLCI seen the worst?", really no one knows. From the chart, it has completed the Head-and-shoulder's target, however, it may retest the low of 1157, if that was not defended, then KLCI may further test the support at 1140. The market may see strong support at the 1128-1140 level. How far down the CI may goes will depend on the performance of the DJIA in the near term. The KLCI is now just doing a catch up with the DJIA and the rest of regional markets which have started their down trend move since mid October 2007.

The chart of DJIA shows strong support at the current level of 11,600 -12,000. From the charts, one can see that regional index like the HSI is following the DJIA closely, both indices are showing consolidations at the current level. If the support level of DJIA at 11,600 cannot hold, then DJIA may see further downside to 10,700. In that case, we may see the KLCI tumbling down to the 1130 or even 1090 level.



During a down market, it is full of fear and investors always act irrationally, this may be opportunity in disguise, and the best time to buy quality stocks at discount. However, do not try to catch a falling stocks, it is like catching a falling knife. Let the price settle first, we may not buy at the lowest, it is better to see the bottom first.



Disclaimer: The above is not a recommendation to buy or sell, all suggestions mentioned are purely for academic study purposes for our trend trader club members only, and the author may have personal interest and position in some of the examples mentioned. Any losses incurred if you were to trade base on the study examples above is solely your own responsibility. Do consult your dealer before taking any action.

The Bear in action

Since I came back from my trip to Huangshan the market has not been performing well. Short term players has been selling ahead of the national election on 8 Mac 2008. The overall market trend has turned bearish with a broke down on the neckline of the Head-and- Shoulder chart pattern. Daily volume traded has shrunk to an average of 600 million shares which indicates lack of interest in the market. On the moving averages, the short term 30 days MA is pointing south, and the CI is closed below the long term 240 days MA indicating strong bearishness. In view of that, the CI may move further down to test the 1300 psychological support, if breach, it may visit the important the 61.8% Fibonacci retracement level at 1287.

The general direction of the KLCI will be very much influence by the performance of the DJIA, which is probably in the base forming stage. The 12,000 mark is a critical support for the DJIA, if breach, DJIA may plunge another 360 points down to the 11640 level.

Despite the bearish market sentiment, there are a few counters that are showing support by the market, perhaps one can look at them from longer term perspective, they are Proton, Maybulk, BJLand, BJcorp.

Disclaimer: The above is not a recommendation to buy or sell, all suggestions mentioned are purely for academic study purposes for our trend trader club members only, and the author may have personal interest and position in some of the examples mentioned. Any losses incurred if you were to trade base on the study examples above is solely your own responsibility. Do consult your dealer before taking any action.

Gong Xi Fa Cai

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Last week was a consolidation week for the KLCI after a rapid correction of the CI the previous week. KLCI was mainly in the sideway mode the whole of last week swinging between 1370 and 1400 with 1380 as the short term strong support. As mentioned in the previous post, the long term trend of KLCI is still up, medium term is going sideway and the short term is volatile.

We must thank our government for managing the CI very well, when people in the world's largest economy were having sleepless night in the past weeks, our stock market, a barometer of the economy is still performing okay. All these are a result of the effort to create a pre-election feel good factor.

Where is our KLCI heading next? We may move in tandem with the rest of the major indexes, especially the DJI. DJI has managed to stay above the 12000, and closed last Friday at 12743, hopefully with Bush government's economy rescue plan DJI will stabilize around the current level. CI may move between a range of 1370 to 1420 for the immediate term. With the coming national election factor, there may be some chance for those who like to punt the market to make some money but trade with caution, and always have your stop loss in place.

Jesse Livermore, one of the greatest trader of all time used to say that the stock markets are designed to fool most of the people most of the time. News is a way the insiders fool and manipulate the public but there is one thing that does not lie and that is the chart. If you can close your ears to the lies and learn to read a chart you can be in the 10 % of players who make money.

Lastly, I wish everyone a happy and joyous Chinese New Year, Gong Xi Fa Cai, and may you get a big Ang Pow from the market.

Reminder: Drive carefully.

Correction

KLCI on last Monday started the week with making the record high of 1524.69, but ended the week with a very weak closing that form a bearish engulfing pattern. Technically, this is a correction to the run up from 1141 point. As mentioned in the previous post, the break down of DJI below 12,500 may lead to some fear in the world market, indeed, it actually caused flu. If DJI don't perform well, we may see our KLCI to further test the support of 1412, a 60 days MA support. In the worse case scenarion, CI may correct as far as 1380, be prepared. Technically, even if CI corrects down to 1380 it is consider a normal correction, the overall uptrend is still not spoil. Hopefully, with the coming election factor and the roll out of more economic corridor, our KLCI is able to sustain above 1400.

As for DJI, it has already gone into a bear phase, the support at 11,900 is important, hopefully with President Bush's economic rescue plan and further rate cut can save the DJI.

When market is panic, it is time the smart-money will come in to collect quality stocks at discount, don't get panic, just follow the foot print of the smart money. Some of the quality stocks worth watching are Sime, KLK, IOICorp, BSTEAD, Gamuda and many more. Buy near the major support.

Disclaimer: The above is not a recommendation to buy or sell, all suggestions mentioned are purely for academic study purposes for our trend trader club members only, and the author may have personal interest and position in some of the examples mentioned. Any losses incurred if you were to trade base on the study examples above is solely your own responsibility. Do consult your dealer before taking any action.

Profit taking

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As mentioned in previous post, the KLCI hit the high at 1524.69 on Monday and went into a profit taking mode. I hope all of you has locked in some profit. On Tuesday, KLCI started the day with a positive mode, gainers were more than losers. However, the bear came in quickly, and the market went into a profit taking mode after 10.00 a.m. The bear drove the CI down to a low of 1497, but the magic hand managed to bring the CI back to close at 1505.71. Losers lead gainers with 605 to 208, volume is healthy at 1.1 billion shares. From the volume traded, most of the retailers are still sideline, probably protest against the new minimum commission rate of Rm40. For the next few days, the market will hover around the 1500 level with the support at 1488 and resistance at 1524.


DJI has gone into a bear phase, with the index hovering near the important support of 12500 level, if this level can't hold, the index may go down to test 11900. Be prepared, if this happen, it may cause some fear in the KLSE, and the bear will take excuse to drive the market down.
Some of the stocks to watch: KPS, Proton, Astro, Unico and MBFHldg

Disclaimer: The above is not a recommendation to buy or sell, all suggestions mentioned are purely for academic study purposes for our trend trader club members only, and the author may have personal interest and position in some of the examples mentioned. Any losses incurred if you were to trade base on the study examples above is solely your own responsibility. Do consult your dealer before taking any action.

Weak market, correction downward

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The KLCI closed weak at 1403.41 on last Friday(141207) after it hit the record high of 1449.70 a week ago. It was down 30.63 points week-on-week. Market players took the opportunity to lock in their profits. Stock markets worldwide was down since 121207 due to a rate cut by FED that was lower than what was anticipated by the market. Daily volume of Bursa Malaysia has shrunk to around 600 to 700 million shares, which is a bad sign indicating a weak market, and more correction ahead is anticipated. In view that 1423 did not hold, and CI actually penetrated 1400 to the low of 1396.45 before a last minute push up to close at 1403.41, KLCI may further correct downward to the 1380 level to close the Gap that was created due to the listing of Sime Darby. Strong support may be found around 1350 and 1330 level. If these two level could not hold, then the KLCI will actually turn into bear phase. Hopefully the year end window dressing activities could help CI maintain at the current level.

Stock wise, there aren't many stocks that are good for trading. Some of the strongly trending stocks are BJCorp, BJCop-LC, and BJland. Gamuda shows a strong reversal up due to the revival of the double-tracking project, with a potential target of 5.10.



To all my Muslim readers, I wish all of you Selamat Hari Raya Haji; and to my Christian readers, Merry Christmas.





Disclaimer: The above is not a recommendation to buy or sell, all suggestions mentioned are purely for academic study purposes for our trend trader club members only, and the author may have personal interest and position in some of the examples mentioned. Any losses incurred if you were to trade base on the study examples above is solely your own responsibility. Do consult your dealer before taking any action.

KLCI lacking participation

The KLCI started Friday(071207) with a positive mood, the CI touched the record high of 1449.70 within the first twenty minutes of the session, and thereafter profit taking sets in and sent the CI down to the low of the day at 1431.77, an 18 points retracement from the peak but closed off low at 1434.04 (-6.35, -0.44%). Losers outnumbered gainers with 542 to 275. Volume traded was weak at only 790 million shares, this clearly indicates the local market lacks participation from the mass retailers, the CI's gain over the last few days was merely due to the gain in a few heavy weights.

Technically, Friday's price action has lead to the formation of a bearish engulfing candlestick which indicates distribution, especially happening near the top. The KLCI may continue to retrace downward to the 1423 level, which may provides support for the immediate term. For the medium term the 1400 psychological support is important. For the long term, our KLCI is still on the uptrend. Base on the trend channel, we are looking at the very possible target of 1500, this target may be achieved by the first quarter of 2008.

Some of the stocks that may offer short term trading opportunity are Kianjoo and Pohkong.
















Disclaimer: The above is not a recommendation to buy or sell, all suggestions mentioned are purely for academic study purposes for our trend trader club members only, and the author may have personal interest and position in some of the examples mentioned. Any losses incurred if you were to trade base on the study examples above is solely your own responsibility. Do consult your dealer before taking any action

Marching towards 1450

I mentioned in the post on 291107, "hopefully the listing of SD (now SIME) will kick-off a new round of rally", it is now coming true, thanks to the heavy weight counter. Our KLCI started Wednesday (051207) with a slight dip to 1415 due to Dow's overnight fall of 65 points, and very quickly CI shrugged off the fear and march towards 1423, the previous all time high. The attempt to break the record high was finally successful at 3.30 pm and CI reached a high of 1431.69 intraday, and finally settled at 1427.77 (+11.96, +0.84%). Market breadth was strong with 602 gainers against 241 losers, and volume was mild at just about 1 billion shares traded.

With the CI breaking through 1423, we are seeing the high possibility that KLCI will march towards 1450 before we say bye-bye to 2007. While the heavy weights are leading the way, the second and third liners are also showing signs of reversal after almost one month of correction. Some of the counters worth watching are MPHB, JAKS, Sunway-WB and Dataprp.

Disclaimer: The above is not a recommendation to buy or sell, all suggestions mentioned are purely for academic study purposes for our trend trader club members only, and the author may have personal interest and position in some of the examples mentioned. Any losses incurred if you were to trade base on the study examples above is solely your own responsibility. Do consult your dealer before taking any action.

KLCI up, but market was actually down

The listing of Sime Darby (or Synergy Drive as mentioned previously) on Friday, 301107, actually lifted the CI to open at 1408.09, a 33.77 points up. However, the CI did not continue with the up move, it only managed to climb to the intraday high of 1408.32, and thereafter was heading south direction to hit the low of 1391.72 and finally closed at 1396.98, up 22.66 points. The KLCI was up, but in actual fact the market was down, reason being Sime Darby alone, being the largest market capitalization counter on the Bursa Malaysia has contributed 23.40 points gains to the KLCI with its Rm2.10 gain. If we take away the contribution by SIME, the KLCI actually closed at 1373.58 (-0.74). Technically speaking, the candlestick formation coupled with a gap on Friday was not a good sign, despite the fact that CI was up, the general market actually took opportunity to take profit (or sell on strength), the confidence was not there yet. The general market sentiment was actually weak on Friday with majority of the counters down, losers lead gainers with 469 to 339, and volume done was only 970 million shares which indicates the general market lacks enthusiasm. Hence, CI may continue to slide down back into the sideway consolidation mode.

On the regional side, Hong Kong's HSI was back above the 28000 mark, and Singapore's STI has also climb back above the 3500 mark. These two marks was important for the respective indexes.













As for the DJI, it continued with its rebound from the recent low of 12,724 to close at 13,442. DJI may face some resistance at the 13,500 to 13,600 level.





From the movement of the indexes, most markets will move into the sideway consolidation phase, maybe this is a time to take a rest.

Disclaimer: The above is not a recommendation to buy or sell, all suggestions mentioned are purely for academic study purposes for our trend trader club members only, and the author may have personal interest and position in some of the examples mentioned. Any losses incurred if you were to trade base on the study examples above is solely your own responsibility. Do consult your dealer before taking any action.

Consolidation

In response to the overnight 215 points gain of the DJI, our KLCI started Wednesday with a 3 points gap up on opening and hit a intraday high of 1373, and profit taking sets in quickly. KLCI has been maintaining in the positive zone most of the day. At about 3.30 pm, the market took a dip as a result of the "limit-down" action of a few speculative stocks. The actions really affected sentiment of the general market at a time like this, where the market is just trying to recover from the recent correction. However, the magic hand is there doing his job and closed the KLCI at 1366.58, with 1.59 points gain. Market breadth remains weak with 297 gainers and 556 losers, volume is back to 1 billion share level. As mentioned previously, our market is consolidating at the current level with a trading range of between 1340 - 1380. The general market will only regain activeness if only the KLCI can goes above 1380.

Majority of the regional markets have also moved into the base building consolidation phase except Shanghai index (SSEC), where it has just broken the 120 days MA support, and may go further down to test the support at 4335.

The bulls on the DJI are fighting back, and the index has rise about 545 points over two days to bring the DJI above the 13,000 mark, back to the uptrend channel and above the 200 days long term MA. The bull may meet some strong resistance around the 13,500 level. Whatever it is, at least the Dow is back on track, and may goes into a consolidation phase between 13,000 - 13,550.

The sentiment of our local market was really affected by the plunge of the RL group of stocks, taking the lead was ETITECH, COMINTL, OILCORP, and KBES. If one wants to play these kind of stocks, one must always be happy with the profit when one have it, don't try to take every drop out of it, then one may end up giving everything back and may even get roasted.

The plantation sector remain steady in anticipation of the listing of Synergy Drive tomorrow, hopefully SD will lift the sentiment of the market and kick-off a new round of rally. Some of the plantation stocks that are worth watching are Twsplnt, Kretam, Cepat and Harnlen.

Disclaimer: The above is not a recommendation to buy or sell, all suggestions mentioned are purely for academic study purposes for our trend trader club members only, and the author may have personal interest and position in some of the examples mentioned. Any losses incurred if you were to trade base on the study examples above is solely your own responsibility. Do consult your dealer before taking any action.

Taking a breather

Our KLCI had on last Friday (231107) mainly stayed in a range bound trading condition with CI fluctuating between 1345 and 1354 and close the day near the high at 1353.55, however, it never goes below the close on Thursday of 1344.16. Volume shrunk to a low 630 million shares which indicate a lack of interest. Gainers lead losers with 464 against 287. After 3 weeks since the correction started on 1st November, the KLCI has came down from its peak of 1423.81 to the 120 days MA support at 1340. If this support holds well, KLCI may take a breather from its recent correction and move into sideway consolidation with a range between 1340 and 1380. Hopefully the listing of Synergy Drive on the 30th November will bring some life to the market.

For the Singapore STI, it is also showing a temporary bottom signal with the low of 3306.53. STI will also goes into a sideway market with a range of between 3300 and 3500




The Hang Seng Index has also seen a temporary bottom at 25861. It may swing between 25500 and 28000 points






As for the Dow Jones Industrial Average (DJI), it closed last Friday at 12980.88 with a green Marubozu candle, indicating that the bulls are in control the whole day, trying to fight back to bring the index back near the 13000 level. Whether the bull will succeed in their attempt is really critical for the Dow, we will find out tonight.


Disclaimer: The above is not a recommendation to buy or sell, all suggestions mentioned are purely for academic study purposes for our trend trader club members only, and the author may have personal interest and position in some of the examples mentioned. Any losses incurred if you were to trade base on the study examples above is sole your own responsibility. Do consult your dealer before taking any action.

Update

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Regional bourses all open with a panic gap down on Tuesday morning following the falls of 218 points on DJI on Monday which closed at 12958, below the 13000 psychological support, this really cause the regional market to jitter, hence, the panic gap down opening. However, one can observed that the downward selling pressure did not last and the bull was fighting in the afternoon session. HSI and STI closed the day with a bullish reversal candle. HSI will have to go back above 28000 to maintain the medium term uptrend, and STI will have to go above 3500 to keep its long term uptrend intact. As for our KLCI, we lack a bit of strength, and closed the day off low at 1371.70 (-8.21, -0.59%) to form a bottom reversal black Hammer candlestick. Whatever it is, KLCI is now stuck in a sideway trading range of between 1360 - 1400, hopefully the listing of Synergy Drive will bring the KLCI above 1400, and that will bring life to our market again.















The DJI has on last night seen a roller coaster ride with the bull winning the battle for the day to close Tuesday at 13010, and the psychological support of 13000 was temporary defended. This also keep the DJI within the uptrend channel which must be defended, otherwise the whole world will purge.



Some of the stocks that may offer short term trading opportunities are CBSTech, GPlus and Tanco. However, one must be quick in taking the profit when you see it.


















Disclaimer: The above is not a recommendation to buy or sell, all suggestions mentioned are purely for academic study purposes for our trend trader club members only, and the author may have personal interest and position in some of the examples mentioned. Any losses incurred if you were to trade base on the study examples above is sole your own responsibility. Do consult your dealer before taking any action.

Sideways

Last Friday(161107) was generally a down day with the KLCI trading in the red zone most part of the day. Regional market was generally down with HSI taking the lead with a fall of 1100 points, a result of the Chinese government curbing the underground currency exchange activities. The KLCI actually showed mild selling pressure with the CI hitting a low of 1377.43 intra-day and closed at 1386.64 (-3.36, -0.24%) with a last minute magical touch, volume reduced to 1.01 billion shares with losers (519) outnumbered gainers (276), forming a Doji candlestick. The Doji formation indicated that the market (CI) is uncertain of its direction, however, the price action for the day showed that the magic-hand is trying to maintain the KLCI above the 1380 level. For the moment, KLCI is finding good support around the short term 27 days MA, the medium term 50 days MA is coming to meet the short term MA, and the long medium term 120 days MA has gone flat indicating that the market is probably going into a sideway condition in the short to medium term. The long term 200 days MA, however, is still pointing northeast indicating that the long term trend of KLCI is still up. Looks like the market is taking a breather while waiting for a catalyst to move it further, probably the listing of Synergy Drive at the month end.

As for the DJI, it is probably trying to find a base around the current level of 13000 to 13400 amidst the many troubles the US economy is facing. As mentioned in the previous posts, the 13000 level is critically important for the DJI to defend in order to maintain its medium to long term uptrend.


Back to our local market, some of the stocks that we are following such as BHIC, KNM, MPHB, and MPCorp, the uptrend is still intact. MPHB will be suspended till Wednesday awaiting the result of the announcement on its intention to privatize Magnum.

Maybulk, Landmrk, BJCorp, Kretam and a few other plantation stocks have gone into a short term sideway consolidation. Their medium to long term uptrend is still intact.

Time and Timecom may offer short term trading opportunity as a result of the positive development between Timecom and Digi.

Disclaimer: The above is not a recommendation to buy or sell, all suggestions mentioned are purely for academic study purposes for our trend trader club members only, and the author may have personal interest and position in some of the examples mentioned. Any losses incurred if you were to trade base on the study examples above is sole your own responsibility. Do consult your dealer before taking any action.