Wednesday, May 4, 2011



On Monday’s close the KLCI was down by 3.48 points or 0.23% at 1531.47 on slightly lower volume of 1 billion shares traded. Decliners led advancers by 519 to 255 with 262 stocks unchanged.

1. The KLCI continued to drift downwards.

2. That is not a good sign as volume rose, suggesting that selling has increased.

3. For this market to stay bullish, IT MUST NOT FALL FURTHER, otherwise the moving averages are going to turn south and along goes investors confidence.

4. Moreover May has historically been a notoriously bad month for stocks and this did not go un-noticed by U.S. and European investors. Yahoo Finance was quoted as having said, “Surveys of 56 leading investment houses in the United States, Europe ex-UK, Japan and Britain showed exposure to stocks falling to 51.3 percent in the month from 52.6 percent in March.”

5. Noted Yahoo Finance, “Interviews with poll participants suggested a degree of concern has grown about the impact of a rising oil price on growth that may also be peaking." We're moving into seasonally weak conditions (for equities) with May and June here, and the macro story may be at risk if oil prices shoot to $130 per barrel or so. There are too many things that can go wrong," said Keith Wirtz, chief investment officer at U.S. firm Fifth Third Asset Management.

6. Many of our stocks which we called a “buy” a week or more ago have been declining since.

7. Stocks like Ramunia, Ramunia-Wa, Kbunai, Coastal, Cuscapi PMetal for example, which had a brief one day flutter on April 22, is now slumping back to its April 22 level.

8. This failed rally is worrying. If they fall further, we would consider cutting losses.

9. For Ramunia, the sell-stop is 0.63 or lower. For Ramunia-Wa, it is 0.41 or lower.

10. For PMetal it is a sell at 2.51 OL. For KBUNAI, it is a sell at 0.20 OL.

11. Having said that, there may still be a chance of a rebound, if there is no further selling today.

12. Stocks-to-watch for today are: GUANCHG, RHBCAP, AIRASIA, CUSCAPI.

13. News of Osama bin Laden’s killing drove the U.S dollar higher on Monday and triggered a sell-down on gold and crude oil appears to be temporary as the trend is bent on continuing with U.S dollar loving lower, and oil and gold higher.

14. As long as the Federal Reserve does not bite the bullet and raise interest rates to combat inflation and their burgeoning trade deficit of $1.5 trillion, the dollar will weaken further.

15. Investors should think of shifting out to world commodities to take advantage of this weak US dollar!

16. The ringgit weakened a little to 2.9730 from 2.9610.

17. We are not long because 1541 is not exceeded. We only re-enter above 1541.

CONCLUSION: The local index continues to languish in lacklustre trade yesterday. While the Dow

remains firm, Malaysian stocks drifted lower and the current political situation in Malaysia isn’t helping to shore up confidence amongst whatever is left of foreign investors keen on Malaysia. Our view therefore remains unchanged – i.e. we would stay out until the KLCI can rally above 1541 OH.

Upside Targets: 1550(hit)/1584/1652/1681/1760-64 (Revised targets on 5/1/11)

Immediate downside targets: 1473/1431/1410 (Revised on 11/2/11

Ichimoku chart: Span A SUPPORT: 1509 (Revised on 15/4/11)


Thursday, April 14, 2011



On Wednesday’s close the KLCI was up by 9.67 points or 0.63% at 1535.59 on low volume of 1.17 billion shares traded. Advancers led decliners by 610 to 204 with 265 stocks unchanged.

1. Yesterday we mentioned the possibility of a rebound if the Dow fell by double digits.

2. True enough our stocks were traded lower in the morning after Dow fell 117 points on Tuesday. But in afternoon trading, buyers returned and pushed many stocks that have plunged from last Thursday through to Monday and Tuesday to higher grounds (higher than Tuesday’s open or high.

3. At the end of yesterday, our KLCI had closed back above Tuesday’s low for a “piercing line” pattern. Some stocks like CIMB even closed above Tuesday’s high. DRBHCOM and FABER, VITROX had good turnarounds via “engulfing bullish” patterns. Some had “piercing line” patterns for e.g. KUB.

4. Because yesterday’s close was significantly bullish, there is a good chance buyers are still a force to be reckoned with and prices may not fall further. That is the good news.

5. As such, if you have stocks that have not hit your “stop losses” levels, do not exit yet.

6. The bad news will be if price rallies fizzled out today and price stop rising further but instead profit taking sets in again.

7. So how to you trade today?

8. If you are conservative, it would be prudent to “sell on rally” in the morning. This will be based on the technical view that our stocks cannot breach Monday’s high price (that was when most stocks sell-down started).

9. If you are aggressive, “hold” onto stocks as (1) many stocks and the KLCI are still abovetheir moving averages which suggests “bullishness” and RSI, MACD are still bullish. (2) You may even want to re-enter buy if you have been stopped out.

10. The aggressive trader would argue that a rally in the works from today till Monday as it expects the BN government to win at least a simple majority returning it to form the state government.

11. If KLCI rallies and close past 1541, then the aggressive traders would be right in their reasoning.

12. If you subscribe to the aggressive trader’s logic (which is backed by positive technicals anyway) then re-enter stocks that have been stopped out like KIMLUN, MAYBANK, TA, LINGUI, INCHKEN, MAHSING, PARAMOUNT, SAPCRES, TEBRAU, AIRASIA, FABER, GENTING, POS.

13. The ringgit strengthened to 3.0230 from 3.0260.

14. Tuesday’s long black candle’s gap would be viewed as close and exceed above 1541. Hence our call for a re-entry above 1541.

CONCLUSION: The local index rebounded strongly. We may be saved by this rebound. Mosttechnical indicators are still bullish. You could re-enter buy if you are aggressive, especially above 1541.