A New Journey

The month of August marks a new phase in my trading life. I will be managing an trading account for a friend. This is my first step in commercializing my trading skills so that I can become a full time independent trader. Maybe I should call myself a money manager since it sound more sophisticated.

My objectives are to make money for my client during bull market (an obscene amount, hopefully) and to lose less during a bear market. I still hope that CIMB or OSK will issue some put warrants so that traders like me can make a living during bull or bear market.

Managing someone's money requires a different mental preparation especially you know your client. As in every new venture, the first step is the hardest. So, I hope that the first trade that I place out will turn out well.

World Market

Major markets keep pushing to the upside. Based on daily chart, it is overbought. However, based on weekly chart, it seems that it can go some more. When everything is so bullish, it is only natural to be on guard on any possible sharp pullback like the one in Shanghai last week.

World	Monthly	Weekly	Daily	Note
S&P500	Up (+)	Up	Up	R=1k
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	Next R=21k
TWII	Up	Up	Up	Toppish
STI	Up	Up	Up	At R=2.65k. Overbought
JKSE	Up	Up	Up	Next R=2.35k
SENSEX	Up	Up	Up	Next R=17.5k
AORD	Up (+)	Up	Up	Brokeout downtrend?
NZX50	Up (+)	Up	Up	R=3.05k
FTSE	Up (+)	Up	Up	R=5.1k
DAX	Up (+)	Up	Up (+)	R=5.5k
Bovespa	Up	Up	Up	More upside

Carotec

Carotec Weekly Chart

All possible downtrend lines that can be drawn have been broken. A buy signal was given and may continue moving up.

Disclosure: I'm long in Carotec.

Weekly Summary

KLCI Monthly Chart

Unbelievable. Looks like a V-shape recovery. Looks it KLCI is heading to cover the gap at 1190. Looking up, there are two gaps at 1350 and 1495. Looking down, there are many many gaps. Why is KLCI behaving like this? I think that a lot of money is going into unit trust such as ASN and 1Malaysia. Maybe someone is frontrunning these funds. Anyhow, market is really overbought. Bluechips have lead the way and Friday is penny shares day. So, how long will this last? Speculators expect that China shares will continue to go up until Oct 1 because that is the 60th Anniversary of the People's Republic of China. So, it is expected that the government will not spoil the celebration mood until after the anniversary.

Looking at Bursa Malaysia's various sector:

Malaysia	Longterm	Midterm	Shorterm	Note
KLCI	Up	Up	Up	Overbought.
Finance	Up	Up	Up	Overbought.
Construction	Up	Up	Up	Should have more room up.
Plantation	Up	Up	Up	Should make big move soon.
Property	Up	Up	Up	Waiting for big move
FBM Mesdaq	Up	Up	Up	Will challenge the previous high
FBM 2nd Board	Up	Up	Up	Overbought.

E&O

E&O Weekly Chart

Breakout, sort of, but low volume. Next resistance MYR1.40.

Disclosure: I'm long in E&O-WA.

Axiata

Axiata Weekly Chart

Breakout. Next resistance is MYR3.70.

Disclosure: I'm long in Axiata-CB

IJMLand

IJMLand Weekly Chart

Broke out of downtrend, sort of tested the breakout and now, possibly going higher.

Disclosure: I'm long in IJMLand-WA.

HSBC

HSBC Weekly Chart

HSBC (0005.HK): Next resistance HKD80.00, thereafter HKD90.00-100.00.

Disclosure: I'm long HSBC-C5.

Shorts Squeeze

So, the US market is going up because "securities recalls" are in progress that will take 1 to 3 years. Those that shorted now have to buy back because the owner wants their share back. Another news is that naked shorting is now permanently banned.

The rules of the game have changed. It is crazy to be bearish at this moment. I think that the market will fall, "when" is the question.

Paul Tudor Jones

A documentary about the legendary trader Paul Tudor Jones. See his emotion during the heat of a trade, his lucky sneakers and his lifestyle (big mansion, cool vacation, philanthropic works).

Anyway, can you believe that he was talking about the great depression in 1987?

The documentary has been divided into 7 parts. Part 1 is shown below and continues with part 2, 3, 4, 5, 6 and 7.

Irrational Exuberance Again

Humans have a short memory. It was 1 year ago that the stock market crashed. Now, huge liquidity is guiding speculators to repeat history again: Sichuan Expressway Triples on Shanghai Trading Debut. That is what you get when you have near zero interest rate.

The Ascent of Money Episode 4: Planet Finance

In Planet Finace, Prof. Ferguson talks about property ownership democracy and Chimerica. Side stories are Argentina's inflation and Bolivia's micro-financing.

World Market

A fantastic week around the world. The bears have been beaten severely. Breakouts are everywhere. Is this the beginning of a new party? I hope so. However, please keep in mind the following party poopers: CRE, swine flu, China property.

World	Longterm	Midterm	Shorterm	Note
S&P500	Neutral	Up	Up	Slightly overbought
DJI	Neutral (+)	Up	Up	Stabilizing?
NasdaqComp	Up	Up	Up	Around R=1.95k-2k
Nikkei 225	Up	Up (+)	Up (+)	Breaking out, next R=11k
Kospi	Up	Up	Up	Breakout, next R=1.6k
SSECI	Up	Up	Up	Wow! Next R=3.8k. Can?
HSI	Up	Up	Up	Next R=21k
TWII	Up	Up	Up	Toppish
STI	Up	Up	Up	Next R=2.65k, slight overbought
JKSE	Up	Up	Up	Next R=2.35k
SENSEX	Up	Up	Up (+)	Breaking out, next R=17.5k
AORD	Neutral	Up	Up	To challenge downtrend @ 4.2k
NZX50	Neutral (+)	Up	Up	R=3.05k
FTSE	Neutral (+)	Up	Up (+)	Slightly overbought
DAX	Neutral	Up	Up (+)	May go to 5.5k
Bovespa	Up	Up	Up	More upside

Weekly Summary

What a week! It's like launching a rocket into space. KLCI pretty overbought now. Look for support at 1100. Currently, it is at the door step of resistance level 1160. Next resistance could be at 1300 level. Looking at the KLCI weekly chart, no bearish divergence in the RSI. However, MACD looks weak - a red flag. Anyhow, there is a gap at 1190 level, will it be closed?

KLCI Weekly Chart

The summary for the rest of the sectors:

Malaysia	Longterm	Midterm	Shorterm	Note
KLCI	Up	Up	Up	Overbought.
Finance	Up	Up	Up	Overbought.
Construction	Up	Up	Up	Should have more room up.
Plantation	Up	Up	Up	Should make big move soon.
Property	Up	Up	Up	Waiting for big move
FBM Mesdaq	Up	Up (+)	Up (+)	Will challenge the previous high
FBM 2nd Board	Up	Up	Up	Going into overbought zone

Finance is the strongest of all the sectors. Maybe next week is contruction, plantation and property play.

As fast I have sold out, I had to buy back (some at higher price) because the set up was just too good and cannot be ignored. Some have not move yet. So, I'm keeping my fingers crossed.

Rice

14 months ago, we had a record high price for rice. The government pledged to spend $9 billion to increase rice production. What has happened now? I hope that something has been done. Looking at the rough rice futures price (chart below), it seems that RR has found a bottom, broke out of downtrend and may be heading up again. A news article from The Star says that many cannot cope with increased food price. What is the government action plan when the people goes hungry?

Rough Rice Weekly Chart

International Reserves of BNM

A small dip for 15 Jul 2009.

New Covered Warrant

New call warrants (from CIMB) that will be listed on 23 Jul 2009:

1. AirAsia-CF (21 Jan 2011, MYR1.16, 2 to 1)
2. AMMB-CE (21 Jan 2011, MYR3.48, 5 to 1)
3. Genting-CP (21 Jan 2011, MYR5.50, 8 to 1)
4. KLK-CI (21 Jan 2011, MYR11.80, 16 to 1)

The lifetime of the warrants kind of long this time. Anyhow, all are not worth it because there are better deals (i.e. existing warrants).

Remember, you can make your life easier by having a Bursa Malaysia Warrant Calculator. Why not give it a 1 year try? The cost is almost the same as the brokerage transaction fees. I'm sure you can earn it back in no time.

Bullish for USA

S&P 500 Weekly Chart

Look at the chart, bullish case is supported by the following evidence:

1. H&S formation that has been broken.
2. Bullish divergence in MACD.
3. Bullish divergence in RSI.

The next downtrend line is drawn from the 1550 peak. This means that S&P 500 can possibly go to 1100 (time dependent).

I think that everything will be confirmed when it can close above 960 by the end of this week.

Shopping Spree.....

When you have the money, you can buy buy buy! You can see that China is buying a lot of commodities.

• Cnooc & Sinopec: CNOOC, Sinopec JV to Buy 20% Stake in Angolan Oil Block (20 Jul 2009)
  
• Cnooc: China wants all of Repsol’s Latin American oil assets (6 Jul 2009)
  
• China Nonferrous: China Nonferrous Wins Approval for Terramin Deal (6 Jul 2009)
  
• CIC: China takes minority stake in Canadian miner (3 Jul 2009)
  
• Sinopec: China buys Addax for £4.4bn to tap Iraqi oil (24 Jun 2009)

World Market

Stocks go up around the world:

World	Longterm	Midterm	Shorterm	Note
S&P500	Neutral (+)	Up (+)	Up (+)	Stabilizing?
DJI	Down	Up (+)	Up (+)	Stabilizing?
NasdaqComp	Up	Up (+)	Up (+)	Going to 1.95k-2k
Nikkei 225	Up	Neutral	Down (-)	Correction over, base building
Kospi	Up	Up	Up	Possible break, more upside
SSECI	Up	Up	Up	Toppish, but still going up
HSI	Up	Up	Up (+)	If close >19k, then next R=21k
TWII	Up	Up	Up	Toppish
STI	Up	Up	Up (+)	Next R=2.65k
SENSEX	Up	Up	Neutral	Possible break, more upside
AORD	Neutral (+)	Up (+)	Up (+)	S=3.7k, R=4k
NZX50	Down	Up (+)	Up (+)	Possible break, more upside
FTSE	Down	Up (+)	Neutral (+)	Going up but not strong
DAX	Neutral (+)	Up (+)	Neutral (+)	Going up but not strong
Bovespa	Up	Up (+)	Up (+)	To challenge 55k