Thursday, April 30, 2009
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.
|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?
Tuesday, April 28, 2009
- 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
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? U.S.
Sunday, April 26, 2009
- 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.
Saturday, April 25, 2009
|Nikkei 225||Down||Neutral||Neutral (-)|
Friday, April 24, 2009
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).
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.
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 is also bullish, you can see a bullish divergence in this chart. The next resistance is at around 7900, about 300 points away.
Construction is also bullish, but it is almost at the resistance line now. The next resistance is at around 210.
Finally, the property sector. Same bullish story. Next resistance at around 650.
The summary for all the sectors are:
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.
Thursday, April 23, 2009
Tuesday, April 21, 2009
Monday, April 20, 2009
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?
Saturday, April 18, 2009
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:
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.
Friday, April 17, 2009
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:
|Mesdaq||Down||Neutral (+)||Up (+)|
|2nd Board||Down||Neutral||Up (+)|
Thursday, April 16, 2009
Tuesday, April 14, 2009
Friday, April 10, 2009
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:
|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:
Did you learn anything from this financial crisis? I sure do. I learned that:
- 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.
- 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!
- 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 $$$.
- 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?
Thursday, April 09, 2009
Monday, April 06, 2009
Saturday, April 04, 2009
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 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.
|DAX||Down||Neutral (+)||Up (+)|
Friday, April 03, 2009
The summary for the various sectors in KLSE:
|KLCI||Down||Neutral (+)||Up (+)|
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.”