World Market Weekly Summary

US housing market is starting to continue its downward trajectory. How much fantasy value can the banks keep up with? Next in line will be China and Australia's housing market. If they bust, the government will try to bailout the banks again. No wonder the precious metal sector is hot. Are you in this sector?

World	Monthly	Weekly	Daily
S&P500	Up	Down	Down (-)
DJI	Up	Down	Down (-)
NasdaqComp	Up	Down	Down (-)
Nikkei 225	Down	Down	Down (-)
Kospi	Up	Up	Up
SSECI	Down	Down	Down
HSI	Down	Neutral (+)	Up (+)
TWII	Neutral	Down	Neutral
STI	Up	Neutral (+)	Up (+)
JKSE	Up	Up	Up
SENSEX	Up	Up	Up
AORD	Down	Down	Neutral
NZX50	Down	Down	Down (-)
FTSE	Neutral (-)	Down	Down (-)
DAX	Up	Up	Neutral (-)
RTSI	Up	Down	Neutral
Bovespa	Up	Neutral (+)	Neutral

Bursa Malaysia Weekly Summary

KLCI Daily Chart

Impressive window dressing! Daily chart suggests that it will go down towards 1300. I suspect that this is the end of the road for KLCI before we start the next leg down. Let's see what happens when the correction sets in.

Malaysia	Monthly	Weekly	Daily
FBM KLCI	Up	Up (+)	Up (+)
Finance	Up	Up (+)	Up (+)
Construction	Up	Up	Up
Plantation	Up	Neutral (+)	Neutral
Property	Up	Neutral (+)	Up (+)

International Reserves of BNM

Date	MYR (billion)	USD (billion)
31-May-10	312.2	95.5
15-Jun-10	314.3	96.1

Source.

Fear the Boom and Bust

How about a 6 minute music video about economic theories? Hayek vs Keynes in Fear the Boom and Bust.

The Yuan Trap

Be careful what you wish for. American politicians are complaining that the Chinese government suppression of the Yuan is making Chinese exports more competitive.

When the Chinese government issues a statement that they will allow the Yuan to float, markets around the world rallies in the expectation that the Chinese will buy more due to cheaper imports, therefore, the rest of the world can sell more and save their own economies.

However, something else may happen instead. You see, the Chinese government has been buying the US Treasuries to suppressed the value of the Yuan (i.e. USD that goes in through import is cycled back or exported by buying Treasuries). If the government allows the Yuan to appreciated, that means the Chinese government do not need to buy as many Treasuries as they did last time. This means that the Treasuries may drop (i.e. interest rate goes up). Up to a certain point, higher interest rate will hit the home loans in US. When home buyers defaults, bank losses increases. Less lending will result. Business contracts, more retrencement will occur. No jobs means less consumption. US government will collect less tax. Therefore, more Treasuries will be sold which will suppressed the price (since China is not buying that much). This may be the death spiral that will plunge the whole world into a depression.

So, be careful what you wish for.

World Market Weekly Summary

Markets around the world continue to rebound except Shanghai. Shanghai is still facing pressure to go down. I thought that the Chinese is expected to save the world. But their stock market doesn't indicate so.

World	Monthly	Weekly	Daily
S&P500	Up	Down	Neutral
DJI	Up	Down	Neutral
NasdaqComp	Up	Down	Neutral
Nikkei 225	Down	Down	Neutral (+)
Kospi	Up	Up (+)	Up (+)
SSECI	Down	Down	Down (-)
HSI	Down	Down	Neutral
TWII	Neutral	Down	Neutral
STI	Up	Down	Neutral
JKSE	Up	Up	Up (+)
SENSEX	Up	Up (+)	Up (+)
AORD	Down	Down	Neutral
NZX50	Down	Down	Neutral (+)
FTSE	Up (+)	Down	Neutral
DAX	Up	Up	Up (+)
RTSI	Up	Down	Neutral
Bovespa	Up (+)	Down	Neutral

Bursa Malaysia Weekly Summary

KLCI Daily Chart

Beware of the low volume push up. The way the index moves, it is telling me that this is just a rebound. Daily movement can go either way. No strong bull or bear movement.

Summary for the rest of the sectors:

Malaysia	Monthly	Weekly	Daily
FBM KLCI	Up	Neutral	Neutral
Finance	Up	Neutral	Neutral
Construction	Up	Up (+)	Up (+)
Plantation	Up (+)	Down	Neutral
Property	Up	Down	Neutral

Window Dressing Again

Beware of this rally, now is the time for the half year window dressing. The "smart" fund managers need to look good before they issue the quarterly report to their clients.

Coffee and Sugar

Coffee Futures Monthly Chart

Coffee futures ran riot this week. If this keeps going on, I think that I better store up my Aik Cheong coffee before the price goes up.

Sugar Futures Monthly Chart

For sugar, the futures price has collapsed. Well, I don't care much about sugar. I can take 1 year just to finish my 1kg of sugar. I don't understand why is there a shortage when sugar is cheap now? Who is hoarding sugar? I think that based on current situation, better hoard coffee.

World Market Weekly Summary

It seems that the market is trying to find a new base. No strong trend for US. I think that China has found a temporary bottom. I think that the next selldown will start after the end of 2010 FIFA World Cup. What do you think?

World	Monthly	Weekly	Daily
S&P500	Up (+)	Down	Neutral (+)
DJI	Up (+)	Down	Neutral (+)
NasdaqComp	Up	Down	Neutral (+)
Nikkei 225	Down	Down	Down (-)
Kospi	Up	Neutral	Neutral
SSECI	Down	Down	Neutral (+)
HSI	Down	Down	Neutral
TWII	Neutral	Down	Neutral
STI	Up	Down	Neutral
JKSE	Up	Up (+)	Neutral
SENSEX	Up	Neutral	Neutral
AORD	Down	Down	Neutral
NZX50	Down (-)	Down	Down
FTSE	Neutral	Down	Neutral
DAX	Up	Up (+)	Neutral
RTSI	Up	Down	Neutral
Bovespa	Neutral	Down	Neutral

Bursa Malaysia Weekly Summary

KLCI Weekly Chart

KLCI has succeeded in covering the gap of 1290-1300. Unfortunately, in the process of covering this gap, a few gaps were made at 1270 and 1293-4. From the chart, it looks like KLCI is in consolidation mode. The consolidation range should be +/-20 points around 1300. No strong trend in either up/down direction. For trend followers like me, this is the time not to take in any new position. However, if one has an old position, then I believe that it is best to close it due to the worsening fundamentals.

Summary for the rest of the sector:

Malaysia	Monthly	Weekly	Daily
FBM KLCI	Up	Neutral	Neutral
Finance	Up	Neutral	Neutral
Construction	Up	Neutral	Neutral
Plantation	Neutral (-)	Down	Neutral
Property	Up (+)	Down	Neutral

Riding the dragon

Latest from Andy Xie: Riding the Dragon.

Poll: Peak Oil

Do you know what is peak oil about? Do you have an investment based on the believe that peak oil is going to happen or happening now? If peak oil is true, then our standard of living is going to drop. We will have less money allocated for entertainment. We will have to spend a larger portion of our income on food and transport. Inflation will be high. Economic growth will become weak.

Poll: Tell me whether you believe in peak oil or not. Please vote on the left panel of this blog.

International Reserves of BNM

Date	MYR (billion)	USD (billion)
14-May-10	314.2	96.1
31-May-10	312.2	95.5

Source.

Looks like the outflow coincides with the past 2 weeks selldown.

World Market Weekly Summary

Even though Asian markets had a rebound, but the world is generally starting to break to the downside:

World	Monthly	Weekly	Daily
S&P500	Neutral (-)	Down	Down
DJI	Neutral (-)	Down	Down
NasdaqComp	Up	Down (-)	Down
Nikkei 225	Down (-)	Down	Neutral (+)
Kospi	Up	Neutral (+)	Neutral (+)
SSECI	Down	Down	Down (-)
HSI	Down (-)	Down	Neutral (+)
TWII	Neutral (-)	Down	Neutral (+)
STI	Up	Down	Neutral (+)
JKSE	Up	Neutral	Neutral (+)
SENSEX	Up	Neutral (+)	Neutral
AORD	Down (-)	Down	Neutral
NZX50	Down (-)	Down	Down
FTSE	Neutral (-)	Down	Neutral
DAX	Up	Neutral	Neutral
RTSI	Up	Down	Neutral (+)
Bovespa	Neutral (-)	Down	Neutral

I saw another sign that things are worse than we know. The 1st sign was the ban of naked short selling by Germany. The 2nd one was when President Obama gave a speech to assure everyone that things are continuing to improve after the announcement of bad employment data. When politicians come out to calm our nerves, that means that we should run and hide.

Poll: Gold

The poll only attracts 20 votes. So it is not statistically valid. Anyhow, I'm surprised at the result. I didn't expect so many people has a gold position. I guess that we are all worried about money printing, inflation and government debt.

Bursa Malaysia Weekly Summary

KLCI Daily Chart

KLCI is still in rebound mode. Looking at the chart, I think that the best KLCI can go is just around 1310. This could be the left shoulder of a H&S formation. Unless there is a new theme, I don't think that KLCI can go any higher because the finance sector has hit the monthly overbought region and based on its historical chart, the bull is pretty over. However, the next selldown could be 6 months down the road. Based on the current movement, I cannot say when will the next selldown begins.

For those that is still holding a position, ask yourself what is your time frame. If you can wait for another 5 years for the next bull, then hold on. Additionally, ask yourself about your mental strength. Only a few can ride out the bear market. Good luck!

Malaysia	Monthly	Weekly	Daily
FBM KLCI	Up	Neutral	Neutral (+)
Finance	Up	Neutral	Neutral (+)
Construction	Up	Neutral	Neutral (+)
Plantation	Up	Down	Neutral (+)
Property	Neutral (-)	Down	Neutral (+)