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Saturday, February 28, 2009

Breakdown Week?

KLCI is still within the rising wedge formation. Will this week mark the start of another downward spiral? The property sector index has started to turn down again. Finance, construction and plantation is still holding on. My interpretation is:
Malaysia Longterm Midterm Shorterm
KLCI Down Neutral Neutral
Finance Down Neutral Neutral
Construction Down Neutral Neutral
Plantation Down Neutral Neutral
Property Down Down (-) Down (-)
Mesdaq Down Down Down
2nd Board Down Down Neutral

For the rest of the world, only SSE is still holding on. The rest are moving downwards:
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 Neutral Neutral
HSI Down Down Down
TWII Down Down Neutral
STI Down Down Down
SENSEX Down Down Down
FTSE Down Down Down
DAX Down Down Down

Saturday, February 21, 2009

To Nationalize or Not To Nationalize

KLCI Daily Chart

So, will the US government nationalize Citibank and Bank of America in this weekend? Whatever that is going to happen, it looks like KLCI will be testing its lower boundary of the rising wedge next week. I expect it to break and a test of 800 in this month or early next month.

Finance, construction, plantation and property have been downgraded based on this week's action:
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 Down
2nd Board Down Down Neutral

For the world, SSEC is still strong, but an analysis estimates that 1/3 of the loan in January has been diverted into the stock market! No wonder SSEC has such a good performance. For Europe and US, they are still going down. Be prepared for the next wave of financial crisis where western Europe banks have overlend the eastern Europe countries which may default on their loan.

The summary of my analysis:
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 Neutral Neutral (-)
HSI Down Down Down (-)
TWII Down Down Neutral
STI Down Down Down
SENSEX Down Down (-) Down (-)
FTSE Down Down Down
DAX Down Down Down

So, I will stay away from going long in any market. Do not believe in any analyst that suggest to you to buy "defensive" stocks. When the market goes down, everything will go down. It is just a matter of percentage. Of course, "defensive" stock may go down less, but why should you lose your hard earn money? Put your money in the bank better, but don't be greedy for the high interest rate fixed deposit ;)

Monday, February 16, 2009

Stimulus Package

Failed bond sale was hightlighted here


It seems that at the moment, it is not easy to raise new money.

Well...our Prime Minister in waiting is going to announce the next stimulus package. The question is whether will it be effective?

As I understood, boom and bust is part of the business cycle. So, why are we trying so hard to avoid recession? Look at USA, they tried to avoid recession, and now what has happened? The recession becomes a deep recession that may turn out to be a depression.

I think the best analogy is forest fire. Every now and then, small forest fire clears out the dead shrubs and branches, regenerating the forest floor and supply new nutrient to the trees. If you always put out small fires, the dead material will get piled up. Next time, the regular small fire may be so big that it will just burn down the whole forest.

So, why can't we just let a recession runs it course? Let it weed out the badly run company and the unprofitable industry. Of course there will be suffering. But suffering is part of life. It makes us stronger. It forces us to change for the better. We do not want bad companies to survive in an artificially created environment because they may grow so big that when they failed, the consequence will become a catastrophe. A good example is General Motors.

If government wants to provide assistance to the people, then just make sure that every single Malaysian has 3 meals per day and they are able to send their kids to school. Let's suffer in the short term for the benefit of long term.

A stimulus program will provide the benefit for the short term but suffering in the long term. Politicians will prefer the short term program because they know that they will not be around in the long term, and it is easy to push the problem to the future politicians. That is why I think that Tengku Razaleigh is crazy for wanting a big stimulus program. Who is going to pay? Japan pump in 6.3 trillion USD and it didn't work. The only result is more debt!

Anyway, if the government still wants the stimulus package as it is a "politically right thing to do", then I hope that the government will not raid my money in the EPF. That is my hard earned money. It is not going to be easy to raise money at this time. So, please leave EPF money alone. Why not take Petronas money? It is money from the earth. It is free money. Since I have no access to it, I don't mind you go and raid it. 


Saturday, February 14, 2009

Weekly Analysis

KLCI Weekly Chart

KLCI still trapped within the rising wedge formation. Various sectors show short term uptrend:
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 (-) Down (-)
2nd Board Down Down Neutral (+)

For the rest of the world, China and Hong Kong still showing some strength. However, US, UK and German market indicates the possibility of going down again. DJI has indicate the break down of a triangle formation. The weakest link over there is still the financials. President Obama has turned out to be not different from the Bush administration. The solution to the crisis is obvious, but they choose not to take the obvious route. Whatever they are doing now is just prolonging the crisis. Come on, nationalize the insolvent banks and get over it! A sharp pain is better then a long time suffering.
World Longterm Midterm Shorterm
S&P500 Down Down Down (-)
DJI Down Down Down (-)
NasdaqComp Down Down Neutral
Nikkei 225 Down Down Down (-)
Kospi Down Neutral Up
SSECI Down Neutral Up
HSI Down Down Neutral
TWII Down Down Neutral
STI Down Down Down
SENSEX Down Neutral (+) Neutral
FTSE Down Down Down (-)
DAX Down Down Down (-)

Tuesday, February 10, 2009

Chneah Hoay

Last night was Tua Pek Kong's turn to make the prediction for 2009. Well, it is not good. It took them extra effort to start the flame.

What about the prediction for last year? Malaysia's GDP growth for 2008 was 7.1% (1Q), 6.3% (2Q) and 4.7% (3Q). Well, it was not really accurate since Tua Pek Kong foresee some pickup in the June to Sept 2008 period.

Believe in what you want. This is just for fun.

Monday, February 09, 2009

Trapped within a rising wedge

KLCI Daily Chart

Looking at the KLCI, we can see that it is still trap within a rising wedge. So, don't get excited if it moves up to the upper resistance of around 945. For the sector analysis, finance, construction and plantation indicates a short term upward movement:
Malaysia Longterm Midterm Shorterm
KLCI Down Neutral Neutral
Finance Down Neutral Up (+)
Construction Down Neutral Up (+)
Plantation Down Neutral Up
Property Down Neutral Neutral
Mesdaq Down Neutral (+) Neutral
2nd Board Down Down Down

For the rest of the world, Obama's false hope/change may push stocks up:
World Longterm Midterm Shorterm
S&P500 Down Down Neutral (+)
DJI Down Down Neutral (+)
NasdaqComp Down Down Neutral (+)
Nikkei 225 Down Down Neutral
Kospi Down Neutral Up (+)
SSECI Down Neutral Up
HSI Down Down Neutral
TWII Down Down Neutral (+)
STI Down Down Down (-)
SENSEX Down Down Neutral
FTSE Down Down Neutral
DAX Down Down Neutral

If you are afraid that you have missed the Shanghai train, don't worry. I'm not. Please note that the computation of the GDP for China is different from the western countries (it doesn't make sense to me, so Google yourself for the difference). My wait and see strategy remains unchanged.

Monday, February 02, 2009

Weekly Analysis

KLCI may break down this week. The bad bank idea in the US will just not work because of pricing and the amount of toxic assets available. You can save some small banks all the time, you can save all the big banks some of the time but you can't save all the small and big banks all the time.

KLSE reading is generally neutral (but waiting for the break to the downside):
Malaysia Longterm Midterm Shorterm
KLCI Down Neutral Neutral
Finance Down Neutral Neutral
Construction Down Neutral Neutral
Plantation Down Neutral Up (+)
Property Down Neutral Neutral
Mesdaq Down Down Neutral
2nd Board Down Down Down

For the rest of the world, the market generally follows the US market. The bad bank idea gave a small hope to the bulls (especially the banking sector). S&P 500 should test its November 2008 low soon:
World Longterm Midterm Shorterm
S&P500 Down Down Down
DJI Down Down Down
NasdaqComp Down Down Down
Nikkei 225 Down Down Neutral (+)
Kospi Down Neutral Neutral
SSECI Down Neutral Up
HSI Down Down Neutral (+)
TWII Down Down Down
STI Down Down Neutral (+)
SENSEX Down Down Neutral (+)
FTSE Down Down Neutral (+)
DAX Down Down Neutral (+)