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Monday, December 29, 2008

Sector Indexes (20081226)

Late update. My readings for the week ended 26 Dec 2008:
Malaysia Longterm Midterm Shorterm
KLCI Down Down Neutral
Finance Down Down Neutral
Construction Down Neutral Neutral
Plantation Down Neutral Up (+)
Property Down Down Neutral
Mesdaq Down Down Neutral (+)
2nd Board Down Down Neutral

For the rest of the world:
World Longterm Midterm Shorterm
S&P500 Down Down Down (-)
DJI Down Down Down (-)
NasdaqComp Down Down Neutral
Nikkei 225 Down Neutral (+) Neutral
Kospi Down Neutral (+) Neutral
SSECI Down Down (-) Down (-)
HSI Down Neutral Neutral (-)
TWII Down Down Neutral
STI Down Down Neutral
SENSEX Down Down (-) Neutral
FTSE Down Down (-) Neutral
DAX Down Down Neutral

Everyone is expecting a strong rebound in the first half of 2009. For me, I'm still expecting the market to go down until I can see more strength in the up movement. Currently, I consider everything as a dead cat bounce. So, it is not worth the risk unless one is very fast and agile in executing the trade.

Sunday, December 21, 2008

Rebound in Progress

Looks like rebound is in progress. Where will it go? The current KLCI downtrend line resistance is at around 900.

KLCI Weekly Chart

The various sectors seems to have stabilized:
Malaysia Longterm Midterm Shorterm
KLCI Down Down Neutral
Finance Down Down Neutral
Construction Down Neutral (+) Neutral
Plantation Down Neutral (+) Neutral
Property Down Down Neutral (+)
Mesdaq Down Down Down (-)
2nd Board Down Down Neutral (+)

For the rest of the world:
World Longterm Midterm Shorterm
S&P500 Down Down Neutral
DJI Down Down Neutral
NasdaqComp Down Down Neutral
Nikkei 225 Down Down Neutral
Kospi Down Down Neutral (+)
SSECI Down Neutral Up (+)
HSI Down Neutral (+) Up (+)
TWII Down Down Neutral
STI Down Down Neutral
SENSEX Down Neutral (+) Neutral
FTSE Down Neutral (+) Neutral
DAX Down Down Neutral

It looks like the first one that may emerge from this bear market are the China stocks. Not many China CW left in KLSE. Hope that more will be issue now so that they will be in the money by the time the next bull begins.

Tuesday, December 16, 2008

KL mart may hit bottom early 2009

Original source.

CITI Investment Research expects the benchmark Kuala Lumpur Composite Index (KLCI) to fall by another 18 per cent to 691 points, as earnings per share (EPS) growth expectations continue to fall amid the uncertain market.


"With the macro risk rising, the market could fall below the 1.4 times price-to-book ratio (P/B) it hit during the 2000-01 recession ... taking a more cautious approach, we are now using our benchmark the average Asia P/B of 1.2 times - implying a further decline to 691 points," Citi Investment Research said in its report last Friday.

The research house expects the bear market to hit the bottom as early as the first quarter next year.

"In three of the last four recessions, the bear market ended in or immediately after the worst quarter of GDP growth. Our economist forecasts GDP to bottom at around two per cent in the first quarter 2009, down from 2.6 per cent in the fourth quarter of 2008. If history repeats itself, first quarter 2009 is the earliest the market could bottom," it said.

It also revised downwards its projections on EPS for 2009. Companies in the utilities sector are expected to see a 23.7 per cent decline in EPS, banks (-8.3 per cent), telecoms (14.4 per cent), plantations (-20.6 per cent) and tobacco (-10.5 per cent).


It advised investors to go for stocks that has low P/B or with high earnings visibility.

"Be they cyclical or defensive, stocks trading at trough P/Bs or have strong earnings visibility are on our top buys list - AMMB, BCHB, IGB Corp, KLCC Property, Tanjong plc and IOI Corp. Our top sell ideas are Public Bank and Maybank," it added.

$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

My questions:
KLCI bottom at 691? My God! How did they manage to come out a figure so precise? The market is consist of thousands of buyers/sellers, does that mean everyone will decide that 691 will be the bottom for 2009? What should be the price for the components (TM, PBBank, Genting etc) so that we will exactly hit 691?

Sunday, December 14, 2008

Weekly Analysis

I don't know where the indexes will go tomorrow, but they are going down in the long run:
Malaysia Longterm Midterm Shorterm
KLCI Down Down Neutral (+)
Finance Down Down Neutral (+)
Construction Down Down Neutral
Plantation Down Down Neutral (+)
Property Down Down Down
Mesdaq Down Down Neutral (+)
2nd Board Down Down Down

Still no sign of rebound. Anyway, I'm bad a playing rebound. Just once in a while greed trying to take over me and I got myself into trouble.

For the rest of the world, it's volatile enough to give you sleepless nights:
World Longterm Midterm Shorterm
S&P500 Down Down Neutral
DJI Down Down Neutral
NasdaqComp Down Down Neutral
Nikkei 225 Down Down Neutral (+)
Kospi Down Down Neutral (+)
SSECI Down Neutral Neutral
HSI Down Down Neutral
TWII Down Down Neutral (+)
STI Down Down Neutral (+)
SENSEX Down Down Neutral
FTSE Down Down Neutral (+)
DAX Down Down Neutral (+)


Looking at the S&P 500 daily chart, the EMAs line are converging. This tells me that the bulls and the bears are in equal strength and a major move will be made soon. It could be 1 week to 1 month. Which direction? Based on the weekly chart, I would say down. But then again, it could have already broken the latest downtrend line and may be heading towards 1000. For this two, I still think the former has a greater probability of happening.

S&P 500 Daily Chart

Friday, December 12, 2008

Time to buy battered stocks: JPMorgan

Published: 2008/12/11

Now is the time for investors to buy battered stocks as the global financial crisis is expected to retreat by the second half of next year, an equity strategist says.

"We have seen the peak of selling (of the stock market) in October," said JPMorgan Asian and emerging markets equity strategist Adrian Mowat at a briefing in Kuala Lumpur yesterday.

The stock market, which took a beating in October, following panic-selling in global markets, led the local benchmark Kuala Lumpur Composite Index to a four-year low.

Valuations are cheaper compared with previous crisis, he added, but investors are staying on the sidelines.

"Malaysia is unlikely to be a leader in recovery because international markets tend to go for markets with more liquidity and China will lead the story," Mowat said.

$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
My comments: I don't know how he can come to the conclusion that the crisis is over. For me, it is still too early to tell whether the bottom has been reached. The monthly S&P 500 chart shows that it may have found support in the 750-800 region. If this is the true support, then the market should test this in the next 3-6 months time. Even thought the chart shows that it is really oversold, but we need to remember that this is a strong downtrend. Thus, indicators can stay oversold a long time. Based on my interpretation on the S&P500 chart, I cannot come to the conclusion that the crisis is over.


Thursday, December 11, 2008

If Middle Earth Has A Stock Exchange

Oh....look at IOICorp, it may be giving a buy signal base on daily chart!

No no no...cannot touch this....the long term trend is still down!

But the potential move may be high! The weekly chart is ain't that bad too.

It is a downtrend stock. It can stop at any levels and reverse back.

I think that it can go up to 4.00...IOICorp-CJ looks yummy!

The risk is not worth it. I cannot break my trading rules. That is to stay out of downtrend stock.

But it is Christmas time, then it is Chinese New Year....sure will rally and the risk is not that great.

Remember the last time I broke my rule, I suffer huge losses!

Ang pow lai liao, ang pow lai liao.....he he he

Arrrggghhh.......I'm starting to become greedy again. Greedy is the cause of my last downfall.

I can squeeze 50% profit in it. I should take the risk.

Follow the rules. Be discipline. Will not become a good trader if I am not discipline.

(Ah, a little bit of Gollum inside of me)

Wednesday, December 10, 2008

Sepandai-pandai tupai melompat...

Creation and construction takes time and effort, but destruction can be swift and violent.

That is why I do not have a long term view of the market. You will never know how severe the bear market will turn out to be. This story concerning Bill Miller shows that it is better to be save than sorry. When you smell a bear, start liquidating some. When you hear the bear, liquidate some more. When you see the bear, liquidate all!

The story also shows that we are all vulnerable. Don't be arrogant. Don't take excessive risk. Always look out for signs of trouble. The most important of all, take responsibility for your failure. Do not blame it on the market. By taking responsibility, you learned about your mistakes, about your foolishness and about yourself. This is the only way we can survive.

Tuesday, December 09, 2008

Greedy Dream Gone

Oh, my dream was to leave my current job and to go into the hedge fund industry. I want to be those greedy fund managers, playing with other peoples money and earning 6 obscene figures. Fast car, good wine, good food, big house and branded items.

Well, that is all gone now. Hedge funds are closing down. The chances of getting a job is very low now. Maybe I'm not destined for those. So, I have to be content with playing my own money. That means to be more careful with my money and not take excessive risk. That means a small national car, cheap wine, mixed-rice, low cost house and fake branded items.

But all is not loss yet. Human will have a short memory. It will always be different the next time. The next bubble will come. It will be something different. We have already gone through the bubbles for tulips, trading rights (South Sea Co.), dotcom, property, commodities and energy. Rest assure the next bubble will be waiting to grow. Then maybe, I can achieve my dream. I just hope that I will still be around to see it grow.

Bubble here, bubble there
Bubble burst, becomes big brown bear
Last one in, first one suffer
Big ugly frown, no more laughter

The slow one gets slaughtered
The hopeful becomes bottom pickers
Every rally becomes a new hope
But it was only a short of dope

When the euphoria ends
The bottom pickers are squashed like ants
Everyone is humbled
Assets continue to tumble

But do not despair
A new bubble lay hidden somewhere
With new money and no memories
Ingredients for the next bubble recipe

And so we are back again
Seeking that elusive gain

Sunday, December 07, 2008

The 5 Stages

This is my 500th post! Enjoy.



Conflit of Interest

This is my 499th post. So, I'll say something more serious. The topic is conflict of interest in the mutual fund industry.

What type of conflict of interest am I talking of? Well, during this bearish market, you still hear of dollar cost averaging.

The reasons given for dollar cost averaging are:
  1. You cannot be influence by the fluctuation in the stock prices.
  2. It is hard to determine to top and bottom in a market.
  3. A way to force you to safe.
Point 1 is partly true. Prices fluctuate within a certain range if you view them using daily time frame. No point to react to every movement because of the high charges in commission. But if you step back a little bit further and use the weekly time frame, then you can see that certain stock have strong uptrend and downtrend. To make money, you need to be able to catch the strong uptrend and to avoid the strong downtrend.

Now, this comes to point 2. It is of course impossible to catch the top and bottom, but it is still profitable if one can determine the bottom after 10-20% raise or the top after 10-20% drop. This is because, in a strong uptrend, the price can increase over 100%, sometimes 200-300%. If one can catch 60% of this move, you will already have a very good return. In a strong downtrend, the price can drop 50 to 80%. Thus, it is best to avoid them. Therefore, being able to draw a simple uptrend or downtrend line using a chart is really beneficial in maximizing ones profit.

For point 3, I think that saving should be part of your natural habit.

So, that 3 points are used to promote dollar cost averaging. But the real reason, based on the point of view of an asset management company is different.

It all comes down to profit. You see, the asset management company sucks a minimum of 1% of your asset every year. In a good or bad year, they are still able to reduce your asset. If they promote chart reading, imagine what will happen in a bear market? If everyone pull out they money, less asset under management means less profit! That is why, you always hear from fund managers "advicing" you to keep on investing in the market. They don't really put your priority as they priority. Their priority is to take your money first. Making profit means that they can attract more money for management.

Well, you can't blame the mutual fund industry for this behavior. They are business minded. The blame is really on you. If you choose to remain ignorant in this investment game, then you are a sucker and unless you change your attitude, you remain a sucker for life.

If you want to invest, you need to know the basics of fundamental analysis and technical analysis. This is a must. With this knowledge, you can put in tough question for your financial planner, your broker or the a representative of the mutual fund industry. If you don't ask, they will not tell you and the loser will be you.

So, go to MPH and increase your knowledge. We are experiencing a bear market now, so it is a good time to educate yourself to prepare for the next bull market.







Weekly Analysis

Ok, still no rebound for KLSE. My charts a little bit contradicting each other. That is why I don't think that the downtrend will be strong. But it looks like we are still slowly drifting down. Since everything except gold has collapse, we should look forward to the next bubble. Currently, it is still too early to tell. Maybe China play? SSECI seems to have been stabilized.

My interpretation for KLSE are:
Malaysia Longterm Midterm Shorterm
KLCI Down Down Down
Finance Down Down Down
Construction Down Down Neutral (+)
Plantation Down Down Down (-)
Property Down Down Down
Mesdaq Down Down Down
2nd Board Down Down Down

For the rest of the world, the reading is mixed. :
World Longterm Midterm Shorterm
S&P500 Down Down Neutral
DJI Down Down Neutral
NasdaqComp Down Down Neutral
Nikkei 225 Down Down Down (-)
Kospi Down Down Down (-)
SSECI Down Neutral (+) Neutral
HSI Down Down Neutral
TWII Down Down Down (-)
STI Down Down Down (-)
SENSEX Down Down Neutral (+)
FTSE Down Down Down (-)
DAX Down Down Down (-)

Nothing much to say but to wait for the right signal.

Sunday, November 30, 2008

Where is Santa?

KLSE is not reacting to US stock movement. I'm still expecting a rebound. December is the month where stocks usually move up. In addition to that, the fund manager must do some window dressing to cover their miserable performance. But.......most of sector charts are still pointing down:
Malaysia Longterm Midterm Shorterm
KLCI Down Down Down
Finance Down Down Down
Construction Down Down Down
Plantation Down Down Neutral (+)
Property Down Down Down
Mesdaq Down Down Down
2nd Board Down Down Down

The rest of the world looks like stabilizing:
World Longterm Midterm Shorterm
S&P500 Down Down Neutral (+)
DJI Down Down Neutral (+)
NasdaqComp Down Down Neutral (+)
Nikkei 225 Down Down Neutral (+)
Kospi Down Down Neutral (+)
SSECI Down Down Neutral
HSI Down Down Neutral (+)
TWII Down Down Neutral (+)
STI Down Down Neutral (+)
SENSEX Down Down Down
FTSE Down Down Neutral (+)
DAX Down Down Neutral (+)

But please note that US stock market has gone up with decreasing volume. So when everyone is back after Thanksgiving, do expect the real action to continue.

Also, the talk of the town is that China is in panic mode. Their GDP may contract more. Now, if we can lend money to the Americans to continue their spending binge, maybe we can save the world from going into a severe recession.

If you are interested in US and world economy, then please do read the blog Calculated Risk.

Sunday, November 23, 2008

To Test The Downtrend Line?

All sectors are still pointing downwards:
Malaysia Longterm Midterm Shorterm
KLCI Down Down Down
Finance Down Down Down
Construction Down Down Down (-)
Plantation Down Down Down (-)
Property Down Down Down
Mesdaq Down Down Down (-)
2nd Board Down Down Down (-)

However, the downward pressure doesn't look strong. This observation is obtained base on the daily MACD reading that shows some contradiction with the price movement. A good chance that the rebound may continue towards the downtrend line that is currently at around 950. Maybe the rebound can just stuck at 920 again. The important point is that the probability is still not favorable for going long.


KLCI Daily Chart

For the rest of the world, the reading is still gloomy:
World Longterm Midterm Shorterm
S&P500 Down Down Down
DJI Down Down Down
NasdaqComp Down Down Down
Nikkei 225 Down Down Down
Kospi Down Down Down
SSECI Down Down Neutral
HSI Down Down Down
TWII Down Down Down
STI Down Down Down
SENSEX Down Down Down
FTSE Down Down Down
DAX Down Down Down

After China unveiled its stimulus package, SSECI seems to have stabilize. Well, President elect Obama has unveiled his stimulus package that will create 2.5 million jobs. My questions are:
1. Where is he going to get the money?
2. Can the banks be saved before the effect is seen?
3. Are investment bankers and auto plant workers going to the work of shovelling sands, welding metals and laying bricks?

Anyway, base on the Chinese announcement and the effect on the Shanghai stock market, I guess that NYSE and Nasdaq will also stabilize (unless Citi crashes on this coming Monday).

Saturday, November 15, 2008

Continuing Down?

KLCI rebound may be over. If 800 breaks, then the next possible support is around 640.
Malaysia Longterm Midterm Shorterm
KLCI Down Down Down (-)
Finance Down Down Down (-)
Construction Down Down Neutral
Plantation Down Down Neutral
Property Down Down Down (-)
Mesdaq Down Down Neutral
2nd Board Down Down Neutral

US roller coaster ride may reach another cliff that will clearly break the Oct 10 lows (I'm talking about DJI).
World Longterm Midterm Shorterm
S&P500 Down Down Down
DJI Down Down Down
NasdaqComp Down Down Down
Nikkei 225 Down Down Down (-)
Kospi Down Down Down (-)
SSECI Down Down Neutral (+)
HSI Down Down Down (-)
TWII Down Down Down
STI Down Down Down (-)
SENSEX Down Down Down (-)
FTSE Down Down Down (-)
DAX Down Down Down (-)

By the way, have you seen the news concerning China's Oct industrial production growth? 8% increase. But wait a minute, the electricity consumption contracted by 4%! Huh?!

Thursday, November 13, 2008

The Global Bailout Map

I want more sir! 20 billion --> 85 billion --> 700 billion --> gazillion ???

The global bailout map

The more you bailout the sick companies, the more I'm scared.

Wednesday, November 12, 2008

The End

A great article from Michael Lewis. It is about the people that saw and profited from this subprime crisis.

Saturday, November 08, 2008

Rebounding

KLCI Daily Chart

KLCI had a big bounce from 800 to 900. Downtrend line resistance is at 950-970. So, will it go higher? What are the fundamentals for it to go higher? A new US president does not mean that the problem will go away overnight. The next fear factor may be China contracting GDP.

My interpretations for the various sectors in KLSE are:
Malaysia Longterm Midterm Shorterm
KLCI Down Down Neutral (+)
Finance Down Down Neutral (+)
Construction Down Down Neutral (+)
Plantation Down Down Neutral (+)
Property Down Down Neutral (+)
Mesdaq Down Down Neutral (+)
2nd Board Down Down Neutral (+)

For the rest of the world:
World Longterm Midterm Shorterm
S&P500 Down Down Down (-)
DJI Down Down Down (-)
NasdaqComp Down Down Down (-)
Nikkei 225 Down Down Neutral (+)
Kospi Down Down Neutral (+)
SSECI Down Down Down
HSI Down Down Neutral (+)
TWII Down Down Down
STI Down Down Neutral (+)
SENSEX Down Down Neutral (+)
FTSE Down Down Neutral
DAX Down Down Neutral