SPSetia

SPSetia Weekly Chart

SPSetia: Gave me a buy signal. But, most of the gain for this week is due to the last 1 hour buying spree.  Resistance: 3.60 (previous high) and 3.90 (downtrend line).

Disclosure: I have no position in SPSetia or its warrant.

IOICorp & KLK

IOICorp Daily Chart

IOICorp: Still within the uptrend line. Can it break the resistance line?

KLK Daily Chart

KLK: Is that a valid break? I think that the last transaction was a low volume transaction. 

Disclosure: I'm long on both IOICorp and KLK CW. Most probably I'll double up if I think that the break out is valid.

Weekly Analysis

KLCI Daily Chart

What a volatile week. This may mean the run of this bear market rally may come to a temporary stop. If the daily RSI manage to go into the overbought region again, then look for a possible bearish divergence as a clue that this party may be over. Any more serious pullback should be supported by the new uptrend line.

Looking at the various sectors, so it seems that the penny stocks from Mesdaq and Second Board are following into this bear rally.

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

Construction looks like going into full bull mode. Can the construction sustain this up move? I know the government is pumping money into construction. I wonder where will the government get the money? Selling some bonds won't be enough. With the current political situation, it is a taboo to dip into EPF vault. With CDS at a highly levitated level, the government cannot go into the international market to borrow. I think the best choice is to float Petronas into Bursa. This will be a win-win situation for everyone. It will energize the stock market. Oil and gas counters can be bubbled up. The citizen feel more wealthy. The government can even be assured of remaining in power when the next GE comes. I am sure happy citizens do not want to see any change of government. So, it is a win-win situation for everyone. So, what say you PM Najib?

A conversation about the economy

Charlie Rose talks to Bill Ackman (Pershing Square Capital Management LP), Kate Kelly (WSJ), Andrew Ross Sorkin (NYT) and Joseph Stiglitz (Columbia University).

Bulls, not Bears, May End in Tears

A good article by Andy Xie. Some interesting points are:

• But this is a bear market bounce that will end in tears. What will bring it down will be the likely torrent of new issues. Banks that report good earnings and speak about recovery will probably try to raise massive amounts of capital, taking advantage of the market rally, to weather the long winter ahead. IPOs will swamp emerging markets. Money flowing from bullish investors will become the winter clothing for distressed banks and companies.
• The bull case is built on three assumptions: (1) the market decline is already deep enough; (2) the global economy is either recovering or about to; and (3) more government stimulus money is coming, should there be more trouble. The bear case rests on: (1) this is a debt crisis, the debt levels are still too high, and the global economy can’t resume growth until debt levels recede to normal; (2) the world economy is still shrinking, though at a slower pace; and (3) government stimulus can’t start another growth cycle as the global economy must restructure itself first.
• Some argue, why can’t we revive the old bubble or start a new one? The problem is that after a bubble has lasted several years, its bust leaves so much rubbish around that a new bubble cannot take root. For example, high levels of existing debt make further debt growth difficult. Without debt, a new bubble would have no legs. The economy needs time to recover before it can support another bubble. If you are waiting for another bubble to bail you out, I am afraid it’s going to be a long wait.
• For example, the U.S. government is conducting a stress test on the banks. The test is a scenario analysis, i.e. whether banks can survive the downturn under different possible scenarios. I am sure most banks would ‘pass’ the test with flying colors, but this is self-deception. The U.S. financial system is technically bankrupt. The strength of a banking system reflects the strength of the economy it serves. Just look at the balance sheet of the U.S. household sector. How could U.S. banks survive when so many of their customers have negative equity?

H1N1 Swine Flu Tracking

Track the H1N1 swine flu outbreak through Google maps. 

Swine Flu vs Equity Rally

Will the swine flu in Mexico kill the worldwide equity bear market rally? Reuters has an article about the economic cause of a flu pandemic:

• The World Bank estimated in 2008 that a flu pandemic could cost $3 trillion and result in a nearly 5 percent drop in world gross domestic product. The World Bank has estimated that more than 70 million people could die worldwide in a severe pandemic.
• Australian independent think-tank Lowy Institute for International Policy estimated in 2006 that in the worst-case scenario, a flu pandemic could wipe $4.4 trillion off global economic output.
• Two reports in the United States in 2005 estimated that a flu pandemic could cause a serious recession of the U.S. economy, with immediate costs of between $500 billion and $675 billion.
• One report, from the Congressional Budget Office, said hospitals would have difficulty controlling infection and might become sources for spreading the illness.
• A second report by New Jersey-based WBB Securities LLC predicted a one-year economic loss of $488 billion and a permanent economic loss of $1.4 trillion to the U.S. economy.
• SARS in 2003 disrupted travel, trade and the workplace and cost the Asia Pacific region $40 billion. It lasted for six months, killing 775 of the 8,000 people it infected in 25 countries.

Looking at SARS, the outbreak period is from Nov 2002 to Jul 2003. I don't see any correlation between the outbreak with the performance of KLCI. So, I think that we have nothing to worry about unless it becomes a pandemic.

KLCI Weekly Chart

Weekly World Market Review

It seems that we have nothing to fear about the impending stress test. The methodology has been released and it seems that it is not that stressful. Looking at the world markets, the western markets (DAX, FTSE, Nasdaq, S&P500) are holding up well. The eastern market (Nikkei 225, SSECI, HSI) seems like taking a breather. The summary:

World	Longterm	Midterm	Shorterm
S&P500	Down	Neutral	Up
DJI	Down	Neutral	Up
NasdaqComp	Down	Up (+)	Up
Nikkei 225	Down	Neutral	Neutral (-)
Kospi	Neutral (+)	Up	Up
SSECI	Neutral	Up	Neutral (-)
HSI	Down	Up	Neutral (-)
TWII	Neutral	Up	Up
STI	Down	Neutral	Neutral (-)
SENSEX	Down	Up	Up
AORD	Down	Neutral	Up
FTSE	Down	Neutral	Up
DAX	Down	Neutral	Up
Bovespa	Down	Up	Up

Weekly Analysis

The expected correction has not arrive yet. Today, the volume is amazing! Stocks that you thought are already dead jump to life! Let's us not get into the euphoria...yet!

KLCI Daily Chart

From the KLCI daily chart, 14-day RSI at 81! Very bullish indeed. The further the index go without correction, the harder it will fall. Any possible correction may go to 930 (the breakout point).

KLCI Weekly Chart

From the weekly chart, we can see that this could be the beginning of a new bull market. Possibly the 1st wave based on Elliott wave principle. Based on economic fundamentals, I still think that this is a bear market rally. If this is just big bear market rebound, then a 38% Fibonacci retracement will give the next possible target at 1070. However, the intermediate horizontal resistance is at around 1020. So, watch out at these levels. Don't get too carried away. The rate of ascent is too fast.

Plantation Sector Weekly Chart

The plantation sector weekly chart shows that we have cleared the resistance at 5000. The next one is at around 5300. The chart is bullish. Since I'm mostly long in plantation counters, I do hope that it can hit the downtrend line :p

Finance Sector Weekly Chart

Finance is also bullish, you can see a bullish divergence in this chart. The next resistance is at around 7900, about 300 points away.

Construction Sector Weekly Chart

Construction is also bullish, but it is almost at the resistance line now. The next resistance is at around 210.

Property Sector Weekly Chart

Finally, the property sector. Same bullish story. Next resistance at around 650.

The summary for all the sectors are:

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

My conclusions are:
1. Market is very overbought.
2. Wait for correction to happen.
3. Then, a possible buy because it can go up further.

By the way, I'm not playing penny shares or small capital stocks at the moment. I'm concentrating on CW of bluechips. So, if you are looking for "ideas" in penny shares or small capital stock, this is not the blog for you.

Marching towards 1000

Yippee!  Stocks are moving higher! Who cares when the world is in a severe recession. Everyone is making money. Well, we need the money when we lose our job. Anyhow, take note of May 4, 2009. This is the date that the US bank stress test will be announced. Roubini says that thebanks are already insolvent. So, how will those in power massage the stress test result to make it look good?

AMMB Daily Chart

I am out of AMMB CW because AMMB is trading almost at the upper level of the channel and it is very overbought. I'm still holding my plantations and waiting patiently for them to move. I don't know why are the plantations not moving when CPO is ripping higher. Sigh! I think that CPO run is nearing the end. So, please IOICorp and KLK, move now or missed the chance!

KLCI is at an extremely overbought condition now.  It is not wise to succumb to your feeling and enter now. The train may have left the station but there are other stops for us to board. 

Financial Crisis Most Wanted

This is cool! 52 key players of this financial crisis on a special edition playing cards. Hmm.....should I use this as a contrarian signal?

Chmobil

Chmobil Weekly Chart

Looks like it has broken out from the falling wedge formation (Jan-Mar 2009 period). Resistance at around 85 (previous high) and 95 (downtrend line). I think that it is a good rebound play.

Disclosure: I am long in the CW.

Blog Plagiarism

I always have a disdain on plagiarism. When one is expressing his view, he should use his own words. If one need to lift whole sentences from another source, then reference must be given. Credit must be given where it is expected.

So, why do I mention this? Have you read Don't Marry An Economist! - The Trouble With Economists? Actually, Dali is taking a view against Paul Krugman! The 4 points given are Krugman's reasons to be cautious about the economy. Dali's own words are inserted between Krugman's arguments.

What I understand is that if you want to comment on other people's opinion, then you mark it clearly from where you are getting it from and put your comments after the source text. However, by inserting your text between the source, i.e. copying part of sentences, you are considered to have plagiarize the works of others. Boy oh boy, students copy, ex-investment banker also copy! Don't we have any honor anymore?

Weekly World Market Review

S&P 500 Daily Chart

Bit by bit, the S&P 500 index goes up. The momentum is worrying. Anytime can breakdown. But looking at the next downtrend line, it seems that it still have some more to go since the daily RSI is bullish but not yet overbought. The volume looks nice but manipulated due to program trading.

The summary for the rest of the world:

World	Longterm	Midterm	Shorterm
S&P500	Down	Neutral	Up
DJI	Down	Neutral	Up
NasdaqComp	Down	Neutral	Up
Nikkei 225	Down	Neutral	Up
Kospi	Down	Up	Up
SSECI	Neutral	Up	Up
HSI	Down	Up (+)	Up
TWII	Neutral	Up	Up
STI	Down	Neutral	Up
SENSEX	Down	Up (+)	Up
FTSE	Down	Neutral	Up
DAX	Down	Neutral	Up
Bovespa	Down	Up	Up

So, unless the US market drops, I still think that KLCI can still go up. But one must be very careful, don't be the last sucker to get out.

KLCI Weekly Review

KLCI Weekly Chart

Based on daily chart, KLCI is really overbought. Friday's volume that is half of Thursday's indicates that correction is imminent. Theoretically, KLCI should test the breakout level of around 930. However, I prefer that if the correction is shallow, preferably not under 945. During the correction, I hope that I can pick up some Genting and Resorts CW. In the last 5 trading days, all sort of sectors have been played up, i.e. oil and gas, wood, property. Penny shares have become not so penny anymore. I think that I will wait for T+3 of Thursday volume to clear first before taking more position. The summary for the various sectors:

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

Tenaga

Tenaga Weekly Chart

Broken the immediate downtrend line. Gap up today. I just hate gap up because it needs to be covered. If Tenaga can maintain the closing price above 6.70 by the end of this week, then we can see more upside. 

Disclosure: I am long in one of the Tenaga CW. 

TM

TM Monthly Chart

We can see that TM has been moving within a well defined channel. It is about 15 cents to the top of the boundary (about 3.80). The bottom boundary is about 2.80. Volume has been decreasing in the past few months. If it can break to the upside, then it will revisit the previous high around 4.30 to 4.70. 

Disclosure: I'm long on TM-CI

Breakout of Trading Range

KLCI Daily Chart

Yippee! Broken out of trading range. I'm sure a lot of investor is feeling bubbly now :p But beware of all those gaps! A sign of panic buying? Volume is extra strong on Friday. KLCI is already overbought based on the daily chart. This could be a fake break to trap those that bought on Friday. I will be happy if KLCI can just hover around 900 for a base building. Looking at the sectors, plantation and construction are the strongest:

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

For the rest of the world, the Taiwan and Shanghai stock market may be the first to get out of this bear market:

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

Did you learn anything from this financial crisis? I sure do. I learned that:

1. Never let anything to become too big to fail. So, I hope that Zeti learn this too. It is time to issue more banking license. Maybank and CIMB Bank are becoming too big in Malaysia. If any of the CEO make a poor decision, the country will suffer. Let small banks flourish. Diversity is the key to survivability.
2. If you want to become greedy, then go all out for it. You must take a lot of risk, you must bet big and greese as many politicians as possible. Make sure the politicians enact laws that favour you. Make sure that when you fail, you will take down the whole system. This will ensure that those in power will not let you fail and continue to support you. The bigger your "crime", the less chance you will be procecuted!
3. We are all humans. Yes, from Malaysia to USA, we protect our cronies. We talk about fairnest, we talk about the rule of law. But when our cronies are in trouble, we will help them. We will overlook the laws that they have broken. We will squeeze the taxpayer for our cronies. We are just helping a "friend" in need because when that day comes, our "friend" will return our kindness with $$$.
4. Lies when repeated often enough will become truth. Yes, the toxic waste is now known as legacy assets. The banks have lots of it. But if the banks keep saying that they are making money now that they can fantasized on the value of their legacy assets, sooner or later the market will believe it. Ah...the art of accounting...ain't it beautiful?
   

So, don't forget these important lessons!

YTLPowr

YTLPowr Weekly Chart

Looks like a triangle. If it can manage to break to the upside, then it should challenge the downtrend line at around 2.15. The warrant will be a better choice to ride this possible move.

Disclosure: I'm long in YTLPowr-WB.

Sharing the Blame for the Economic Crisis?

This video has been featured in many blogs. It is very interesting and I believe that it is a must watch video.

Part 1 of 3:

Part 2 of 3:

Part 3 of 3:

Play The Plantation

CPO has broken out of a ascending triangle. Hopefully, there is a play on the plantation sector.

KLK Weekly Chart

Volume for KLK is low. Base on weekly chart, it looks slightly bullish. However, the bullishness is not strong. Will KLK made a double top or go up further? Resistance is around 11.00 to 11.50. If KLK can overcome this, then the next resistance is around 14.00.

IOICorp Weekly Chart

IOICorp may have broken the resistance of around 4.00. Uptrend may continue to the next resistance of around 4.80.

Disclosure: I'm long on KLK and IOICorp CW.

Spring Of Hope

It is spring in the northern hemisphere. World markets that I am tracking have stabilized. How long will this last? Will it be the seed of a new bull? Fundamentals still sucks. But the stock market is consist of a sea of emotionally charged people. The summary for world markets based on my interpretation:

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

No Bull Yet

KLCI Daily Chart

The above chart shows that the KLCI is still inside the trading range of 830-930. It has been slightly more than 6 months that KLCI is moving within this range. The daily chart indicates that overbought condition has not been reached yet. Notice that there were two gap ups. Someone in panic buying mode? This gap should be close eventually.

I still consider this as just a bear market rally. I don't know where and when it will end. The initial evidence indicates that this bear market rally will be led by the plantation sector.

The summary for the various sectors in KLSE:

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

Dr M: Don’t bail out failed banks

When I read this, I chuckled. This is a good example of the pot calling the kettle black. Maybe Tun's memory is not that good. Let me refresh your memory, Bank Bumiputra (twice!)  and Sime Bank. 

 LONDON: Tun Dr Mahathir Mohamad has called for the closure of banks that caused the global financial crisis instead of bailing them out.

The former prime minister lambasted the West for pumping in billions of dollars to resuscitate these “failed institutions”.

He said they should be allowed to go under as bankers were rewarding themselves with fat bonuses rather than be punished for their inefficiencies.

“Let’s start new banks. We don’t need to have banks with those names anymore as they are a disgrace,” he said in his talk ‘The Alternative G20 Agenda: Real Financial Fairness’ at the Royal Commonwealth Society here on Wednesday.

More than 200 people attended the event on the eve of the G20 summit.

In his usual hard-hitting style, Dr Mahathir said there should be no attempt by governments to rebuild institutions which have failed.

“If they must dole out money, give it to the people who suffered actual losses due to the banks’ failure, but not to the bankers,” he said.

He questioned the logic of rewarding bankers who caused the economic crisis, saying those who created trouble were normally put in prison.

Dr Mahathir also took a dig at hedge funds, saying their borrowings should be limited and not be 20 or 30 times more than the investments.

“Imagine if a hedge fund were to borrow US$30mil and trades on US$20mil based on a US$1mil investment, the profits would be far bigger than that of the original investment,” he said.

He said a stop should be put in creating money out of nothing, adding everyone must come clean instead of obtaining false wealth through shuffling papers. “Most of the wealth comes from playing around with money. You can sell currencies and make tons of money,” he said, adding they were not derived solely from producing goods and services anymore.

He called for a review of the international monetary, financial and banking system which had suffered a systematic collapse due to gross abuses.

Dr Mahathir said the global community could elect people to represent the differing economies and work together in curbing financial abuses.

“If we’re going to be fair – real financial fairness – we should give everybody a say in the formulation of a new banking, financial and monetary system.”