Friday, April 10, 2009

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!

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