Wednesday, February 28, 2007

20070228 Bottom is the current KLCI weekly, top chart is early 1994 weekly chart. Nothing more to say except History Repeats Itself.

20070228 Momentum indicators show the technical damage to the KLCI by turning down. Looking forward, we'd expect levels to watch would be the filling of today's gap or retracement to the fib levels, which are forward projections.

20070228 17:15. Carnage on a big down day for the KLCI. Howevr, if you look closely, this intraday action on Mar FKLI looks sinisterly like a trend day up.

20070228 So the authorities came out to support the market, or rather "buy on valuation". I can distinctly remember in 1998, during the height of the Asian Financial crisis, the PM then said, "we will issue RM6 billion of bonds to buy into the KLSE. At the PE valuations, we will be profitable..." The CI dropped from 800 at the time to 265, before rebounding. Of course, by holding the investments for long enough,(9 years) they made money. This has a lesson, "stock market rewards long term investments." Will history repeat itself.(like the weekly RSI going above 90)

20070228 A nice strategy would be to short the retracement to the 50% to 61.8% levels.

Tuesday, February 27, 2007

20070227 fkli Daily Chart. If the 5 ema cross the 8 ema, then the downtrend start may be confirmed by momentum.

20070227 17:15. A day of plunging stock prices, with the fkli following suit. We have been aware of the weekly technical overbought condition of the RSI getting above 90, despite the chorus from the experts calling for 'good fundamentals' and 'fund flows into the KLSE', pointing to what they call a technical uptrend intact market. That is until today was valid.

20070227 12:45. FKLI big drop into the lunch session close.

20070227 0952. Thes was what Dow Jones reporter eked out from the dealers, who are the specialists in the market: "0035 GMT [Dow Jones] KLCI may open higher, possibly rise to around 1280, as investors cheer mildly positive domestic newsflow. Charts indicate market's uptrend still intact; dealer expects KLCI to hold 1270-1280 range with upside bias aided by good set of quarterly results from government-linked companies while generous dividend payments likely to lend support to the market. "Penny stocks and speculative issues are likely to dominate trade in terms of volume but there is some confidence that foreign funds are among buyers," he adds. KLCI ended down 0.8% at 1272.87. (VGB) "

Didn't turn out as expected judging from the fall in the March FKLI.

Monday, February 26, 2007

Is it Kuala Lumpur Stock Exchange or Bursamalaysia

20070226 This is the report by an eminent 'analyst' of equities in Malaysia. The report still refers to the KLSE or Kuala Lumpur Stock Exchange. To my knowledge, since the demutualisation in 2004, there is now no more KLSE, but instead Bursamalaysia. As well, the market index is the KLCI or Kuala Lumpur Composite Index, and not the KLSE Composite Index. It makes me wonder whay people, and very knoledgable and experienced analysts are stuck in old ways and resistant to change. Anyway, it is just a matter of names. Even students know that the exchange is Bursamalaysia now, and only formerly known as the KLSE.

20070226 17:15. FKLI closes near lows, shorts looking good.

20070226 14:30. FKLI moves down, in tandem with the FBM100.

20070226 12:01. FBM100 cash 3 min breaks down, now see if FKLI follows.

20070226 10:38. Spring is coiling on 3 min FBM100 (FTSE Bursamalaysia 100 Index), which may help the short position on the downside break.(or preclude the stop loss on upside break)

20070226 10:25. Breaking below the morning range indicates a possible short at current level, with stop essential.

Thursday, February 22, 2007

20070222 17:15. Volatile action in FKLI today, could be precursor for the market correction soon.

Wednesday, February 21, 2007

20070221 There are gems out there, if you look hard enough. Insas Bhd, had a big cash pile and marketable securities, which the reports on Feb 16, reported as RM0.58 per share value in the balance sheet. This cash pile did not materialise overnight by magic. For the astute investor/trader, they would have recognised this one, two or even three years back and could have accumulated a "value investing" position and be well positioned for this current bull market. Insas Bhd was trading between 0.22 and 0.40 in 2006, but yet no one had the foresight to take positions in this stock. As of today it closed at RM0.985. As my friend puts it, "You would be on the air-cond bus and be sitting pretty." There would be no headaches or pressure to get in on the bull market at high prices right now.

20070221 17:15. FKLI rises on the first day after the lunar new year. The scoreboard stands at 975 gainers, 131 losers and 101 untraded counters. Weekly RSI could top 92 this week, indicating highly overbought conditions.

Friday, February 16, 2007

20070216 One of our stock picks (Jan 23 2007 as a 'laggard stock') for the year, AIGB.

20070216 Closing on KLCI. Divergence? Needs trigger of some sort to confirm the short.

20070216 17:15. Bear flag fails to materiliase.

20070216 14:24. This is the news item from this lunch hour. Are these the "last of the mohicans" or as come would call them "I can't stand it anymore"(ICSIA) crowd who have resisted and not believed the bull market, now can't stand it and have to get in....time will tell.

20070216 11:39. Possible bear flag forming on FKLI 15 min.

20070216 09:57. FKLI breaks the ow of the first 15 min bar.

Thursday, February 15, 2007

20070215 The above graph plots the 5 week average volume for the past 77 weeks. Illustrates the growth and recent acceleration in trading volumes on the FKLI futures contract.

1994 revisited?

20070215 Weekly RSI stands at 91.25 today. The last time the weekly RSI went above 90 was right before the Daim's 'I'm only in the market to make some pocket money' statement induced crash in 1994. Bear in mind though that the week has tomorrow to go.

20070215 17:15. Mid afternoon selloff in FKLI, doesn't paint favorable picture for follow through tomorrow.

Wednesday, February 14, 2007

20070214 17:15. FKLI closes 1253.50, near the highs. Trend day did eventuate.

20070214 12:45. FKI gaps up 9.50 points and keeps going, could be a trend day into the closing.

Tuesday, February 13, 2007

20070213 17:15. Since the oversold condition of the RSI, coupled with divergence, Now the KLCI has settled higher than then, with corresponding higher movement from the FKLI.

20070213 First bar in 15 min FKLI chart pointed the trend for the day.

Monday, February 12, 2007

20070212 17:15. Rebound takes the FKLI to 1227, but last minutes of trade, gains from the lows could not be held.

20070212 11:27. KLCI not quite getting to the 200 ema. However, there is divergence, as well as oversold condition on the 15 min chart, precluded the rebound.

20070212 10:27. KLCI at 200 ema on 15 min might provide support, for 'buy' trade.

Friday, February 09, 2007

20070209 1715 pm. "engulfing bearish" candlestick pattern could signal the start of the correction. Coming into today there were few factors that signalled the start of the possible correction:
I went out for dinner at the local teochew porridge restaurant. The lady shopowner was discussion stocks like Affin and Faber with a customer, pouring over the stock section of the newspaper.
  • Expert analysts were seeing the market as being "not overbought" when RSI is above 80, possible blow off top pattern, parabolic rise in stock prices with gapping up vertical action. They see what they 'want' to see, and fail to see the wood for the trees.
  • Absolute deadweight leading indicator stocks that never fail to move at the end of uptrends start moving up as people search for 'laggards'. Won't mention names but I think experienced professional traders know what names they are.
  • The talking buzz yesterday was that "foreigners were piling money into Malaysian stocks, with expectations of earnings growth of 20%. And not just blue chips, absolutely every damn stock." A tenet of value investing is when return on equity is enough to create positive return on capital employed, then growth is there and value is created. But when prices run up 30 to 35% so far (in some cases 100 to 200%), stocks are overvalued.
  • I called up a friend to tell them about the surge in Magnum Corp shares from 3.16 to 3.42 this morning. Said "I won't be selling until RM4..., they tell me the KLCI can surge another 300 points." When expectations become unrealistic....time to be careful.

20070209 First 15 min candle of the FKI chart pointed the way....for the correction in the market.

Thursday, February 08, 2007

20070208 Deutsche Bank said today Malaysian market is still bullish and not overbought. I don't know about you, but looking at the KLCI chart, it looks pretty overbought to me. Sometimes these people may be brilliant at interpreting fundamentals, but technical analysis skills need improvement. Fundamental data sets the tone for the Medium to longer term horizon, but regard must always be given to technicals for trade timing, exit and entries, in my honest opinion. But still, once you have good fundamentals behind you, there is no temptation to fall prey to 'stock tip' from acquaintances to get into a spec stock.

Broker-Dealers (Securities firms) stocks epitomise the bull market

"There is the plain fool who does the wrong thing at all times anywhere, but there is the Wall Street fool who thinks he must trade all the time."J Livermore Manchester City FCl Crude Palm Oil


From Dragons and Bulls by Stanley Kroll
Intro and Foreword
The Importance of an Investment Strategy
5 The Art of War, by Sun Tau (circa 506 BC) and The Art of Trading Success (circa AD 1994)
That's the way you want to bet/a>
Long-term v Short term trading
Technicals v Fundamentals
Perception v Reality
Part 1: Winners and Losers
Part 2: Winners and Losers
Sun Tzu: The Art of War
Those who tell don't know, those who know don't tell
Why there is no such thing as a "bad market"
The Secret to Trading Success
The Experts, do they know better?
Risk control and money management
Good advice
The 'good bets' business by Larry Hite
Don't lose your shirt
Ed Sykota's secret trend trading system