Saturday, January 24, 2009

Rising wedge formation

KLCI Daily Chart

From the KLCI daily chart, we can see that we are still within the consolidation area (rising wedge formation). Currently, we are at the lower boundary. The various sectors are currently at the neutral phase based on the daily chart. I'm anticipating a big move in a week or two, either continuing the downtrend or change of trend. Based on the worsening economic situation, the continuation of downtrend has a higher chance of happening.

Malaysia Longterm Midterm Shorterm
KLCI Down Neutral Neutral
Finance Down Neutral Neutral
Construction Down Neutral Neutral
Plantation Down Neutral Neutral
Property Down Neutral Neutral (-)
Mesdaq Down Down Neutral (+)
2nd Board Down Down Down

Looking at the various world market, all of them except SSE is showing downside bias. For SSE, it looks like it is building a base.
World Longterm Midterm Shorterm
S&P500 Down Down Down
DJI Down Down Down
NasdaqComp Down Down Down
Nikkei 225 Down Down Down
Kospi Down Neutral Neutral
SSECI Down Neutral Up (+)
HSI Down Down Down
TWII Down Down Down
STI Down Down Down
SENSEX Down Down Down
FTSE Down Down Down (-)
DAX Down Down Down

Based on what I have read, I think that insolvent banks should be put to sleep. Whatever politically accepted actions that President Obama is going to take will only prolong the crisis because walking zombies will only scare everyone from the market.

Friday, January 23, 2009

The Economists Don't Know

Warren Buffett says that the economist don't know a thing on how to solve the current crisis. Read the interview transcript here

That is why I have stop believing the so call experts. But many people still look to these people to guide them in their investment.

Thursday, January 22, 2009

Promote Growth My Ass!

Malaysia is an export oriented country. When the buyers have no money to buy, you cannot sell. So, how does a low interest environment promote growth? Yes, you can borrow cheaply, but who is going to buy your products? Yes, you can buy a house with cheap interest, but if you fear of losing your job, will you take in new loans?

By lowering the interst rate, the Malaysian ringgit will get whack. This will definitely makes our exports cheaper but our neighbor can also lower their interest rate and so we go into a competition of let's see who reaches zero first!

To promote growth through cheap money? There are other ways lar. Improve in efficiency is one of them. You make your product cheaper to allow people to buy it more for the same amount. Improve in technology is another. You make your product better so that people will buy your product instead of from others.

My dad is very angry with this lowering of interest rate. Pensioners will definitely suffer. This is the problem will modern economy. Economist don't give a damn thought about poor people. What we are doing is tentatively is to support poorly run company that cannot survive in this environment by providing cheap credits to them. What Jim Rogers are all well know by every common people in Malaysia. The politicians are useless! We have so much resources but we are not using it efficiently. The money that we got are simply thrown to those with special contacts.

We do not need to promote growth by lowering interest rate, we can promote growth by kicking out those useless and incapable politicions from office. Yes, change we can!

Jim Rogers on Malaysia

From the Jim Rogers blog:

Blessed with natural resources, Malaysia is in a better position than most countries in the current economic environment, according to Jim Rogers.

The Malaysian economy is natural resource-based so you are in a better position than many countries. And therefore, your currency is better positioned than other currencies,” Rogers said at the Asian Financial Forum.

My main problem with Malaysia is that your politicians don’t seem to get it right. It’s a fabulous country and it should have a fantastic future. Get politicians who understand how the economy works and adapt and adjust. Malaysia should be and could be a wildly successful and rich country,” he commented.

Monday, January 19, 2009

Honeymoon is Over

US market has turned down. The situation is getting back to bad. Honeymoon period for President-elect Obama is over.
World Longterm Midterm Shorterm
S&P500 Down Down (-) Down (-)
DJI Down Down (-) Down (-)
NasdaqComp Down Down (-) Down (-)
Nikkei 225 Down Down (-) Down (-)
Kospi Down Neutral Neutral (-)
SSECI Down Neutral (+) Neutral
HSI Down Down (-) Down (-)
TWII Down Down Down (-)
STI Down Down (-) Down (-)
SENSEX Down Down (-) Down (-)
FTSE Down Down (-) Neutral (-)
DAX Down Down (-) Down (-)

Friday, January 16, 2009

Getting weaker

KLCI Daily Chart

We can find some sort of formation in the KLCI chart now. It looks like a rising wedge. The upper (around 940) and lower (around 860) boundaries have been set. Look for a big move in either way when these imaginary lines are broken. I'm expecting a down move. The chart has not indicate any possible big move yet. The technical is getting weaker based on the daily chart. For the rest of the sectors:
Malaysia Longterm Midterm Shorterm
KLCI Down Neutral Neutral (-)
Finance Down Neutral Neutral (-)
Construction Down Neutral Neutral (-)
Plantation Down Neutral Neutral (-)
Property Down Neutral Up
Mesdaq Down Down Down (-)
2nd Board Down Down Down

Saturday, January 10, 2009

Blog War!

I do not understand why must these people fight on whether fundamental analysis or technical analysis is better (see Seng vs Sam). This is a useless activity. Everyone has their style of making money. There is no right or wrong method. It all works. The important thing is that you must find a method that suits your personality!

However, from my analysis from the post, I think it is not only about the techniques. It is also about egos, i.e. who is better? I feel that those two chaps are battling over their big ego that seems to be not able to exist together in the blog world.

For me, I read about macro economies but trade using technical analysis. If people come and say that technical analysis is useless, then it is better for me. I know my edge and if everyone trade using my method, then my technique will become less effective. It is not like I want to keep my technique secret because it is already out there in the books. It is not my job to convert you to my technique. You have a brain to think and to make your own decision. So, it is no point for me to defend myself. At the end of the trading day, only the number in my account matters.

So, if you two ever come to this blog, cool down man!

Spend towards your death!

Looks like KLSE is still making a dead-cat-bounce/sucker's rally. My analysis indicates that this up-movement will reverse course soon. KLCI @ 936 may be the highest we will see for this quarter. To confirm the continuation of the downtrend, KLCI must drop below 860 (based on last week's reading). Nothing is certain yet because my midterm reading is still neutral. The KLSE sector readings are:
Malaysia Longterm Midterm Shorterm
KLCI Down Neutral Up (+)
Finance Down Neutral Up (+)
Construction Down Neutral Up
Plantation Down Neutral Up
Property Down Neutral (+) Up (+)
Mesdaq Down Down Neutral
2nd Board Down Down Down (-)

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

US market may be on the verge of another downward spiral. So beware! Don't hope that President-elect Obama can do anything. The only rational thing we can do is to save more and only buy what is needed. The Americans is having a hard lesson of spending beyond your means. Can you believe that their savings rate is around 1-2%? So, it is payback time for them.

Looking back at my process of financial responsibility, I realized that I got it all wrong when I first graduated. I bought a car even before I start working (okay, my parents paid for the deposit and I paid for the monthly installment). This can only happen when the bank officer cook up my loan applications! The only thing I did was to sign all the papers and the salesman fill-up the details. Anyway, buying a car without a strong savings is my mistake. I was in debt for 5 years without much savings as I have to pay also for food, maintainance, housing and parents.

Luckily I bought a book about financial planning get myself out of debt. I'm lucky as I discover the death-trap of compound interest can do to your credit card loan. I hope that someday, financial planning will be taught in school so that everyone is responsible in their financial spending. We cannot get into too much debt in good times because when the bad time comes, we will be unable to get out of it.

Now, I'm very careful with my spending until I think that I'm a very kiam-siap (miser) person!

Monday, January 05, 2009

Still rebounding

Ah, I'm getting sloppy. As I get no clear signals to be bull or bear, I'm not paying much attention to the stock market. Looks like the markets that I'm tracking of are still in a rebound mode. This week, we shall see the real action when everyone is back from Christmas and New Year holidays. My interpretation for major markets are:
World Longterm Midterm Shorterm
S&P500 Down Neutral (+) Neutral (+)
DJI Down Neutral (+) Neutral (+)
NasdaqComp Down Neutral (+) Neutral
Nikkei 225 Down Neutral Neutral
Kospi Down Neutral Neutral
SSECI Down Down Down
HSI Down Neutral Up (+)
TWII Down Down Neutral
STI Down Neutral (+) Neutral
SENSEX Down Neutral (+) Neutral
FTSE Down Neutral (+) Up (+)
DAX Down Neutral (+) Neutral

Sunday, January 04, 2009

Feng Shui tips for Year of the OX


In these uncertain times, Tee Lin Say talks to Feng Shui experts Joey Yap and Geraldine Goh for their take on investing in the Year of the OX.

Joey Yap

Founder and Master trainer of the Mastery Academy of Chinese Metaphysics

Celebrity feng shui master Joey Yap isn’t just celebrated for his ability to enthrall a crowd of audience with his hillarious feng shui tips and analyze a person’s Destiny Code.

The predictions made by Yap in the year of the Rat have been rather accurate.

Readers who had heeded the forecasts made by Yap in the BizWeek issue of Feb 9, 2008 would have thrived.

Yap correctly predicted that the second half of the year would be worst off, and one should be holding cash come end 2008. He also predicted that oil prices would start their downtrend after the second half.

Hence, what does the master has to say about the Year of the Ox?

Unfortunately, it isn’t good, as the world’s financial problems are far from over. Why, it’s merely serving starters. Yap is quick to say that it’s not doom and gloom as opportunities abound.

“(The year) 2009 will see the year of the Earth Ox in an earth cycle. As it is earth, what we see is stagnation, and the image is one of a pile of mud,” says Yap.

He foresees dirt emerging, or rather, past mistakes coming to haunt. This is the year to address problems created in the past.

Yap sees volatility in markets, dissatisfaction with how things are done, and retrenchment without reason.

“It will be a daunting year. We haven’t really reached the peak of the problems yet. We are probably one third through this difficult cycle. We haven’t tasted the main dish, and will most likely experience it during the second half of the year. Desert will probably be nearer towards the year-end,” he sums up.

Nonetheless, Yap says not to fret as this is a nescessary cleansing for better times to come.

“It will get worse, but it won’t be bad for everyone. It’s not good for things which have metal elements – financials being the main theme. Metal is seen to be covered by earth, with a lot of dirt piling on it. Therefore, the financial industry won’t prosper this year.”

Yap foresees the first half of 2009 as being “all right”, while the second half will see deterioration.

He says countries will be fortunate if they don’t enter a recession.

“(The year) 2009 is pictured by people pushing other people out. Most likely the people being pushed out are those in existing power. It is good as things need to change for the positive to happen,” says Yap.

On this note, he adds that the financial tsunami needs to happen. The year 2008 up to 2010 will be the rebuilding years, before wealthy times appear.

How do investors armour themselves in such dire times?

Yap says it’s all about preserving what we already have.

“I would say that the best thing to invest in is yourself. Most people have the victim mentality. I want to say this: You are not the victim. That is nonsense. Everyone has the same two hands and two legs and the same 24 hours. Instead of saying you are worst off because the economy is languishing, why don’t you think how you can value add instead,” says Yap.

Hence, under such circumstances, Yap says to do one’s job better, and not to blame other people.

For investments, Yap advocates going long term.

“Look three to four years ahead. In times like these, you cannot make quick gains. My advice is to hold on to cash.

“As a buyer, I would suggest you make your investments and acquisitions in the second half of the year, while as a seller, do it in the first half.

“People need to remain optimistic about what they can do. They need to look out for opportunities. Wait for the market to take its huge fall, then it will be time to go shopping,” he says.

Yap cautions that there will be a little spring appearing in mid-2009, which is in actual fact, a false image.

“People will think this spring marks the start of a rally, but no. Things will in fact go down after that. My advice is for investors to ride on the wave of this little spring when it happens. Use this opportunity to sell,” says Yap.

For those feeling very negative, Yap says it won’t be such a bad year.

“You need times like these to expand your empire. Things were getting so expensive, and if you had been preserving cash, now you would have the money to buy and expand. You can’t wish your problems away, but underneath all these lie opportunities. Last time, things were so expensive, but it’s now so cheap. You can make your killing now,” he says.

Sectors that are seen able to preserve cash are the wood-related sectors such as academic related, printing, self-help, teaching. The health industry will also do well. As plantation is wood related, crude palm oil may see a chance of going up again.

It won’t be great for oil, however. Oil is of the fire element. Earth dampens fire. So Yap says its difficult for crude oil to appreciate. Construction prices will also go down.

Currencies, which are defined by the water element is seen to be contaminated by dirty earth.

He says that Asian countries will do better than other parts of the world. Malaysia is also better insulated than other countries.

“(The year) 2010 will be good. It will mark the start of the rejuvenation process. It is like the big sweep. We shouldn’t be that negative because we know at the end of the tunnel it is going to be good,” says Yap.

Meanwhile, as the ox is in the earth cycle, Yap sees earth related problems such as landslides and earthquakes happening.

(Yap will be giving a feng shui and astrology seminar entitled “Thriving in Challenging Times” on Jan 17. Please call 03-2284 8080 for details.)

Dr Geraldine Goh

Founder of the Institute of Tao Studies, Malaysia

Dr Geraldine Goh feels that the Year of the Ox is not necessarily negative at all, and she sees a chance of revival in the second half of the year.

Nonetheless, in a year that is streaked by challenges and provocation, Goh advises investors to do things within their means.

“Having the holding power is extremely important this year,” she says.

For the year, the image she conjures is one where water is lacking and the metal store is closed. In investment terms, metal is represented by the financial services sector.

For things to happen smoothly, there is a need for flowing water into the economy. Water is represented by activity.

Hence, for the year to prosper and pick itself out of the present financial woes, there is a need for recurring transactions, spending and consumption to balance out the water shortage.

“The government’s policy is geared towards spending, and that is the right thing to do. The US government’s lowering of interest rates and pumping money into the system are all positive measures which encourage the flow of water,” she says.

Goh says that once the water element is balanced out, other elements will start functioning smoothly. To thrive in 2009, one needs to have a lot of activities going on.

For instance, the education, motivational and speaking industries are under the wood element, which she says will do well.

Goh says if water nurtures wood, then the store of money will be opened. She sees sectors in the earth and fire elements continuing to do well, as these are necessities.

The food and beverage industry is lumped under fire, while the property sector is earth.

“People will still buy houses and still need to eat,” she says.

She says the outlook for crude oil and crude palm oil are uncertain, as they have a combination of earth, fire and metal elements.

“As long as there is water, a lot of the problems will be solved,” she says.

Meanwhile, in the first half of the year, Goh sees people in authority coming out to contribute in a constructive manner.

People in high positions need to be humble this year, and come down to “earth” if they want to seek better solutions or solve the problem.

There is no place for an inflated ego in the Year of the Ox.

“Policies by people in power will be meant to rectify the current unsound situation. When these policies first come out, people will feel disturbed, shaken and threatened, but the policy will be good to right past wrongs,” she says.

Goh feels that the second half will start flourishing.

“To make money, there will surely be risks. But if you have foresight and you have the money, then make your investments in the first half. You will likely make more money than others.

“Individually, it is up to you what you want to buy. I think it is a good time to invest in areas which traditionally appreciates in the long run. I would still buy property and stock-wise bank shares,” she says.

On the global outlook, Goh says Asia for now is stronger than the Western nations, but it is the Western side that holds more potential. She sees the West leading the eventual recovery in the world.

In terms of investment luck, the horse, dragon, monkey, tiger and dog will be better off. This is especially apparent for the horse and dog, which will have better luck in money making and windfall opportunities.

The dragon and tiger’s luck are in terms of career advancements and promotions. For instance, their hard work or research will see a breakthrough, where the fruit of the hard work is reaped.

(The Institute of Tao Studies is located next to the Taman Desa Hospital. Please call 03-7983 0388 for details.)

Friday, January 02, 2009

At The Juncture

KLCI Daily Chart

Today's movement has put KLCI at the downtrend line. It could either breakout to 950 to 1000 or collapse and continue the downtrend. I think that because of the feel good effect of CNY, KLCI will move up. My system doesn't allow me to trade yet. So still sitting on the sideline. My interpretation for the various sectors shows sign of stabilizations:
Malaysia Longterm Midterm Shorterm
KLCI Down Neutral (+) Neutral
Finance Down Neutral (+) Neutral
Construction Down Neutral Up (+)
Plantation Down Neutral Up
Property Down Down Neutral
Mesdaq Down Down Neutral
2nd Board Down Down Neutral

I will only start to trade when the midterm indicator shows "up" and the longterm indicator shows "neutral".

If you are only able to play "long" only, I'm sure that you are looking for positive news to convince yourself to buy while ignoring all the negative news. You must be aware of this danger because it does not allow you to judge the market objectively.

I'm still in the bear camp eventhough a lot of people has gone into neutral or bullish now. I guess I'm influence by the uber-bear news that I follow. For instance, the Market Ticker blog by Karl Denninger. His arguments sound logic to me as compared to other economist or experts. I encourage everyone to read his blog because the US still leads the way in the world market. Thus, understanding what is happening in the US will help you in playing the Malaysian market.

If you believe that the US is going into a depression, then it is best to sell into this rally because the Chinese or the Indians will not be able to safe the world. From the technical analysis, KLCI has broken its uptrend and unless a miracle happens, I expect more pain to come.

My point of view is that it is not worth it in playing the dead-cat-bounce game. Why? If a good fund manager cannot avoid losing 40% after a strong bull market, what is your chance of winning in a bear market rally? The period in this bear-market movement is considerably shorter while the movement in points in much smaller as compared to the bull market. If your capability allows you to capture 50% of a movement, imagine the amount of points you are able to capture in a bear-market rally. It doesn't give you much room for error.

Of course the brokerage firms encourage you to play this because it is their interest to generate commission. The brokers need to survive. But we should not be charitible in ensuring their profits.

Do not be greedy in chasing that 30-50% profit. What we want is the 200-400% profit in a bull market. The big money is made from the big moves, not many small moves.