Friday, June 29, 2007

20070629 1715. FKLI July closing, on the half year. Basically today was a tale of two trades without followthrough. Would not have expected much less, as spread and roll activity always screw up the directional trades.

20070629 1558. Longs at 1343 stopped out, with stop and reverse at 1339 would have been prudent. The true breakout today was to the downside fro. 1339 for the FKLI July 2007 futures.

20070629 1136. Breakout levels set up on FKLI Jul contract at 1343 and 1339. Will look to take with appropriate stops.

Thursday, June 28, 2007

20070628 1000. the divergence on the 15 minute KLCI cash index chart, actually provided the clue to which side of the trade not to be on.

Wednesday, June 27, 2007

20070627 1605. KLCI cash index 89 min chart, delineating the clear downtrend in the price level.

20070627 1230. FKLI collapses with the regional markets. Jul FKLI trades at 1340 at 1230 pm, which iis a full 21 points from the sell signal yesterday. Those who take on the risk of holding positions short would benefit from such a gap down and trend day move like today.

We alluded to fact that the small cap stocks were up and big caps dropped for the past few days. Now we know, small caps are retail/syndicate driven=dumb money, and big caps are institutional and big boys=smart money.

Tuesday, June 26, 2007

20070626 1715. FKLI did trade 1361, the lower breakout level. However no follow through. (maybe it was too close to the closing) Shorts would be underwater by 2 points at the close. It is important to have a plan when trading. Since this was intended as an intraday trade, it is imperative to try to close out the 'wrong' trade and not hold overnight. THuman nature of not wanting to admit wrong is folly in trading leveraged financial instruments like futures. Don't let day trades turn into overnight position trades...

20070626 1621. FKLi sets up with breakout levels 1361 and 1364, the second setup today. This is pretty rare, normally we might get one setup only per day. Maybe the spread trade and rolling activity is screwing the normal course of trading.

20070626 1557. KLCI went below 365 ema as expected. We might get a pullback to the 200 ema from here fo rthe ocntinuation possibly down.

20070626 1507. FKLI July 07 contract trades a low of 1359.50 in the afternoon session.

20070626 1203. Cash KLCI breaks its 15 min 200 period exponential moving average. We would expect a test of the 365 ema around 1370. If the bearish sentiment persists, that would help the short position.

20070626 1034. FKLI July 2007 contract goes on to reach low of 1363. Proper risk management would dictate peeling off 1/2 the position and locking in some profits, with stops moved to breakeven, so the 'risk free' trade position can be ridden down.

20070626 1058. Short at 1368.5, on the break of the low of the consolidation range on FLI. Small cap stocks are 'goreng' or gambling, while the big caps are under selling pressure. It has come to the stage where the market can go either way, but speculation is setting in for the small cap stocks.

Monday, June 25, 2007

20070625 1715. FKLI in downtrend. But there was only one setup for the break out of consolidation trade. Comes at the end of the day when 1377.5 traded, triggering a short for a quick move to 1368.5. The only problem was this move was caused by 1 market order. FKLI is an illiquid market with few participants, despite the 10,000+ contract traded today. This underlies the need for the DMA to put more market participants to add depth and liquidity. If Bursamalaysia can use the CMDF to fund the Investor Relations Association (which the errant directors of listed entities may see as legitimising the books cooking in public companies, since "we are members of the IR Association"), why not use the CMDF to fund this very important project DMA to add depth to this market and the equities market in the future? Who knows what the hierarchy at Bursamalaysia is thinking?

Wednesday, June 20, 2007

20070620 1715. Entry long was indicated at 1386, with the stop below the other breakout level 1380. With this sound risk management strategy, one would be able to withstand the 'heat' as the FKLI dropped to 1380.5, only to close 1392.

20070620 1045. The FKLI breakout range is 1380 and 1386 today. With appropriate risk management, let's see if the breakouts get the follow through momentum.

20070619 AMMB announced a RM3.70 per share privatisatin of AIGB. So our laggard stock pick of 207 is prematur0ely matured. In this day and age of cheap financing, so called value investing may sometimes be torpedoed by the big boys coming in and taking the 'value' stocks private. As such, the claims of value investing gurus may not hold true these days.

Tuesday, June 19, 2007

20070619 1715. FKLI June contract goes on to trade 1385.5 high, but settles at 1378. The long signal was one, for the 'not so greedy' traders. Greed in the end usually results in heartache and despair, evidenced from the lower close, moving the position from profit to loss.

20070619 1433. FKLI triggers a buy at 1380 after the lunch session break. Four candlesticks within a large 'thrust' candle, creates the resistance and support zone for the breakout trade.

Friday, June 15, 2007

20070615 1103. The JADE CPO futures after 1 hour of 'trading' shows jilo volume. They launch the contract without liquidity providers, like Bursamalaysia which has a valuable asset, its Local Participants, who make the market for the CPO futures. Bursa should cherish and maintain this valuable resource to maintain their market position. JADE think they can launch contracts in a vacuum, without Locals, the rebates and scratch trade concessions. At this stage, how they rue their decision.

Thursday, June 14, 2007

20070614 FKLI traded as high as 1358.5 this morning, a big gap in response to Dow rally >180 pts. This quote is poignant on how the market is behaving and is a good warning of the impending moves ahead:

"This is a classic demonstration of the market's continuing denial of risk," said Robert Brown, chief investment officer at Genworth Financial Asset Management, contending that while the economic news is generally favorable, investors aren't pricing in adequate amounts of risk. "It wants to ignore the negative news and focus solely on the positive."
from Yahoo Finance.

Tuesday, June 12, 2007

20070612 1800. FKLI has been range bound and tough for trading past couple days. Why? Because the action has been in the crude palm oil futures, which has crashed.... More civilized would be 'reversion to the mean'. But trade on Bursamalaysia suffers from a lack of participants, with people going to the markets where there is movement, like now from FKLI to FCPO. We need to expand the trader base via DMA. (Direct Market Access) Trade in the FKLI is also confined to finite same groups of players, with local institutions notably absent. DMA might open up the door to this segment of the market to add depth and liquidity to the futures market.

Saturday, June 09, 2007

Megan, Tansmile, corporate governance, regulators

First Transmile, now Megan Med, who is next? Crooks abound in the corporate world in malaysia, or just isolated incidents... SC or whichever regulator need to invoke the "RM1 m fine and/or 10 years jail" on individuals responsible, not just do 'special audit' then sweep under the carpet.

The era of the ETF (Exchange Trading Fund) for equities is upon us. The first one will be the FBM30 (FTSE Bursamalaysia 30 index) to be managed by Aminvestment. Few comments are in order here:
  • This should be good for the market, provided the local institutions and retail embrace the product and change the mindset from gambling on tips and rumours or insider trading.
  • FBM30 futures should be launched side by side. This is a logical extension, as the fund manager will be the natural hedgers.
  • The manager should learn from Barclays on how to make the market. This malyasian institution is terribly deficient in this area. Just look at the FKLI KL Composite Index Futures, the biggest local institutions are not in the market. Don't know why, maybe they are scared of beng wrong!

Friday, June 08, 2007

20070608 1715. FKLI closes 1334, near lows. The rebound before lunch session break had no legs, as it wasn't confirmed by OBV.

20070608 1610. A nothing move, only to 1341. Sideways after that. Will be some nervous longs going into weekend.

20070608 1154. FKLI breakout levels set up 1338 and 1334. Longs in play now.

20070608 1032. FKLI moves to low of 1333.5.

20070608 0921. FKLI makes big gap down to 1343.5. OBV volume on downside.

Wednesday, June 06, 2007

Currency as hedge for inevitable crash

There has been multiple euphoric episodes in equities that inevitably have led from boom to bust cycles, and when the downdraft comes, it is often difficult to find willing buyers for equities to get out. Dr Klaus Wellerschoff, Chief Economist of UBS Wealth Management recently went on an Asian tour and pointed out this interesting chart EUR/JPY cross currency rate versus Purchasing Power Parity of the Euro v Yen. There is a tendency of FX rates to revert to the mean of the PPP and overshoot to the other side after an extension. When and if world equities fall or correct, shorting the EURJPY will provide a 'hedge' for investors, is the argument.

20070606 1645. FKLI reaches high 1374 (good for the long at that time), but crashes down. Interesting to note how FKLI gravitated back to a thinly traded area in the morning.(1360.5 to 1361.5), It couldn't go roaring up without coming back and revisit this area.

JADE: How the scheme to make money failed

20070606 There has been a lot of hype by market participants on how JADE Crude Palm Oil futures will take off, take liquidity out of Bursa cPO futures contract, how their ecbot platform has 20000 terminals worldwide, they got clout of SGX/CBOT behind them etc etc. Right now this morning on the first day of launch of the USD CPO contract the volume traded is 70. 70? Pitiful.....

Why did they not take off? They lack people.... Specifically they lack a healthy population of locals to act as liquidity providers. JADE did try to woo the Bursa locals, but hey no scratch trade providions who wants to go? That is why Bursamalaysia has the upperhand because they have a valuable intangible asset: the Locals. Now that Bursamalaysia even waived the RM20,000 membership entrance fee and maintain the rebates and scratch trades providion, Bursa should be highly commended for their foresight and vision. Without people JADE contracts won't take off...

The next question is the foolhardiness to create another exchange JADE. Why not just launch contracts under the SGX brand? The answer is the boffins in CBOT and SGX thought they could creak and skim more profits from another vehicle, by selling servers, computers (front end), software etc. Bursa take heed..... make your money from clearing and trading fee.....not by charging arm and leg for servers and ocmputers.... DMA, go for FIX lah, don't start with stupid MNTP so you can sell each broker a couple of servers for RM100000.....

20070606 1209. Breakout levels 1368 and 1365. FKLI breaks to the upside now.

20070606 1209. Breakout levels 1368 and 1365. Broke out to the upside now.

Tuesday, June 05, 2007

20070605 1715. FKLI reaches high 1367 and settles at 1363.

20070605 1433. Gap up after lunch provides a good place to take partial profits for longs.

20070605 1226. A couple of breakout levels today on FKLI. Now on a long from 1354.5, corresponding stop/short at 1349.5.

20070604 The inevitable CRASH has come in the China stock markets. T he world has been anticipating this China stock market plunge, only the gamblers in China's two stock exchanges Shenzen and Shanghai were blinded by greed, one of the two enemies traders face in the markets. Now the punters get to know 'fear' the second enemy.

Monday, June 04, 2007

20070604 1715.Drawing trendlines will help define the right side of the trend to be on.

20070604 1443. Following the rules, the longs would be stopped at 1369, with shorts opened.

20070604 1230. This was an article in the Business Times online (4 June 2007), on the good corporate earnings reported thus far and how the 'outlook' was bright and rosy. With the cooking of the books of Transmile Bhd recently, we as investors have to ask the questions.
  • Do we believe the unbelievably good profits?
  • Was there any cooking of the books.
  • and the bigger question: Do we trust the numbers?
Rest assured, corporate worlds are littered with hanky panky and crooks (who cook the books) abound.

20070604 1159. FKLI breaks out at 1373.50, from the breakout levels 1373.5 and 1369.

20070604 0915. FKLI 5 min shows clear uptrend in place for a while now.

Friday, June 01, 2007

20070601 1715. FKLI goes on to close at the highs.

20070601 1245. The breakdown through 1349.5 would be stopped out. However, the reverse trade long at 1355, compensates.

20070601 1018. FKLI sets up breakout levels 1349.5 and 1355. Let's see what happens.

20070601 0941. The KLCI 60 min is now above the 89 ema, could be possibly the start of new uptrend. FKLI trades around 1352, a premium supports.

"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