Correction or consolidation

The higher you go up, the harder you fall. Look at Hang Seng and Jakarta, falling 2.9% and 2.2% respectively.

So, is this just a minor correction or the beginning of a consolidation? I think it depends on Malaysian currency against USD. Still cannot break 2.63.

Anyhow, for the foreign funds, I think they are content with the coming Christmas bonus.

So...maybe we shall have a month long consolidation until next year. So what will the fire pig brings us? Any hints from Mr. Market?

Currency effect

I think I know why I'm feeling so uneasy with the rally this week. It has got to do with the currency. Coincidently, I tried out Deutsche Bank Forex demo program this week. I don't have the money to play with Forex (min USD50k) but I tried it just for fun. What a beginners luck I had with the forex. I bought GBP against the USD and earn 25% in a day. So I check the Forex chart and I discover that major currencies are in a long term uptrend against the USD. Furthermore, the EUR has just broke free of a symmetrical triangle against the USD. USD was really getting whack! So what does this got to do with stocks?

Well, if I'm investing in US stocks, most probably I will sell them and convert it to EUR or whatever to avoid currency loss (just like 1997). If everyone thinks like that, then US stocks will go down.

The next question is how will this affect Malaysia? If US sentiment is bad, most probably it will affect us also. I'm not sure what will be the correlation this time.

If you read the newspaper, they always says that the rally is due to foreign buying. So what will the foreigner do? If MYR keeps tagging with the USD, I think they will sell. If MYR breaks free of the 3.63, then they will continue to buy. Last check at the BNM website shows that MYR is still trading around 3.63. So what will it be?

Comments are welcome

I don't have any privilege information. I don't get tips or whatever information except those published in the newspaper. Look at MPHB, I have no clue why it goes up like that. The most probable cause I can conclude is "the syndicate". If syndicate is involved, I just conclude that based on past charts, it can reverse as fast. So I took profit for my MPHB-WB. But the news is out now, the "reason" is MPHB is making a GO for Magnum. The price is definately not attractive for Magnum holders (no wonder it can't break 2.30). I guess MPHB will continue going up, too bad for me. But I don't regret my decision as it is based on what was at my disposal at that moment. Anyhow, I will learn from this experience and design a more flexible strategy.

Anyway, I don't mind any comments posted. Good or bad, it is fun to read. At least someone is paying some attention to this blog :p

Don't know zone

Yes, I am in the don't know zone. All my indicators for the KLCI is super overbought. Maybe it's no use to use them anymore, maybe we should just buy blindly. I don't have a system for superbought condition. I'm not take old to know what is the superbull. So I decided to sell stocks that moves up like someone with an overdose of viagra. For my buying decision, I only buy 1/2 position as compared to normal (just in case it didn't turn out fine). I have been caught during the 2004 downturn, so I try not to be caught again with my pants down. I think that it is important to make profit during the bull, but the most important is not to lost all back during the bear.

Still going up?

It's amazing that the index is still going up. Anyhow, I started to cut some of my counters as I'm not comfortable with my position. I'm totally out of Gamuda-WC, partially out of Maxis-CA and MPHB-WB. MPHB and Maxis looks very strong indeed. But I don't think I can sleep well during the correction (i'm getting jittery - still need to control my emotion).

New counters that I bought this week are Favco (one more try since I lost the last time) and Coastal (moving up again?) I'm also eyeing Maemode-WA. Counters that I'm still holding are Media-WA and Measat.

If KLCI is going into correction (it's almost at the end of reporting season), I do hope that it will be gradual and slow (at least there will be play on 2nd and 3rd liners counters). Let's see what the market will do tomorrow.

Correction coming?

Hmmm...if you read the news, you can see that many analysis are giving high targets for KLCI. Very bullish indeed. I believe their calls are to lure the last of the buyers. Today's KLCI action worries me. I think that we are heading into at least a 30% correction using wave theory (around 1000?). Funds don't have to push anymore since their account will definately look good at year end. If rally halted, I think it will be restarted for the CNY play (early 2007).

Let's see what happens next.

Cut Cut Cut

I'm not talking about stop loss. I'm refering to daily spending. Yup, the bulls are still charging. If this is a superbull, then it only comes once in 15 years. So we must make fully of this opportunity. Cut daily spending to the bare minimum, no luxury items, no Aunty Kwan, no new clothes, nothing new. Go for the cheapest. Divert most of you money to the stock (but remember to have 5 months of spare ...just in case it turns out wrong). This is one easy time to make money, so squeeze every drop of it.

Fantasies

Ah...the open profit gets bigger everyday. This is the time we usually fantasized on what we can buy....a new car, a new home, a new hifi or a new Nike. For food lovers, it will be Shark fins everyday.

Stop! Stop! Stop! To tell you the truth, I avoid fantasing about my open profit. Infact, I totally avoid counting my profit except for record purposes at the end of the week. I won't look at the profit figures. It's just make me nervous. Well, every stock needs to do cha-cha-cha. 2 steps front, 1 step back. So if you count your profit everyday, then you will see your profit goes up and down. When it is down, you will start thinking...oh ....I'm loosing that Nike that I dream of.....when it goes up, you add a new item into your wish list. At the end, you will not be able to analyse the stock movement objectively. You will be crowded with emotions. Emotions will just make you deviate from your written plan. And when you deviate from your plan, you will be reckless and with recklessness comes mistakes.

So stop counting the open profits.

Maemode, L&G, Gamuda

Lots of profit taking this week. Some stocks has been distributed. My analysis says Media and Masteel will consolidate next week. On the other hand, Maemode is showing signs of possible resuming its uptrend. I think funds are buying Frontken, support is still strong. Still looking for an reentry point to get into it.


Maemode: Daily RSI downtrend broken. Possible consolidation bottom at 1.22. Long term trend is still up.


L&G: Moving up slowly?



Gamuda: Resuming the uptrend? The warrants are all good play if this works out.