Thursday, May 14, 2009

Trade Ideas

KLCI Daily Chart

The immediate uptrend line support is at 1000-1010. I doubt that this will hold because of the selling pressure in the overseas market. I think the best support is at 950-970. Will the world market goes into a selldown mode like Oct 2008? Based on the formations of the chart, I believe that the probability of happening is low. The market may go down, but not like the panic that we have seen. This is because the majority is anticipating it. Panic only occurs when you are not expecting it to happen. 

I think that the scenario that was mentioned by Marc Faber and Jim Rogers is more probable. The economy may not show signs of growing, but the liquidity available is huge. Honestly, my friends have been asking me what stocks to buy. They have a huge amount of money sitting in the bank that earn negative interest rate. 

My trading theme will be based on the following:
  1. The drop of USD
  2. The rise of commodity, i.e. oil, CPO, silver
Therefore, you will see I trade in the following:
  1. Plantation stocks, i.e. IOICorp, KLK.
  2. Crude oil ETF, i.e. USO, DXO.
  3. Oil and gas industry, i.e. Petroch.
  4. Silver ETF, i.e. SLV.
  5. Silver mining companies (still analyzing).
  6. Companies with huge foreign borrowing, i.e. Tenaga.
Tenaga is a little bit tricky, because the rise of natural gas will eat into its profit but this will be offset by better exchange rate. 

I don't believe in gold (yet). IMF is trying to sell their gold. And when gold gets too expensive, jewelry sales will go down. 

So, now is the correction time. This will test our mental power. When you see your profit slowly disappear, you will question yourself whether your analysis is right or wrong. For me, my entry and exit is usually sucks. So, I will sit tight and is willing to see my profit goes back to zero. No point to get in and out when the commission is so expensive. 

Finally, big money is only made in the big moves. No point to aim for the small profit. I will get out when the chart says that the market will go for a strong selldown.

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