SSECI Under 2000!

Andy Xie says that the fair value for SSECI is 2000 or less!

Cuts Like A Knife

SSECI Daily Chart

Possible support now is at 2500 to 2600. I think that if it can find a temporary bottom in this few days, then it should give a quick rebound to the upside (up to 3000). The long candles indicate panic.

Gold

Gold Daily Chart

Gold Weekly Chart

Pay attention to gold! I think something will be happening next week (or soon). Looking at the daily chart, we can see that a symmetrical triangle formation. The breakout point is 970. Looking at the weekly chart, we can see that it has been almost 17 months that gold has challenged and failed to stay above 1000. I'm sure that a lot of people are giving up on gold.

One interesting news is that central banks are the buyer of gold in Q2 2009 as compared to Q3 2008. So, will investment demand outstrip higher supply? Since Deepavali is coming, maybe the purchase from India and government buying will provide the needed fuel to propel gold above 1000 and beyond.

How you can profit from a surging gold:
In Malaysia - GLD-C1
In US - GLD, IAU, UGL, DGP

World Market

Surprisingly, US market is still holding up well. The trend is still up based on weekly and monthly reading.

World	Monthly	Weekly	Daily	Note
S&P500	Up	Up	Up	R=1.14k
DJI	Up	Up	Up	R=9.8k. Daily bearish divergence
NasdaqComp	Up	Up	Up	R=2.18k
Nikkei 225	Up	Up	Up (+)	Next R=11k
Kospi	Up	Up	Up	Next R=1.6k. Overbought.
SSECI	Up	Neutral	Down	R=3.5k. S=2.8k. Correction.
HSI	Up	Up	Neutral	R=21k, S=19.5k. Correction
TWII	Up	Up	Neutral	Toppish
STI	Up	Up	Up (+)	R=2.7k.
JKSE	Up	Up	Up (+)	R=2.5k.
SENSEX	Up	Up	Up (+)	R=16k
AORD	Up	Up	Up (+)	R=4.6k
NZX50	Up	Up	Up (+)	R=3.2k
FTSE	Up	Up	Up	R=5.1k
DAX	Up	Up	Up	R=5.5k
Bovespa	Up	Up	Up	R=55.8k

MYR

This is interesting. The rise and fall of the USD. Does anyone have a chart for the Malaysian Ringgit? I remember when I was young (around 12 years old), my father took me to Singapore for holiday. The exchange rate then was 1.10 to a Sing dollar. Now, it is 2.44. A country with more people, more oil, more land and more forest loses out to a country that don't even have enough water to drink! Something is really wrong with the way we govern ourselves. Think about it, after 52 years, our purchasing power is still weak. If you compare the price of international goods (TV, car, wheat, milk etc), we need to spend a higher percentage of our monthly income as compared to the Singaporeans.

If you talk about patriotism, then in my opinion, the past (starting from Tun Mahathir era) and present politicians are all not patriotic because their management of the country has made us weaker. We rely on cheap labors or energy to make our products competitive. Our R&D is still weak. We are not only exporting rubber gloves and electronic components, but also humans. Our best brains ended up in Singapore, Austrialia, US and UK. It is not the people that left that is unpatriotic. It is the politicians that created the condition that drove the people out that is unpatriotic.

Selamat Hari Jadi Malaysia!

Genm & YTL

I'm stalking the following two. Currently, I have no position in both or their warrants.

Genm Weekly Chart

YTL Weekly Chart

Weekly Summary

Another week has gone by. Volume continues to shrink. Weekly momentum getting weaker. Weekly KLCI chart indicates that the trend is still up but with less strength now. If you look at the monthly chart, then you will see a doji. Not a good sign. I think that there shall be a correction towards 1150.

FBM KLCI Weekly Chart

Looking at the sectors, it seems that construction and property are holding up well:

Malaysia	Monthly	Weekly	Daily	Note
FBM KLCI	Up	Up	Up (+)	Weak up. Not at firm ground.
Finance	Up	Up	Neutral	Correction. Not at firm ground
Construction	Up	Up	Up (+)	Weak up. Not at firm ground.
Plantation	Up	Up	Neutral	Not at firm ground.
Property	Up	Up	Up (+)	Potential double top.
FBM ACE	Up	Up	Neutral	Potential H&S.

I'm just sitting tight with my positions. Selling the weak ones, and holding the stronger ones. Currently, I have no trade ideas.

The Right Warrant

Warrant is a good instrument because of the leverage that you get. It is a quick path to become rich and also a quick path to become poor. That is why selecting the right warrant is very important. To trade in warrant, you need to have good skills in:

1. Ability to red the trend of the mother share.
2. Good timing (don't have to be perfect).
3. Knows which warrant to buy.

Currently, there are a lot of warrants that have been issued. What I want to touch is how to compare the available warrants. I will use Axiata as an example as the comparison is the easiest. The figure belows shows my warrant calculator result for Axiata. There are 3 call warrants available: Axiata-CB, Axiata-CC and Axiata-CD.

If you have determined that the mother stock's trend is up, then you look at the call warrant.

The first criteria in selecting warrant is the exercise price. You want to buy something that is in-the-money or approaching the exercise price. Too far and the warrant gearing effect is muted. In Axiata case, all 3 warrants are in the money.

Next, you look at the expiration date. Too near and your warrant may not have the full potential to move along with the mother stock. Remember, a good trend may last 6 months to a few years. So, you want your warrant to go as far as it can with the mother stock. In Axiata case, all expires in Aug 2010 (with different dates). So, I consider them more or less equal.

The third criteria is to look at its premium. I look at the actual premium value and the percentage premium. For warrants that is out-of-money, the actual premium value is important as I can determine how much the price must move for it to be in-the-money. I look at the charts and determine whether there are any resistance (or support for put warrant) in the mother stock that will retrict the movement of my warrant. If all the warrants are in the money, then I look at the percentage premium. In Axiata case, Axiata-CC gives you the best value for money.

Lastly, I look at the simple gearing if everything else are equal. The higher the better.

I don't use Black-Scholes formula or any of the Greeks as I would like to keep my decision criteria as simple as possible. Furthermore, in a strong trending stock, this formula is not useful.

In Axiata case, I wonder what is going in the mind for those that bought Axiata-CC and Axiata-CD since Axiata-CB clearly gives you the best value. Maybe because Axiata-CB is more "expensive". Maybe the volume is generated by the market makers.

Anyhow, I hope that you get some ideas on how to choose warrants. If you are trading in warrants, why not try my Bursa Malaysia Warrant Calculator?

Free Money

In 2006, a company was awarded a 3G license in Malaysia. Of course, a highly valuable Malaysian resource should be awarded to a Malaysian company. However, this company does not have the capital or the initiative to provide any 3G service. They hold on their license and waited and waited for something to happen.

In 2007, a foreign-owned company, which have the resource to deploy the 3G service, but cannot get the spectrum (because they are foreign devil), have no choice but to exchange the available spectrum with some yellow shares.

Of course, the person in charge makes some noise about the non-transferability of the license. Anyhow, the transaction proceeded smoothly.

In 2009, the company that was initially awarded the 3G spectrum sold the yellow shares for MYR600 million.

The 3G spectrum license costs MYR50 million per year.

Ain't life is wonderful in this country? Money just falls down on "brother-earth".

Call Warrant (AirAsia, AMMB, Gamuda, Genm, TM)

5 new call warrants from OSK that will be listed on 27 Aug 2009:

• AirAsia-CG (Call, 25/08/2010, MYR1.38, 2 to 1)
• AMMB-CF (Call, 25/08/2010, MYR4.00, 6 to 1)
• Gamuda-CJ (Call, 25/08/2010, MYR3.00, 4 to 1)
• Genm-CM (Call, 25/08/2010, MYR2.60, 4 to 1)
• TM-CJ (Call, 25/08/2010, MYR3.00, 4 to 1)
  

Getting Rich in Malaysia Cronyism Capital Means Dayak Lose Home

It makes me feel sad when forest is replaced by oil palm plantation. Making money while destroying other people's mean of living is just pure evil. The fight is loopsided and the minority has no chance of winning. Read the complete story of Getting Rich in Malaysia Cronyism Capital Means Dayak Lose Home from Bloomberg.

New CW & PW

New CW and PW. Is there a mailing service from CIMB or OSK that informs you of the new issues? With this service, I do not need to check everyday in Bursa Malaysia website. Sometimes I forget to check, like yesterday.

• Axiata-CD (Call, 23/08/2010, MYR2.88, 5 to 1)
• IGB-CA (Call, 23/08/2010, MYR1.98, 2 to 1)
• Maybank-CL (Call, 23/08/2010, MYR6.84, 8 to 1)
• Tenaga-CN (Call, 23/08/2010, MYR8.15, 8 to 1)
• FBMKLCI-HA (Put, 22/08/2011, [MYR]1148, 1500 to 1)
• HSI-H1 (Put, 22/08/2011, [HKD] 19500, 15000 to 1)
• IOICORP-CL (Call, 20/05/2010, MYR5.10, 6 to 1)
• Maybank-CK (Call, 20/05/2010, MYR6.10, 8 to 1)

You can relieve yourself of keying this information in your Excel spreadsheet by buying my Bursa Malaysia Warrant Calculator. It automatically updates the information for you.

Boom And Burst

I like to read Andy Xie's article because it keeps me on the ground, not getting too carried away with my speculation. Boom and Burst is published in scmp.com, unfortunately it is behind a pay wall. Fortunately, Barry Ritzholtz put it in his blog. Maybe the mother of all stock market crashes will come in 2012?

World Market

US markets continue to punish the bears. I'm Looking out for the new foreclosure panic. But then, the banks can have fantasy value, the market may not sell down. The Federal has print so much money. Deflationist says that the money will be used to pay the housing losses. But what losses to pay if the valuation is at fantasy numbers? What do you do with the extra cash if you don't want to lend it out? I think that the answer is to use it to speculate. Yes, banks can use the money to speculate on commodities because they need the profit to payback the government. So, I think that the inflationist will be right.

World	Monthly	Weekly	Daily	Note
S&P500	Up	Up	Up	R=1.15k
DJI	Up	Up	Up	R=9.8k. Daily bearish divergence
NasdaqComp	Up	Up	Up	R=2.18k
Nikkei 225	Up	Up	Neutral (-)	Next R=11k
Kospi	Up	Up	Up	Next R=1.6k. Overbought.
SSECI	Up	Neutral (-)	Down (-)	R=3.5k. S=2.8k. Correction.
HSI	Up	Up	Neutral (-)	R=21k, S=19.5k
TWII	Up	Up	Neutral (-)	Toppish
STI	Up	Up	Neutral (-)	R=2.7k.
JKSE	Up	Up	Neutral (-)	At R=2.5k, overbought
SENSEX	Up	Up	Neutral (-)	R=16k
AORD	Up	Up	Neutral (-)	R=4.6k
NZX50	Up	Up	Neutral (-)	R=3.2k
FTSE	Up	Up	Up	R=5.1k
DAX	Up	Up	Up (+)	R=5.5k
Bovespa	Up	Up	Up	R=55.8k

Looking at commodities:

Commodity	Monthly	Weekly	Daily
Gold	Up	Up	Neutral
Crude Oil	Up	Up	Up (+)
Crude Palm Oil	Up	Up	Neutral
Rough Rice	Down	Up	Neutral

Why is oil going up when the biggest consumer, USA is in the great recession? Peak oil or speculation?

Hitler Missed the Bottom

There are a lot of different version subtitles based on Der Untergang clip. I'm amazed that the person behind it is so creative. Have a nice laught with this latest version that is circulating in the Internet:

Weekly Summary

KLCI Weekly Chart

A few red flags: Reversal candle, RSI uptrend broken, bearish divergence in MACD. Trend is still up, but I think that a strong correction is coming. I'm gonna reduce some weak position. The problem is the volume has shrunk so much. I didn't reduce last week because of work commitment. Felt like working like an ox all the time. Still looking forward to the day I can shake my leg and still see money flowing into my pocket...

Malaysia	Monthly	Weekly	Daily	Note
FBM KLCI	Up	Up	Neutral (-)	Correction. No bottom yet.
Finance	Up	Up	Neutral (-)	Correction. No bottom yet.
Construction	Up	Up	Neutral (-)	Correction. No bottom yet.
Plantation	Up	Up	Neutral (-)	False break of downtrend. Correction.
Property	Up	Up	Neutral (-)	Potential double top.
FBM ACE	Up	Up	Neutral (-)	Potential H&S.

International Reserves of BNM

Slight increase at 14 Aug 2009. If you look at the amount in USD (blue line), looks like a head & shoulder formation. :p

New Bubble Threatens a V-Shaped Rebound

Are we in a bubble now? I don't feel any bubbles. Is China a bubble? Andy Xie says that New Bubble Threatens a V-Shaped Rebound. Anyhow, if it is a V-shaped recovery, does that means the leftside slope is the same hight as the rightside slope?

William Black

A good talk by William Black about the failure of regulators to regulate. This is something that we can surely learn.

SSECI

SSECI Daily Chart

This is scary! Look for support at around 2800. If not....

Based on weekly chart, there is still no bearish divergence yet. So, long term still up. Short term, to test your mental strength.

World Market

Nothing much happened. Every market has hit a top. I'm not sure whether this is THE top or just a temporary top.

World	Monthly	Weekly	Daily	Note
S&P500	Up	Up	Up	R=1.15k
DJI	Up	Up	Up	R=9.8k. Daily bearish divergence
NasdaqComp	Up	Up	Up	At R=1.95k-2k
Nikkei 225	Up	Up	Up	Next R=11k
Kospi	Up	Up	Up	Next R=1.6k. Overbought.
SSECI	Up	Up	Up	Next R=3.8k. Correction.
HSI	Up	Up	Up	R=21k, S=19k
TWII	Up	Up	Up	Toppish
STI	Up	Up	Up	At R=2.65k.
JKSE	Up	Up	Up	At R=2.5k, overbought
SENSEX	Up	Up	Up	Next R=17.5k
AORD	Up	Up	Up	R=4.6k Slightly overbought
NZX50	Up	Up	Up	R=3.2k Slightly overbought
FTSE	Up	Up	Up	R=5.1k
DAX	Up	Up	Neutral (-)	R=5.5k
Bovespa	Up	Up	Up	R=55.8k

Weekly Summary

KLCI Weekly Chart

Weekly chart show overbought (RSI). However, no bearish divergence yet but there is one in the daily chart. From the chart, you can see that there is no horizontal resistance until 1300. But I don't think it can move up without any correction (due to the overbought market).

Currently I'm just hanging on to my profitable position. If there is no big crash, I think that the lower liners will continue to play catch-up for the coming week.

Malaysia	Monthly	Weekly	Daily	Note
FBM KLCI	Up	Up	Up	Overbought. Daily bearish divergence
Finance	Up	Up	Up	Overbought.
Construction	Up	Up	Up	Overbought.
Plantation	Up	Up	Up	Overbought. Breakout from downtrend
Property	Up	Up	Up	Slightly overbought.
FBM ACE	Up	Up	Up	Will challenge the previous high

Fuzzy Numbers

If you follow the Western media (CNN, Bloomberg etc), you hear that they say the Chinese government is massaging the economic numbers, everything is a lie, the economy is not as rosy as they claim etc. Well, the US government is doing the same too!

Have a look at this video: Fuzzy Numbers

Reading List

Once in a while, I received an email on how to learn investment. So to avoid repeating, I list out the self-learning book list for Warren Buffett or Paul Tudor Jones wannabes. This is your reading assignment:

1. Reminiscences of a Stock Operator by Edwin Lefèvre
2. Trading for a Living: Psychology, Trading Tactics, Money Management by Alexander Elder
3. Market Trading Tactics: Beating the Odds Through Technical Analysis and Money Management by Daryl Guppy
4. Secrets to Winning Stocks: Change your Investing Destiny by Improving your Trading Method by Teoh Chang Yeow
   
5. Trend Following by Michael W. Covel
   
6. Trading Rules: Strategies for Success by William F. Eng
   
7. The Disciplined Trader: Developing Winning Attitudes by Mark Douglas
8. Inside the Investor's Brain by Richard L. Peterson
   
9. Common Stocks and Uncommon Profits and Other Writings by Philip A. Fisher
10. How To Make Money In Stocks: A Winning System in Good Times or Bad by William J. O'Neil
    

Before you start investing/trading in equity, commodity, forex or property, you need to begin by investing in yourself with knowledge. If you go out without a clue on the rules of the game, you will be going to get hurt badly.

The book list is long because I don't know which method suits you. You must find it out yourself. This may take a few bull/bear cycle before you find the one that suits you (hopefully before you blow yourself out)

Book number 1 is a must read. That is your textbook. The rest are elective subjects. Just make sure you learn techniques (technical analysis or fundamental analysis), money management (or risk management) and psychology.

Good luck!

Tgoffs

Tgoffs Weekly Chart

Broken the downtrend, corrected and now, looks like it is heading up again. Should challenge 1.70 soon.

Disclosure: I'm long in one of the warrant.

World Market

S&P 500 Weekly Chart

Looking at the S&P 500 weekly chart, the next major resistance is at 1100 to 1150. Will it continue to blast up or take a move with nerve wracking zigzag path?

Shanghai, HSI, TWII and Sensex may have hit a top. If they plan to go up, then most probably after a consolidation phase. Currently, it seems that it is the Western market's time to play catch up.

World	Monthly	Weekly	Daily	Note
S&P500	Up	Up	Up	R=1.15k
DJI	Up	Up	Up	R=9.8k
NasdaqComp	Up	Up	Up	At R=1.95k-2k
Nikkei 225	Up	Up	Up	Next R=11k
Kospi	Up	Up	Up	Next R=1.6k
SSECI	Up	Up	Up	Next R=3.8k.
HSI	Up	Up	Up	R=21k, S=19k
TWII	Up	Up	Up	Toppish
STI	Up	Up	Up	R=2.65k. Correction.
JKSE	Up	Up	Up	At R=2.35k, overbought
SENSEX	Up	Up	Up	Next R=17.5k
AORD	Up	Up	Up	Downtrend broken. R=4.6k
NZX50	Up	Up	Up	R=3.2k
FTSE	Up	Up	Up	R=5.1k
DAX	Up	Up	Up	R=5.5k
Bovespa	Up	Up	Up	R=55.8k

Weekly Summary

KLCI Weekly Chart

KLCI still going up but with a weaker momentum. So watch out!

Malaysia	Monthly	Weekly	Daily	Note
FBM KLCI	Up	Up	Up	Overbought.
Finance	Up	Up	Up	Overbought.
Construction	Up	Up	Up	Overbought.
Plantation	Up	Up	Up	Slightly overbought.
Property	Up	Up	Up	Slightly overbought.
FBM ACE	Up	Up	Up	Will challenge the previous high

International Reserves of BNM

Not much change at 31 Jul 2009.

Warrant Orgy

Mama mia! 10 warrants to be listed on 7 Aug 2009. Pay attention! First PUT warrant from AM! Yipeee!!! Now, if CIMB and OSK will also issue a PUT for every CALL, then KLSE will become a trader's heaven!

1. Sime-CH (4 Feb 2011, MYR8.15, 8 to 1, CW) from CIMB
   
2. Genm-CL (4 Feb 2011, MYR3.00, 4 to 1, CW) from CIMB
3. Gamuda-CI (4 Feb 2011, MYR3.12, 4 to 1, CW) from CIMB
4. Bursa-CO (4 Feb 2011, MYR7.70, 10 to 1, CW) from CIMB
5. Bursa-CN (5 Aug 2010, MYR7.20, 10 to 1, CW) from OSK
6. KNM-CB (5 Aug 2010, MYR0.85, 2 to 1, CW) from OSK
7. Commerz-CG (5 Aug 2010, MYR9.30, 15 to 1, CW) from OSK
8. Axiata-CC (5 Aug 2010, MYR2.75, 5 to 1, CW) from OSK
9. HKEX-CC (4 Feb 2011, HKD143.90, 125 to 1, CW) from AM
10. HKEX-HI (4 Feb 2011, HKD143.90, 125 to 1, PW) from AM

Now, I have to get busy to rewrite my Bursa Malaysia Warrant Calculator to take into account this PUT warrant. I feel so excited!

China Stock Market is a Ponzi Scheme

Andy Xie says that the China stock market is a big big ponzi scheme. At the end of he says:

In summary, the market frenzy now won’t last long. The correction may happen in the fourth quarter. There could be another wave of frenzy next year as China can still release more liquidity. When the dollar recovers, possibly in 2012, China’s property and stock market could experience collapses like during the Asian Financial Crisis.

Hmmm...you mean that it is still safe to go in now?

CPO Breakout

CPO Weekly Price

The last time I mentioned about the breakout (April 1, 2009), plantations stock did not react much, I sold my plantations CW when the price breaks down. Now, it seems that CPO is heading up again. I hope that plantations can move more this time.

How To Profit From ISA Protest

Every crisis is an opportunity! How to turn a profit from a protest instead of an allege loss:

1. Allow a peaceful protest between 12pm - 3pm: Under the hot sun, humans will lose a lot of water due to sweating, this loss needs to be replace. Traders can sell mineral water or 100Plus to quench the thirst of protestor.
2. Protesters need to travel to downtown KL, means of transport are the usual train, LRT, car, bus and motorcycle. Increase revenue from parking and toll (it seems that most roads leading to KL are tolled). Increase petrol sales will benefit Petronas. RapidKL buses will be full.
   
3. Sales of T-shirt, headband, scarf, button pins with anti-ISA wordings.
4. After the protest, everyone will be surely hungry (the walking and shouting will require a lot of energy). This is an opportunity to sell Ramli burger, pisang goreng, jagung bakar, ayam percik and all sort of food. Wah! Like a pasar malam now.

This is how a businessman thinks - positively. In my opinion, let them protest peacefully and get it done as fast as possible. I think that 2-3 hours of protest will satisfy the protestors. A lock down of the whole city for the whole day will definitely cause financial loss to everyone.

Sugar High

Sugar Weekly Chart

It is time the government float the price of sugar. Sugar and other commodities cannot be subsidized continuously because it will promote wastage. Too much sugar in your diet will mean greater chance of being obese. Being obese will lead to a lot of health problem. When people have health problem, they will mostly end up at government hospital. So, the government or more precisely, the tax payer is paying for subsidize sugar and health care.

Let sugar price adjust to international price. Higher price will cut down the consumption of sugar, less chance of obesity, less money needed for health care.

In my opinion, price control is a bad thing. It distorts supply and demand, and when the displacement gets too wide, a sudden adjustment will bring suffering to everyone because people need time to adapt to a new environment.

Anyhow, let us just hope that sugar will not break above 20.00.

Crude Oil Alert!

CL Daily Chart

Hmm....possible breakout from a triangle formation. Next resistance will be around USD79.00. If USD continues to slide down, expect oil to go up.

Anyhow, have you all heard of the peak oil theory? Go to the OilDrum to get information about peak oil. It seems that Malaysia's oil production peaked in 1997. That is why Petronas need to go out further to the sea to look for oil. Since Malaysia's public transport is in total chaos, I see many hardship for the people. Weak currency, corrupted and authoritarian government, low tech industry or industry that relies extensively on cheap energy and inefficient use of natural resource are all ingredients for a painful suffering to the society when the price of oil goes up.

I really believe that one should now prepare for the peak oil than rely on the government because the current government is too busy in power grapping or to enrich itself that it has any time to plan for the future of our generation.

DX Alert!

DX Daily Chart

Dollar Index is on the verge of another break down. Will it turn around and make a double bottom formation? Or will it break down towards 72s? I'm sure that the Russians and Chinese do not want to see their investment losses value but then again, if the world's smart investor and hedge funds try to get ahead of the Russians and Chinese, USD will be heading into a ugly decline.

Keep an eye of DX for the next possible crisis in forex.