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CHART OF THE DAY(WEDNESDAY)4-MAY-2011

2011-05-04T12:49:00.003+08:00

STOCK MARKET OUTLOOK (For May 04, 2011): BE CAREFUL OF THIS NOTORIOUSLY WEAK MONTH OF MAY. CAUTION AND TIGHTEN STOP LOSS IS SUGGESTED.

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)

CHART OF THE DAY(THURSDAY)14-04-2011

2011-04-14T15:20:00.002+08:00

STOCK MARKET OUTLOOK (For Apr 14, 2011): CONSERVATIVE INVESTORS SHOULD SELL ON RALLY .IF STOCKS CONTINUE HIGHER & KLCI CLOSES ABOVE 1541, RE-ENTER LONG.

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.

CHART OF THE DAY(TUESDAY)30-NOV-10

2010-11-30T12:34:00.005+08:00

STOCK MARKET OUTLOOK (For Nov 30, 2010): KLCI REBOUND WELCOMED BUT MANY STOCKS STILL WEAK. ONLY SELECTIVE STOCKS CAN RALLY. BE SELECTIVE.

On Monday’s close the KLCI was up by 3.90 points or 0.26% at 1495.95 on slightly lower volume of 1.04billion shares traded. Decliners led advancers by 463 to 293 with 274 stocks unchanged.

1. U.S. stocks headed to a lower open Monday as concerns about the European debt crisis took the edge off a strong weekend of holiday sales. The National Retail Federation, a trade group, estimated that 212 million shoppers visited stores and websites during the first weekend of the holiday season, up from 195 million last year. Online spending also rose more than 14 percent from Thanksgiving Day through Saturday, according to IBM's Coremetrics. A fuller picture on spending will come Thursday when retailers report their November revenue.

2. Investors have been hoping that consumers, who have generally been spending cautiously since the recession, would feel more comfortable about shopping during the holidays. Many economists believe that consumers will have to spend more freely for the economy to put together a stronger recovery. Traders seemed pleased with the results initially, but it's too soon to tell if sales will remain strong through Christmas.

3. Ahead of the opening bell, Dow Jones industrial average futures are down 4, or 0.04 percent, at 11,026. Standard & Poor's 500 index futures are down 1, or 0.1 percent, at 1,182. Nasdaq 100 index futures are down 2, or 0.1 percent, at 2,144. (Source: Yahoo Finance).

4. Many Malaysian stocks closed on a weak note on Monday despite a rebound on the KLCI. But the bounce on the KLCI was nonetheless impressive because it opened on a weak note, came down 18.03 points to 1474.02 before a strong rally in the afternoon lifted the index back up to neutralize its losses to close up 3.90 points, at 1495.95. This is a pretty impressive turnaround of over 20 points!

5. As a result of this turnaround, the stock index futures contract is now trading at a premium of 2.5 points over cash. This premium suggests that stock players are bullish on stocks.

6. Be that as it may, we see only selective buying on the local bourse yesterday (but we were right on calling a buy on KNM and TWS yesterday!) Only some index stocks and selective lower liners are bullish. The majority are still lacking buying support. Hence buy signals coming from our technical studies remain isolated and few.

7. The ones we see capable of further buying today are: KEURO, TWS, KNM, KBUNAI, AIRASIA,

AIRASIA-CF, IJM-WC.

8. New stock to watch is KSTAR.

9. Moving averages are still positive on the KLCI and many lower liners but are reaching a marginal point where further falls would tip the moving averages into negative territory, till the market towards a bearish phase. Note an important trendline support is 1470 (see chart in excel attached).

10. The ringgit improved marginally to 3.1500 from 3.1525. We are ready to take profit on the ringgit by buying dollars and selling ringgits given the turnaround of the U.S. dollar.

CONCLUSION: The KLCI made a U-turn yesterday, and formed a “hammer” pattern. A hammer seen

after a market dip, is a signal of a possible market bottom. Look for further rebound today.

Upside Targets: 1534(nearly hit)/1681 (Revised targets on 08/11/10)

Immediate downside targets: 1480 (hit)/1445/1342/ (Revised on 16/11/10)

Ichimoku chart: Span A SUPPORT: 1416 (Revised on 16/11/10)

KNM: H/FURTHER BUY/INVERTED HEAD & SHOULDERS BOTTOM

KEURO: BUY/WEDGE BREAKOUT/TARGET 1.50

CHART OF THE DAY(Tuesday) 02- Nov.-2010

2010-11-02T15:38:00.005+08:00

STOCK MARKET OUTLOOK (For Nov 02, 2010): WHILE RIDING THIS BULL WE MUST BEWARE OF THE BEAR!

On Monday’s close the KLCI was up by 4.00 points or 0.27% at 1509.66 on higher volume of 1.27 billion shares traded. Decliners led advancers by 440 to 344 with 316 stocks unchanged.

1. U.S. stocks rose sharply Monday after reports showed growth in manufacturing activity accelerated in both the U.S. and China last month. The market was also getting a lift ahead of midterm elections and the Federal Reserve's meeting this week where the central bank is expected to announce a new economic stimulus program. The Dow Jones industrial average rose about 50 points in late morning trading. (Source: Yahoo Finance).
2. With expectations that the Dow can rebound to close at its year’s high last night, our KLCI should see further rebounds today.
3. As at yesterday’s close, the KLCI is edging closer to test its highest close of 1516.22 registered on 11/1/2008.
4. But what is not a welcome sign is that there were more decliners than gainers in yesterday’s activity. This is called “negative market breadth” and should deserve some caution as you try to make some money from the stock market!
5. When a market has negative market breadth, its rally is not running on two legs but one leg, hence it could be unsustainable. As such we should be cautious and sell on any sharp decline. While riding this bull we need to beware of the bear.
6. Still, we expect the KLCI to test its 2.618 times wave 1 target of 1534 before correcting.
7. At this level, the KLCI is at its second highest close EVER. The highest close was at 1516.22
clocked on 11/1/2008. The highest high registered by our KLCI was at 1524.69 on
14/1/2008.
8. We have never been so high (in terms of the main KLCI index) in our nation’s history. Not in 1994, not in 1997, not in 2000 nor in 2004. It was only in 2008 that saw our KLCI closed at 1516.22 – its highest close ever and yesterday we are just a hair’s breathe away from this record high!
9. At yesterday’s close of 1509.66, we are clocking at its second highest close ever. But we are cautious because the strong volume was clocked with more losers than gainers suggesting selling volume.
10. We need to see positive market breadth today accompanied by a rise in the index if this
market is to remain technically strong.
11. Not all stocks are being played up. Mostly it is the index linked and selective stocks from the finance, property, oil and gas and GLCs are being played up.
12. This weakness is very obvious as can be seen from the higher number of losers than gainers.
13. Stock picking is therefore the key to making money in this stock market bull run!
14. Our stocks to watch that are likely to run today are: DNP, GAB, GUANCHG, AFFIN*, AFG, AMMB, OSK*, RHBCAP*, APM, DRBHCOM, HWGB, GUOCO*, IJMLAND, INCHKEN, L&G*, SUNRISE,TEBRAU, DAYA, AFFIN-CA, AIRASIA-CF, IJMLAND-WA.
15. New stock is KFC.
16. GUOCO – take profit at target 1.48.
17. We like L&G, TEBRAU, AFFIN, RHBCAP, OSK, GUOCO.
18. Please check out our stock charts in Excel format before you invest.
19. The Ichimoku charts of the Dow as well as the rest of the world are up. Even Tokyo, which is amongst the world’s weakness bourse, is turning around with the close ABOVE clouds or “kumo”. As such we expect the Dow to be up.
20. We expect Dow to rebound to test 12500 (amended based on Wolfe wave). We are still long on Dow CFD or S & P 500 index futures.
21. The ringgit was slightly strengthened to 3.0900 from 3.1100. We are still long ringgit/short USD.
22. CONCLUSION: The KLCI is now at its second highest level in its history!!! Expect higher
highs! Buy. Look for test of 1534. Index linked stocks still can rally. Buy and take profit on
rally.
Upside Targets: 1534 (Revised targets on 02/09/10)
Immediate downside targets: 1224/1154/1094/1033 (Revised on 5/07/10)
Ichimoku chart: Span A SUPPORT: 1292 (Revised on 5/7/10)

KLCI: H/SELECTIVE BUY/EXPECT FURTHER RALLY

CHART OF THE THE DAY(August 16, 2010)

2010-08-16T15:56:00.003+08:00

STOCK MARKET OUTLOOK (For Aug 16, 2010): DOW COULD REVERSE ITS WEAKNESS WHICH CAN MEAN A TEST OF ITS WOLFE WAVE TARGET OF 11300 AFTER ALL. A REBOUND ON KLSE STOCKS IS IN THE CARDS. BUY.

On Friday’s close the KLCI was up by 10.82 points or 0.80% at 1360.15 on higher volume of 996 million shares traded. Advancers led decliners by 502 to 228 with 269 stocks unchanged.
1. The Dow fell by a whopping 265 points on Thursday but that did not shake Asian equity markets.
2. All Asian bourses were higher except for Hong Kong, Manila and Thailand.
3. This is a good instance of a decoupling of the Dow from Asian markets when it comes to the downside of the Dow and this augers well for the Asian markets.
4. Yesterday’s rebound on the KLCI was not unexpected as we had highlighted the possibility of the 1349 resistance turned support line holding the market up, and it sure did.
5. This unusually strong rebound on the KLCI of 10.82 points is indeed a breath of fresh air after experiencing the very often half hearted bounces from local stocks.
6. There was an up-gap yesterday on the KLCI and it seems quite apparent that a “morning doji star” has unfolded. This seen at a low price area where stochastic hooked up from the oversold zone is indeed foretelling of more rallies to come in the coming week.
7. Here are the stocks-to-watch for Monday: ZELAN, JERNEH*, LANDMARK, LIONIND, SCOMI, GENP, INCHKEN, SAPCRES, AXIATA*, DAYANG*, GENTING*.
8. New stocks to watch are: TWSCORP, JERNEH-WA.
9. In summary I am very pleased with the rebound yesterday and it is indeed a very important rebound because any further falls would mean a fall below its 1349 support. The strong volume clocked yesterday is also a strong indication of buying power.
10. As such we expect an uptrend from now.
11. Our view about the Dow is that it is still bullish and we see it hitting the Wolfe wave target of 11300. Here are the reasons: The Dow is AT the “clouds” at 10,420 suggesting it is still bullish, the Chikou span is above price, and last but not least the Dow is AT its 200-day SMA. But it is getting more bearish by the day and continuing weakness would put the Dow is jeopardy of a recovery. Be cautious.
12. We are still optimistic Dow can rebound to test 11400 (amended) and our KLCI hitting new 2.6 year highs of 1387 and 1408.
13. The ringgit strengthend to 3.1660 from 3.1825. We are now long ringgit/short USD.
14. CONCLUSION: The KLCI is still very much above the Ichimoku clouds and this means a buy signal on selective stocks. The DAX, Singapore index, Hang Seng index, Korea index are also above clouds while Dow is AT the clouds and Footsie, CAX, Australia are in the clouds. So it looks like the world’s markets are still bullish. If Wolfe wave target is right, then expect Dow to climb further to test 11300. But look
for stability yon the Dow and a rebound on Thursday because any further falls could change our view about the bullishness of the world’s markets!

CHART OF THE THE DAY(August 06, 2010)

2010-08-06T14:53:00.005+08:00

STOCK MARKET OUTLOOK (For Aug 06, 2010): OUR VIEW OF THE DOW HAS NOT CHANGED. WE SEE IT HITTING WOLFE WAVE TARGET OF 11300.

On Thursday’s close the KLCI was down by 0.66 points or 0.05% at 1364.82 on relatively lower volume of 993 million shares traded. Advancers led decliners by 362 to 349 with 276 stocks unchanged.
1. We had forecast “some strong rallies on selected stocks” in or newsletter yesterday.
2. True to form, TCHONG ranks as the 9th largest gaining stocks, up 0.14 to RM5.13. Can this go some more? We believe so. So is TCHONG-CA which rose by 0.045.
3. AIRASIA was another of our picks, which ranked 6th with a gain of 0.15 to RM1.65.
4. GENP ranked 4th highest gainer yesterday, up 0.20, at RM7.39 while BTEAD was the
5th largest gainer, up 0.15 to RM4.01.
5. TIMECOM, a stock which we had called a buy at 0.285, yesterday closed at 0.71 triggering our take profit target of 0.67. If TIMECOM today rise above 0.72, it’s a Re-enter BUY as the next target is expected at 0.82.
6. Much as the KLCI did not rally yesterday, lower liners were well supported and volume was not sacrificed.
7. The high volume suggests that big players are still in the market. They have not abandoned it yet.
8. Today we are expecting TIME to feature. It did not rise yesterday but is expected to do so today with a “flag breakout” pattern. Look at TIME – we call a “strong buy”.
9. HSL and TCHONG are also strong buys, especially HSL. The symmetrical triangle breakout patterns on HSL and TCHONG are significant.
10. CSCSTEEL is also a strong buy from a similar symmetrical triangle breakout pattern like HSL and TCHONG.
11. The overall stocks-to-watch for today are: HSL*, TCHONG*, CSCSTEEL, BTEAD, GENP, GENTING, MAS, SALCON, TIME*, TCHONG-CA.
12. So, much as the KLCI did not move, lower liners are steady. The KLCI is expected to rally soon.
13. Our view about the Dow is that it is bullish and we see it hitting the Wolfe wave target of 11300. Here are the reasons: The Dow has closed above the “clouds” suggesting long term bullishness, the Chikou span is above price, and last but not least the Dow closed above its 200-day SMA.
14. By now you should already be long on FKLI and Dow 30 CFD.
15. We see Dow 30 going up to a possible 11200-300 and our KLCI hitting new 2.6 year highs of
1387 and 1408.
16. The ringgit strengthened to 3.1560 from 3.1690. We are now long ringgit/short USD.
CONCLUSION: The KLCI is above the Ichimoku clouds and this means a buy signal on selective stocks. The DAX, Singapore index, Hang Seng index, Korea index are also above clouds while Dow, Footsie, CAX are in the clouds. So it looks like the world’s markets are recovering from their lows. If Wolfe wave target is right, then expect Dow to climb further to test 11300. Those that are still bearish on Dow please change your view or you will miss the U.S., Europe and Asian stock rally!

DJIA ICHOMOKU CHART: DOW COULD REBOUND TO TEST 11300/BUY DOW30 CFD

KLOFFE: MAINTAIN LONG/SELL STOP @ 1353 OL/TGT 1389/1452

CPO: BULLISH/WE EXPECT RALLIES TO TEST 2727/2799/2850

CHART OF THE THE DAY(July 21, 2010)

2010-07-21T10:00:00.003+08:00

STOCK MARKET OUTLOOK (For Jul 21, 2010): EXPECT KLCI AND SMALL CAP STOCKS TO RALLY FURTHER.

On Tuesday’s close the KLCI was up by 4.32 points or 0.32% at 1337.67 on higher volume of 1.12 billion
shares traded. Advancers led decliners by 466 to 278 with 250 stocks unchanged.
1. The local KLCI rose on strong volume.
2. This is technically a strong signal of a bullish market.
3. We expect both the KLCI and small cap stocks to feature in today’s rally as there is a “flag breakout” on strong volume no the KLCI.
4. Our stocks-to-watch are: IJM, KEURO*, MRCB, MUDAJYA, ZELAN, KKB, PELIKAN, PBBANK, RHBCAP, COASTAL, EVERGRN, SUPERMX, UEMLAND, GENTING*, KPJ, MEASAT*.
5. Watch out for KEURO, KKB which have a “wedge breakout” pattern and Genting has an “upgap” which indicate strength. The others have symmetrical triangle breakouts, which are
also strong continuation patterns.
6. I strongly suggest investors to re-enter our market.
7. Do not short KLCI stock index futures yet nor the Dow 30 CFD or futures. I don’t see it ready to fall yet.
8. Look for our KLCI to a hit new year high of 1352 and 1387.
9. I am still looking at the Dow pulling itself up to test a Wolfe wave target of 11135.
10. These lower targets of 1233-20/1154/1031 will just have to wait.
11. We are looking at 1352 and 1387.
12. The ringgit strengthened to 3.2100 from 3.2230.

CONCLUSION:The KLCI is still above the Ichimoku clouds and this means a buy signal on selective stocks even though our market fell yesterday. The DAX, Singapore index, are also above clouds and Hang Seng index
is AT the clouds. So it looks like the world’s markets are recovering from their lows. Watch out for the Dow to lead Asian markets this week. The fact that Asian stocks, especially Malaysian stocks did not fall in the face of
a 261 points drop in the Dow is a positive sign of de-coupling between Dow and Asian indices – at least for now!

Upside Targets: 1365/1418 (Revised targets on 21/06/10)
Immediate downside targets: 1224/1154/1094/1033 (Revised on 5/07/10)
Ichimoku chart: Span A SUPPORT: 1292 (Revised on 5/7/10)

DOW JONES CAN RALLY TO TEST 11135/ H & S FAILURE?

2010-07-13T11:55:00.000+08:00

STOCK MARKET OUTLOOK (For Jul 13, 2010): KLCI TESTED 1331 BUT FAILED TO EXCEED 1331 BUT THERE ARE BUYING ON LOWER LINERS

AS RETAIL INVESTORS SEEN ENTERING MARKET.

On Monday’s close the KLCI was up by 2.43 points or 0.18% at 1326.74 on lower volume of 610 million shares traded. Advancers led decliners by 371 to 265 with 277 stocks unchanged.
1. The KLCI went up to 1331 to test our resistance but closed below it, at 1326.74.
2. Let us see if it can re-test and exceed this resistance. If so, this market of ours is truly a unique one as it would be seen as having bucked the world’s trend – which is down.
3. Now with the Dow rally, all the more, investors, especially retail ones are embolden to take up positions.
4. We come to this conclusion that retail investors are nibbling because of the “steadiness” of lower liners. They seem to be garnering some support and refuse to drop further. For instance, TITAN, LIONIND, MEDIA, UNISEM, GTRONIC, GAMUDA, SUPERMX, TOPLGOV, PLS. TIMECOM.
5. There are even lower liners like XINQUAN that breakout of a consolidation to rally.
6. Unless the Dow makes a top and starts to U-turn down (which we are of the opinion), then it is possible that our KLCI and stocks can remain steady to higher.
7. But note that the 1331 resistance has to be exceeded.
8. Selective stocks can rally and our choice today is: 3A, AXIATA, AXIATA-CC.
9. These lower targets of 1233-20/1154/1031 can still be achieved in the near future.
10. The ringgit weakened to 3.2020 from 3.1980.
11. The KLCI’s down targets are 1224/1154/1033.
12. Up targets are 1335 and 1349.

CONCLUSION: Only the KLCI is above the Ichimoku clouds! The whole world’s (almost) indices like the DJIA, DAX, CAC, Singapore, Hang Seng Shanghai, Nikkei 225, Australia All Ords index are below Ichimoku charts. The world stock markets are weak indeed. With such pressure bearing down on Malaysia, we are doubtful if the KLCI can keep its level without succumbing to the world’s market crashing. It is a matter of time before our market corrects and sharply too. Observe the Dow closely. Any plunge below the neckline is a “short” for all indices.
Upside Targets: 1365/1418 (Revised targets on 21/06/10)
Immediate downside targets: 1224/1154/1094/1033 (Revised on 5/07/10)
Ichimoku chart: Span A SUPPORT: 1292 (Revised on 5/7/10)

CHART OF THE THE DAY(June 15, 2010)

2010-06-16T12:44:00.003+08:00

STOCK MARKET OUTLOOK: Look for 62% Fibonacci resistance at 1308

for KLCI but overall, world equity markets still viewed as technically weak.

On Monday’s close the KLCI was up by 2.49 points or 0.19% at 1297.16 on lower volume of 502 millionshares traded. Advancers led decliners by 302 to 242 with 269 stocks unchanged.
1. Stocks rose for a fifth day, U.S. index futures gained and commodities rallied on speculation government reports this week will show the global economic rebound is continuing. The yen weakened and bonds fell, according to Bloomberg.
2. The Dow was up 38 points to 10,211 last Friday and this rubbed off onto Asian stocks.
3. Yesterday all Asian equity market rose except for Australia.
4. With this continuous rally over the past six sessions, investors are now hopeful of a recovery of the U.S., Europe and Asian stocks in line with speculation of a global economic rebound.
5. Malaysian investors reacted positively to the Dow’s and Asian rally and situational stocks like FABER, KPJ, UNISEM, GENP, SPSETIA, GENP, MBSB faired pretty well and were amongst the top gainers for the day.
6. However, the volume did not reflect that buyers were aplenty. At best, I would say our gainers were propped up by some institutional funds whilst the lower liners are still struggling to stay afloat due to a lack of buyers.
7. Those of you who want to be participating in this short term rebound should be careful not to be overly bullish.
8. Our picks for today are: FABER and KPJ.
9. There are also BOUSTEAD, MBSB, MEDAINC and MTD but we are not picking them as the overall climate is still bearish as price is still below the Ichimoku clouds.
10. If you are short stock index futures, look to cut loss at 1310 OH as the 62% resistance is 1306.
11. The ringgit strengthened from 3.2500 from 3.2810.

CONCLUSION: The Dow, Hang Seng, Singapore and KLCI Ichimoku charts remain below the clouds suggesting that these markets are still in a bear phase. In spite of the rebound we saw yesterday, the indices are ALL below the clouds. My conclusion is, therefore, I am bearish and it is sell market since the 50%-62% rebound level was hit but be careful if you short index futures as buy-stop is at 1310 OH.

Upside Targets: 1283(hit), 1297 (hit)/1308 (Revised targets on 3/06/10)
Immediate downside targets: 1224-00/1154/1033 (Revised on 20/05/10)
Ichimoku chart: Span A resistance: 1288/92 (Revised on 2/03/10)

KLCI: STAY ASIDE: POSSIBLE CORRECTION/NO BUY SIGNAL

CHART OF THE THE DAY(June 07, 2010)

2010-06-07T11:00:00.004+08:00

STOCK MARKET OUTLOOK: : KLCI to gap down on what could be the second leg of the down trend. Market crashing. Do not touch Kenmark.

On Friday’s close the KLCI was down by 0.05 points or 0.00% at 1294.39 on lower volume of 674 million shares traded. Advancers led decliners by 313 to 275 with 277 stocks unchanged.
1. Ok there were more advancers than decliners on Friday trading. But we observed that volume was low which suggest that buyers were not strong.
2. Most importantly price remained stagnant on a small range day. A ‘doji’ candle was formed, suggesting “uncertainty”.
3. As well the KLCI stopped at the 50% resistance level of 1297 without closing above it. It closed at 1294.39.
4. All this suggests that the local market especially the KLCI, has hit a major resistance of 50% at 1297.
5. A “bear flag” can be drawn from recent activity. A bear flag spells of potential weakness. Any break and close below 1281 is a confirmed sell signal for the KLCI and stocks in general.
6. KEURO may succumb to the overall weakness of the market, hence we are raising stop loss to 0.80 or lower to exit. It may not hit 0.98 sen.
7. Last week, a little known stock called KENMARK made headlines with its sudden and sharp price plunge from 0.83 on 25/5 to 0.035 sen by 1/6 accompanied by huge selling volume that even exceeded its share capital of 181.7 million shares!
8. Then at about the lowest level of around 0.04 sen, One Datuk Ishak Ismail and company came in to mop up at least 32% of the shares between June 1 and 2 at firesale prices of between 0.035 and 0.06 sen!
9. To those of you who have studied the Wyckoff Method, this is a text book case of the Composite Man using the news media, and insider conniving strategies to cause public panic triggering all and sunder (including brokerages and banks who were holding Kenmark shares as collateral) to “dump” Kenmark shares at or near to its lowest point from 0.035 – 0.06.
10. And at about the lowest point, guess who came in to mop up the shares? The Composite Man! This Composite Man must be investigated by the Securities Commission, Bursa Malaysia and they must bring those responsible for this classical manipulation move used by the likes of Jesse Livermore since the 1900s to book. This is a long forgotten classical technique taught by Richard D. Wyckoff and it is now taught in a technical analysis course offered by the Open University Malaysia-IPD.
11. The authorities should have suspended this counter when it went limit down to 0.33 on 27/5/10 although on small volume of 1.5m shares. It should be suspended because 27/5/10 was a very bullish day when most counters went up. The KLCI was up 21 points to 1269. Why is Kenmark plunging on a bullish day? But Kenmark was not suspended till 31/5/10 but by that time it closed at 0.105 and 71.9 million shares changed hands. Obviously involved banks and brokerages houses were cutting losses as they read the headline news of Kenmark closing shop. That is another of the Composite Man’s fingerprint!
12. The authorities’ suspension on 31/5 was late but nevertheless was a correct decision.
13. But why did they lift the suspension so soon I am baffled. They lifted the suspension on 1/6/10 and allowed Kenmark to resume trading. By doing that it allowed the Composite Man to mop up more shares at firesale prices. Remember the buy on panic strategy?14. By June 1, 191m shares changed hands and price closed at 0.06 sen. By 2/6 it closed at 0.115 with 138m shares changing hands and by 4/6, Kenmark gapped up 0.09 sen to close at 0.26 sen with 101m shares changing hands. This means that the Composite Man would have made a cool floating or realized profit of at least RM11 million!
15. In my opinion, the authorities should NOT have lifted Kenmark’s suspension of 31/5/10 pending further investigations. Richard D. Wyckoff’s Composite Man Theory was at work then and still is at work if only people knew it.
16. My view is that the authorities should re-suspend this counter from Monday June 7 and do not allow the Composite Man to further their campaign till further investigations have been conducted to confirm there is no foul play, which I doubt. (For chart of Kenmark and the sequence of events, please see Excel spreadsheet). Otherwise a lot of investors are going to get hurt. Sad to say it is the banks and brokerages who are the ones who were hurt the most by this Composite Man!
17. Other than my view on the authorities handling of Kenmark’s price decline, there are no stocks to watch this Monday.
18. Instead I expect stocks to decline especially with the 300+ drop on the Dow on Friday.
19. The Ichimoku charts of the CAC, DAX, FTSE UK, DJIA, S&P 500, Nasdaq, Hang Seng, Australia, Shanghai, Singapore, KLCI charts continue to remain below the clouds, even with the recent rebounds, suggesting the markets are already in bearish mode. There may be a temporary rebound in the near term but soon or late a downtrend should resume. Be ready to short index futures.
20. The ringgit strengthened to 3.2630 from 3.2950.

CONCLUSION: The Dow, Hang Seng, Singapore and KLCI Ichimoku charts remain below the clouds suggesting that these markets are still in a bear phase. In spite of the rebound we saw yesterday, the indices are ALL below the clouds. My conclusion is, therefore, I am bearish and it is sell market since the 50%-62% rebound level was hit yesterday and short index futures.
Upside Targets: 1283(hit), 1297 (hit)/1308 (Revised targets on 3/06/10)
Immediate downside targets: 1224-00/1154/1033 (Revised on 20/05/10)
Ichimoku chart: Span A resistance: 1288/92 (Revised on 2/03/10)

KENMARK 15 MINUTE CHART: FROM 25/5/10 - 4/6/10
THE INVISIBLE HAND OF THE COMPOSITE MAN IN KENMARK!

CHART OF THE THE DAY(MAY 27, 2010)

2010-05-27T13:00:00.005+08:00

STOCK MARKET OUTLOOK: Expect a technical rebound today possibly to 1270/1285 but sell on rally as market has not bottomed yet.

On Wednesday’s close the KLCI was down by 1.19 points or 0.10% at 1248.94 on higher volume of 929 million shares traded. Advancers led decliners by 426 to 320 with 265 stocks unchanged.
1. Stocks rebounded, after yesterday’s slide drove the MSCI World Index to a nine-month low, and commodities rallied as gains in U.S. durable-goods orders and home sales added to evidence economic growth is improving, reported Bloomberg.
2. Asian markets rebounded yesterday also because of a recovery in the Dow, which closed lower by a mere 22 points to 10066 after an intra-day plunge of 292 points to test 9774 at one stage of the day. That rebound from 9774 to close back above the 10000 level triggered a gap-up in our KLCI by 6 points and 15 points for the futures market! We had expected the Hang Seng index’s drop of 682 points to cast a bearish tone on the Dow but the Dow recovered.
3. Following Dow’s rebound, Hong Kong was up 1.11%, Singapore up by 1.71%, Taiwan up 1.14%, Korea up 1.36%, Australia up 1.03%. It is only Malaysia that is down by 0.10%.
4. Our market traded within a tight range yesterday for both the cash market and futures, closing with a“bullish harami cross” for the KLCI futures and a slightly lower low for the KLCI.
5. As world stock markets are now oversold, I expect a technical rebound coming from the Dow, through to European indices to Asian indices. Even though the indices are below Ichimoku charts, they have fallen too much, and are due for technical rebounds.
6. Traders can do two things.
7. Aggressive traders can call for a “speculative buy” and “sell on rally” as prices rebound. Our KLCI may rebound back up to 1285 (38% Fib resistance) or 1309 (62% Fib resistance) But the 50% rebound resistance of 1297 may also be possible if 2008 repeats itself. Note from the KLCI 2008 chart (see excel spreadsheet) that we may be in a similar scenario as 2008, dropping sharply and then rebounding.
8. Many stocks are now considered technically oversold (where stochastic is below 20, RSI below 30 and CCI below -100).
9. Aggressive traders may like to pick up some stocks for a technical rebound that may last till 1285-1297-1309?
10. The stocks are: ZELAN, KKB, BURSA, CIMB, OSK, COASTAL, HIAPTEK, KINSTEL, AIRASIA*, KENCANA.
11. Conservative investors on the other hand MAY NOT WANT TO BUY YET.
12. This rebound of yesterday could well be short lived, and we see another fall today.
13. Any fall below 1247.35 on the KLCI and below 1240.5 in the May futures would mean further bearishness and re-entry of “shorts”.
14. The Ichimoku charts of the CAC, DAX, FTSE UK, DJIA, S&P 500, Nasdaq, Hang Seng, Australia, Shanghai, Singapore, KLCI charts continue to remain below the clouds, suggesting the markets are already in bearish mode. But a temporary rebound happen in the near term.
15. In short, we expect the Asian, Europe and U.S. markets to remain weak and we are sidelined as a result for now. We will not re-enter until the Malaysian stocks trigger buy signals based on our CBO 20-10 system.
16. The ringgit strengthened to 3.3170 from 3.3620.

CONCLUSION: The Asian markets rebounded after the Dow unfolded a long legged “doji” pattern the day before yesterday. Asian markets rebounded in line with the Dow. Asian markets are still taking the cue from Dow. Therefore traders will need to look at Dow’s close to get an indication of the Asian markets’ direction. Hong Kong’s index is also a good cue for Malaysian stocks and futures. It is important that Dow must not fall
below 9774 last night. If so, we can expect our market to fall further, and all the above analysis will be premature.!!! For our KLCI to rebound, Dow must stage a positive close on Wednesday.
Upside Targets: 1360/1436/1463/1524 (Revised targets on 5/3/10)
Immediate downside targets: 1224-00/1154/1033 (Revised on 20/05/10)
Ichimoku chart: Span A resistance: 1288/92 (Revised on 2/03/10)

THIS IS A 2008 CHART OF KLCI
ARE WE REPEATING 2008 REBOUND OF 50% (TO 1443) BEFORE ANOTHER FALL?

THIS IS A CURRENT CHART OF KLCI (2010)
WILL WE SEE A SIMILAR REBOUND LIKE 2008? OF SO, LOOK FOR 1297 AREA TO STOP ADVANCE

CHART OF THE DAY (MONDAY=17/05/2010)

2010-05-17T15:46:00.010+08:00

STock Market Outlook: Good for May 17,2010

STOCK MARKET OUTLOOK: KLCI beginning to show signs of jitters.
Possible weakness if Asian markets react to weak Dow on Friday.

On Friday’s close the KLCI was down by 7.62 points or 0.57% at 1339.30 on slightly lower volume of 682 million shares traded. Decliners led advancers by 371 to 293 with 260 stocks unchanged.

1. The Dow Went down 162 points on Friday to close at 10,620, while the UK Footsie index, French CAC and German DAX lost even more, between 3 to 4 %. 2. The reason behind this weakness is because of renewed concerns that Greece’s sovereign debt crisis will trigger a breakup of the European currency. 3. With the world’s equity indices all falling one after another, how long can our Malaysian index stand? 4. So far, our index has been very impressive. But like I said, no country is an island. 5. For now, our finance stocks like CIMB, PBBANK, MAYBANK, HLBANK, RHBCAP, and even AFFIN still managed to stay firm. 6. So are stocks like KKB, AXIATA, TM, TNB, etc. 7. So as long as their stops are not hit, these stocks remain a “hold”. 8. But lower liners and others that have “S.A.’ or “Stay Aside” in our “REC” column means that these stocks are not to be touched. 9. In short we are not calling a “buy” on Monday. 10. The lower KLCI even suggests that this could be the start of weakness for our KLCI. 11. But I must admit that our Malaysian KLCI is currently one of the strongest “bourse” in the world” as you can see that it is still above the “clouds”. 12. The Ichimoku charts of the CAC, DAX, FTSe UK and DJIA charts in the excel spreadsheet continue to remain below the clouds, suggesting the markets are already in bearish mode. 13. So in short, we expect the Asian, Europe and U.S. markets to remain weak and we are sidelined as a result for now. We will not re-enter until the Malaysian stocks trigger buy signals based on our CBO 20-10 system. 14. The ringgit strengthened to 3.1920 from 3.1980.
Ichimoku chart: Span A resistance: 1288/92 (Revised on 2/03/10)

KLCI: STAY ASIDE/GOING TO GET BEARISH/BUY @ 1350 OR HIGHER

DOW ICHIMOKU CHART: WEDGE BREAK DOWN / WEAK

HANG SENG INDEX ICHIMOKU CHART: BELOW CLOUDS/L/T WEAK

CHART OF THE DAY(TUESDAY APRIL 6, 2010)

2010-04-06T16:42:00.014+08:00

STOCK MARKET OUTLOOK: GOOD FOR APRIL 6, 2010

KLCI stocks stage powerful rally. Expect further rallies but take profiton rally and buy on dips as price get volatile.
On Monday’s close the KLCI was up by 5.81 points or 0.43% at 1341.75 on higher volume of 1.05 billion shares traded. Advancers led decliners by 403 to 322 with 289 stocks unchanged.
1. Syndicates are actively pushing stocks. Yes, banking stocks especially, and many GLC linked
companies, motor stocks, infrastructure stocks, and selective industrial stocks.
2. This is the bull run that is going to make you the money.
3. You should be feeling it already.
4. Notice your stocks are rising without much resistance.
5. This is one of the hallmarks of a bullish market. There just isn’t much sellers to trap you.
6. One stock is breaking out of a consolidation after another, only to fall back into a short consolidation and breaking out again. These short consolidations are known as “flags” or “pennants”. Some are “Triangles” but unmistakably they are continuation patterns that would lead to higher prices.
7. It is clear that this market is getting to move higher.
8. We have many stocks-to-watch today. They are: GAMUDA, JAKS, KKB*, PROTON, TCHONG*, AFFIN*, CIMB*, ECM, HLBANK*, OSK*, PBBANK*, RHBCAP*, TIMECOM, LMCEMENT, LIONIND*, SCOMI, WASEONG*, SUNCITY*, BJCORP, DAYANG*, FABER, PROTON-CB, TCHONG-CA, HLFG.
9. But of they stage a strong breakout, do take some profits, and buy back on dips (if they dip!).
10. Try not to buy in the early morning because they tend to correct back down by 10.30am. Buy either around 10.30anm or 3.30pm.
11. I don’t see much strong correction until they have moved to test 1397.
12. Expect more good rallies. This is the stretch to make money. You should be in the market by now. But remember to take profits.
13. The Ichimoku chart continues to stay bullish suggesting this market is going to go up.
14. The ringgit is strengthening against the dollar, which is why our stocks should be holding.
CONCLUSION: The KLCI is back up above 1300. There is a chance that KLCI can rally further. We are back in business as the KLCI is above 1308. Note the Ichimoku chart is still bullish.
Upside Targets: 1360/1436/1463/1524 (Revised targets on 5/3/10)
Immediate downside targets: 1300/1208/1136/1030 (Revised on 5/02/10)
Ichimoku chart: Span A resistance: 1288/92 (Revised on 2/03/10

KLCI: HOLD/FURTHER BUY/NEW HIGH SINCE 29/2/2008

GAMUDA: H/FURTHER BY/SYMMETRICAL TRIANGLE B.O.

HLBANK: H/STRONG BUY/ASCENDING TRIANGLE B.O./TGT 9.40/10.40

TIMECOM: ACCUMULATE: SYMMETRICAL TRIANGLE B.O./TGT 0.68/0.80

LIONIND: STRONG BUY/SYMMETRICAL TRIANGLE B.O./UP-GAP/TGT 2.19/2.65

CHART FOR THE DAY (March 8, 2010)

2010-03-08T14:58:00.005+08:00

PI DAILY COMMENTS FOR MONDAY, MARCH 08, 2010: KLCI has turned bullish with close above Ichimoku cloud of 1293. Turn long on KLCI and selective lower liners.

NEW STOCKS-TO-WATCH: D&O.
STOCKS WITH SELL SIGNALS: NIL.
STOCKS WITH TAKE PROFIT SIGNALS: NIL.
EXISTING STOCKS-TO-WATCH (Buy): MUDAJAYA, PROTON, MAYBANK, PBBANK*, RHBCAP, LIONIND, PARKSON, GENP, LBS, PJDEV, FABER.
HOW TO TRADE ON MONDAY (MAR 08 2010):
Aggressive trader Buy: D&O, MUDAJAYA, PROTON, MAYBANK, PBBANK*, RHBCAP, LIONIND, PARKSON, GENP, LBS, PJDEV, FABER.
Conservative trader: NIL.
LONG TERM INVESTOR: S.A./HOLD IF STOP LOSS NOT HIT/SELL IF STOP HIT!
STOCK MARKET OUTLOOK: KLCI has turned bullish with close above Ichimoku cloud of 1293. Turn long on KLCI and selective lower liners.

On Friday’s close the KLCI was up by 15.69 points or 1.22% at 1299.78 on higher volume of 941.6 million shares traded. Advancers led decliners by 547 to 194 with 236 stocks unchanged.

1. Our view is now changed to BULLISH for KLCI linked stocks and selected lower liners.
2. This is due to the change in the Ichimoku charts to predominantly bullish both for the short and the long term.
3. The longer term “chikou span” is now neutral but the shorter term tenkan-span is now greater than the “kijun-span”, which suggests short term bullishness. As well price is above the “kumo” or clouds.
4. Banking AND PROPERTY and selective Lion group stocks are strong.
5. They are MUDAJAYA, PROTON, MAYBANK, PBBANK*, RHBCAP, LIONIND, PARKSON, GENP, LBS, PJDEV, FABER.
6. New stock is D&O.
7. Moving average crossover (10-50 SMA) which is a reliable trend following indicator, has now triggered a buy signal. Turtles system has also triggered a buy, and the Ichimoku chart is BULLLISH.
8. Most if not all indicators are now pointing to a bull market.
9. As such Right now I am bullish about our market
10. The U.S dollar is strengthening and that is probably one of the reasons for the sell-off in stocks. Dollar is not expected to weaken as such be wary about stocks, commodities, etc all of which would react adversely to a rise in the dollar.

CONCLUSION: The KLCI is now LONG. Our market has reversed back to being BULLISH. Go long.

PROTON: H/FURTHER BUY/SYMMETRICAL TRIANGLE

MAYBNK: H/FURTHER BUY/TGT 8.00/9.45

CHART FOR THE DAY (26-01-2010)

2010-01-26T11:16:00.007+08:00

KLCI: HOLD/EXPECT REBOUND

PJDEV: AVERAGE BUY/ RESISTANCE TURNED SUPPORT

TALAM: H/FURTHER BUY.TGT 0.22/0.33

CHART FOR THE DAY(07-01-2010

2010-01-07T14:33:00.007+08:00

KLSE STOCK MARKET OUTLOOK FOR JANUARY-FEBRUARY

2010 based on a popular 3-year cycle.

We may be reliving a 3-year cycle. In Jan-Feb 2007, we saw a rally of 14.8%. We may see same these two months!

Written on 6-1-2010 (Valid for Jan-Feb 2010):

On Tuesday close (5/1/10) the KLCI was higher by 12.49 points or 0.98% at 1288.24 on relatively high volume of 1.86 billion shares traded. Advancers led decliners by 658 to 184 with 180 stocks unchanged.
1. If the first trading day of this decade started with a “bang”, then yesterday’s performance was the best we have seen since 2007.
2. This reminds me of the stock market’s 3-year cycle theory. What we saw yesterday, with “so many” buy signals (99 stocks to be precise) based on our CBO 20-10 system is “scary”.
3. Who would dare to buy today after such a bullish day yesterday? The typical reaction today is to expect a correction because 99 buy signals yesterday (or 658 advancers) is just too much for this market to continue rallying. Yes, many of us are not really used to it. In fact I don’t think the new traders amongst you have seen this type of bounce with so many buy signals. I ran a check on my daily “buy” signals records way back 4 years and I found out that it was only in 2007 that we witnessed that our market can sustain such high number of buy signals without “crashing”. In 2007 the highest number of buys (based on CBO 20-10 buy signals) was 366 before the market crashed in the next couple of days. The 366 stocks with buy signal day was 22 Feb 2007.
4. If history repeats itself, and this is a BIG “if”, then you can expect this “January-February” Effect to last from now till Feb 21, 2010 and again “if” history repeats itself, then we could experience a similar 14.8% gain (from 4/1/10’s close of 1275) and that would work out to test a new one-year high of 1463.
5. Ok, if the above confuses you, don’t worry; just take it that if history repeats itself we could be in for a powerful Jan-Feb rally to test a possible high of 1463 by Feb 21, 2010.
6. And if you believe this to be “possible”, then go and buy the stocks I mentioned herein today.
7. It seems “a lot” of stocks, but if I am correct, I believe this market today can absorb this kind of volumes and yet the number of “CBO buy” signals can still be sustained. It will come to a breaking point only at 366 or thereabouts.
8. Ok so the stocks-to-watch for today (Kindly subscribe to our Daily Newsletter @ PI Graduate Studies or call Dylen at 014-9237001/03-21455877
9. I suggest strongly that you go through the charts and pick the ones that are most comfortable to you based on your capital base that you have and the risk appetite that you can stand.
10. Good luck! Note that rubber manufacturing stocks are also experiencing super bull runs. Look into these stocks as well!
11. The long term Ichimoku chart is bullish as three out of three indicators from the Ichimoku charts (the Chikou span, Tenkan-Kijun-sen and kumo) have turned bullish.
12. For gold we have turned long at 1143.
13. The U.S dollar is weakening now and we are mostly selling dollars and buying foreign currencies. Thus a strong stocks market is expected with this weak dollar. We are turning long on GBP, EURO, AUD and NZD.
CONCLUSION: The KLCI has turned bullish once again. The KLCI has triggered a Turtle system
(conservative) buy signal at 1273.31. Short term (CBO 2-2) there is already a buy signal. Expect to see the KLCI move higher. Buy stock index futures. BUY GOLD FROM 1143. We see new KLCI target at 1463.
Upside Targets: 1305/1436/1463/1524 (Revised targets on 4/1/10)
Immediate downside targets: 1233/1200 (Revised on 19/11/09)
Ichimoku chart: Span B support: 1212 (Revised on 30/11/09)

KLCI IN 2007: WE MAY BE REPEATING JAN 2007 RALLY?

KLCI: PREDICTION THIS JAN - FEB 2010: MAY HIT 1463

IF WE REPEAT JAN-FEB 2007 RALLY

CHART OF THE DAY (21-12-09)

2009-12-21T11:33:00.005+08:00

LATEXX: BUY/ASCENDING TRIANGLE B.O./TGT 3.20/3.60

SUPERMX: BUY/ASCENDING TRIANGLE B.O./TGT 4.66/5.22

CHART OF THE DAY (05-11-09)

2009-11-05T14:19:00.003+08:00

CHART OF THE DAY

GOLD –Bullish – Buy. Target 1140-1158 and 1450

CHARTS OF THE DAY(03-11-09)

2009-11-03T11:38:00.006+08:00

TIMECOM: STRONG BUY/SYMMETRICAL TRIANGLE B.O

GKENT: H/F.B./TGT 10.7/1.20/FLAG B.O

3A: BUY/PENNANT B.O/TGT 2.08/2.30

CHART OF THE DAY (27-10-09)

2009-10-27T12:45:00.005+08:00

NEW STOCK

GPACKET: BUY/FLAG B.O./TGT 1.13

CHART OF THE DAY(13-10-09)

2009-10-13T09:46:00.002+08:00

LATEXX: H/FURTHER BUY/STBO

CHART OF THE DAY(12-10-09)

2009-10-12T11:58:00.002+08:00

PBBANK-CJ:STRONG BUY/UP-GAP/CHANNEL B.O.

We like this chart. This chart has broken out of an ascending triangle with an up-gap on strong volume suggesting strength. Target 0.90.

CHART OF THE DAY(29-09-2009)

2009-09-29T10:23:00.013+08:00

TA:F.B./T.P.R.@1.54

WE LIKE THIS CHART. IT STAGED A TRIANGLE BREAKOUT AND WE EXPECT A RALLY TO TEST AT LEAST 1.54.

Hedging Your Hedge-Fund Bet

2007-10-09T11:09:00.000+08:00

HEDGE FUNDS ARE SUSPICIOUSLY popular these days among financial cognoscenti. The Institute for Private Investors' survey of extremely wealthy investors indicated that about 80% have some investment in hedge funds and nearly a third have more than 25% of their assets in them. Private and public pension funds are increasing their stakes in hedge funds in the hopes of scoring double-digit returns on investments. This raises public policy concerns as poor performance will not affect just rich investors but also put employee pensions and taxpayers at risk.
Undoubtedly, some of the 8,219 hedge funds will produce excellent returns for the $1.2 trillion in assets entrusted. Yet it is almost certain that in aggregate, hedge fund returns will be disappointing. It just isn't possible for every manager -- like Lake Wobegon's children -- to be above average. Indeed, their proliferation suggests a much more interesting investment opportunity: selling hedge funds short.
Think like a hedge fund manager for a moment. Is it possible that large classes of these funds with similar strategies will actually beat the market, especially net of their hefty fees? If all the funds "exploit market inefficiencies," as they claim to, will there be enough inefficiencies to go around? Or will the enormous growth of the industry cannibalize those fleeting opportunities? Because of their size, number, leverage and active strategies, hedge funds now represent more than half of the trading in many markets. If they all make the same market bets, can anyone make money? And if they take opposing sides of the same trade, half are assured of losing. Either way, it will be very hard to add value and cover fees, commissions and other costs.
While this critique can also be applied to mutual funds and other active managers, the scale of fees and expenses incurred by hedge funds puts them in a category of their own. Because of their leverage and turnover, hedge funds' costs per unit of capital are many times those of mutual funds -- and so are their fees. Their performance fee structure is a "heads we win, tails we don't lose" proposition for the managers (at the investor's cost).
So, why do people still throw money at them? Largely because of wishful thinking and behavioral quirks. Most people recognize that stocks and bonds will not continue to produce the double-digit returns they have in the past three decades. However, some don't want to accept that those returns are unavailable anywhere. So, these people irrationally wish for a new type of investment - hedge funds - that can produce these kinds of gains. This is paradoxical, considering that the funds invest primarily in the very same securities that they are expected to outperform-namely stocks and bonds. Any individual investor may be right to think that his hedge funds -- like his children -- are exceptional. But, if everyone believes it, that's collective folly.
This folly persists because hedge funds benefit from several well-documented anomalies (more formally called cognitive biases) in the way people make decisions.
The first is the "winner's curse," named for the tendency of people to overbid in auctions (therefore the winner ultimately feels cursed). The hiring of hedge funds is like an auction. Investors are guessing at the future performance of these enterprises. Some guesses will be high, others low. Those most bullish about a fund's prospects will invest. The result is that each fund is valued by those who are most optimistic about its prospects.[drawing]
Overconfidence, the second peculiarity, aggravates this problem. In Nobel laureate Daniel Kahneman's words, decision-making involves a combination of "high confidence and low accuracy." Kahneman notes that "hindsight bias" worsens overconfidence. We do not learn from experience. Even when we get feedback such as investment returns, we tend to attribute the bad outcomes to luck or other people's failings and the good outcomes to skill.
A behavioral aberration called "base rate neglect" also contributes. The Lake Wobegon effect is real. Studies have found that almost all of us believe we are safer-than-average drivers. Similarly, all hedge-fund investors believe their fund is above average. When we make assessments, we tend to focus on the particulars of the situation and ignore the larger context. In assessing hedge funds, that means we put too much weight on the fund itself and not enough on the fact that these vehicles collectively fail to achieve returns that compensate for their very high fees.
Of course, there's another reason people overvalue hedge funds that is not a behavioral quirk. Millions (perhaps billions) of dollars are being spent convincing us that they are good investments. Much, much less is spent arguing the contrary. It would be unusual if this marketing did not affect our judgment.
What's a rational person to do? Not investing in hedge funds is a good start. But, ideally, you would like to invest less than zero -- in other words, to sell them short. While logical, this is difficult to do. But nothing is out of the reach of Wall Street financial engineers. One of their tools is called a "swap" -- a basic financial agreement between two parties. Jane, for example, could agree to pay Fred the return on a hedge fund in exchange for a payment from Fred of a short-term interest rate. Fred benefits if the hedge fund's returns are good while Jane benefits if returns are poor. Effectively, Jane has sold the hedge fund short.
Swaps could be an effective way for investors hankering to be part of hedge funds closed to new investors. In effect, they could bet on continued good returns from the fund while bearish investors would be happy to bet on faltering returns. Now, it must be mentioned that swaps entail significant risk and require very substantial capital. They should be engaged in only by very sophisticated investors. Of course, that is supposed to be true of hedge funds, too.
What would happen if investors could short hedge funds? Very likely, sellers would zero in on funds of hedge funds to sell short. They have two layers of fees, which reduces their performance. In addition, they diversify, which reduces the risk -- for both investing and shorting. Making this short interest visible would provide a valuable signal to investors currently funneling billions of dollars into these outfits.
Last month the European Central Bank cited hedge funds as a "major risk" to financial stability and further noted that the industry "warrants close monitoring despite the essential lack of any possible remedies." The Securities and Exchange Commission's effort to monitor them has been frustrated by a court ruling. While such monitoring is desirable, the ability to short hedge funds would also help maintain rationality. There have also been a number of frauds exposed recently. Short sellers have been effective in sniffing out fraud in other venues and could play a useful role here too.
The creation of a short interest in hedge funds would also offer a new opportunity: The funds could short each other, and new entrants could spring up to short all the existing players. It's just the sort of game hedge funds love to play.
JONATHAN REISS, former head trader in international bonds for Sanford C. Bernstein & Co., is founder of Analytical Synthesis, a research firm focused on financial innovations in the public interest. He says he is both a safer-than-average driver and a better-than-average investor.

Trading Lessons from Leonardo Da Vinci

2007-09-26T11:11:00.000+08:00

A good read that adapts Leonardo Da Vinci precepts to trading.

Article source : http://www.michaelcovel.com/archives/cat_systems_trading.html

A Matter of Perception

2007-09-26T10:36:00.000+08:00

May 17th 2007
From The Economist print edition
Averages need to be treated with caution

CONSIDER these two statements: the American stockmarket was overvalued in 2000; company profits are high relative to economic output. Many people would agree with both propositions, but implicit in each is that there is a correct, or normal, value for shares or profits. The corollary is that when share price or profits are too high or too low, they will eventually revert to the mean. But what do people mean by mean? Efficient-market theory, which states that prices already reflect all available information, presents an immediate problem for the idea of a reversion to the mean. If share prices were obviously too high, investors would sell their holdings until prices fell to the correct level. There would be no extremes to revert from. However, in the light of the dotcom bubble, it seems inherently unsatisfying to argue that markets are always fairly valued. Such a position also gives a green light to those who argue that “it's different this time”, and who use any old valuation measure (price per eyeball for internet stocks) to justify share prices. Pinning down the right mean, however, is difficult. American profits look high by the standards of the past 20 to 30 years. But they do not look unreasonable relative to 1950s and 1960s levels. Perhaps the 1970s and 1980s (which saw high inflation and double-digit interest rates) were the aberration and the immediate post-war era was the norm. Things get even more complicated when investors start to talk about stockmarket valuations. Most analysts tend to use the prospective price-earnings ratio as their chosen measure, rather than the historic figure. They justify this by saying that investors look forward, not back. But banks are in the business of selling shares. Since analysts nearly always forecast rising profits, the prospective p/e ratio is usually lower than the historic one; that makes the market sound cheaper.

Finding "cheaper" is not the objective. Buying and selling to a profit is the objective.

Article source : http://www.michaelcovel.com/archives/cat_trading_101.html

YouTube Michael Covel Clip

2007-08-14T10:05:00.000+08:00

Here is a Micheal Covel video on trend following.

Article source : http://www.michealcovel.com/archives/2007_07.html

Micheal Covel YouTube Videos!

2007-08-07T11:37:00.000+08:00

View some great videos by author Micheal Covel about great traders and hedge funds :
http://www.youtube.com/profile?user=TrendFollowing

Micheal Covel's first book was 'Trend Following'(Pearson, April '04)and his second book is 'The Complete TurtleTrader' (HarperCollins, October 2007).

A View On Trend Following

2007-08-07T11:34:00.000+08:00

This is an interesting exchange about trend following trading.

Article source : http://www.michaelcovel.com/archives/2007_02.html

Do you have passion for what you do?

2007-07-31T10:24:00.000+08:00

A nice article by Carmine Gallo, for a little motivation...

It's not every day you get the chance to pick the brain of a man whose real-life rags-to-riches story was turned into a Hollywood movie starring one of America's top actors. But the other day I had the opportunity to spend time with Chris Gardner, subject of the 2006 movie The Pursuit of Happyness, in which Gardner was played by Will Smith.

... I have spent the last several years interviewing inspiring leaders, and I can say without hesitation that passion is the No. 1 quality that sets them apart...

Article source : http://biz.yahoo.com/bizwk/070724/jul2007sb20070723608918.html?.v=1&.pf=career-work&printer=1

Keep It Simple

2007-07-31T10:12:00.000+08:00

Sometimes, with all the noise, all the complexity, all the trading rules...simple is where it is at. Jeffrey Strain recently listed 5 ways on Yahoo Finance where patience can help you achieve wealth. Sure, some of it is the standard issue stuff we all should know, but his points are good reminders.

1. It helps forgo instant gratification: Being patient allows you to wait until you have the money to purchase the things that you want. But it's not easy to show patience in a society where instant gratification is advertised as being the norm and credit is easy to obtain. If you aren't patient, however, it means that you will likely use a credit card to pay for things you don't have the money to pay for. This is how people get into credit card debt, which will deteriorate savings and hinder your ability to become wealthy.

2. It helps you save: Part of being able to save 10% of your take-home pay is making sure that you spend your money wisely. Having the patience to wait until a product's price comes down will go a long way toward helping you build wealth. People who have to have the latest gadgets the instant that they appear end up paying a premium. When the technology becomes more mainstream, its price becomes more reasonable. Having the patience to wait before you buy often is the difference between having 10% to invest and not having it.

3. Patience helps avoid "get rich quick" schemes: Whether it is the lottery or some hot stock pick, the urge to try to get rich quick is glorified in the media. The problem is, most people who are rich don't get there the quick way. Most have built their wealth over time. While the media glamorizes the few who do get rich quick, most people who try that route don't end up wealthy.

4. It helps you stay on your wealth-building plan: Wealth doesn't usually appear instantly and doesn't present itself unexpectedly. It usually takes a well-thought-out plan over a long period of time. Taking the time to build a solid plan and then sticking to it will ensure that you have a much greater chance of creating and keeping your wealth than if you try to make your fortune instantly.

5. Patience helps you look long term: Even if you create a solid wealth-building plan, there will still be bumps in the road. When these bumps occur, it's important that you have the patience to stick to your plan instead of panicking. If you end up abandoning your plan at the first sign of trouble, you will likely end up much less wealthy than if you have the patience to stick to your plan the entire time. Stocks fluctuate over short periods of time, but they usually go up over a long period of time. It's important to take a patient, long-term view in wealth creation.

Article source : http://www.michaelcovel.com/archives/cat_psychology.html

Negatively Skewed Trading Strategies

2007-07-31T09:39:00.000+08:00

An article titled Negatively Skewed Trading Strategies (PDF) by Glyn A. Holton is definitely worth reading.

Article source : http://www.michaelcovel.com/archives/cat_trading_101.html

Trading as a business

2007-07-17T09:40:00.000+08:00

Charlie Wright of Fall River Capital offers some pearls of wisdom about trading as a business:

"Thinking of trading as a business has helped me enormously as a trader. It puts everything into perspective and helps me deal with my own psychological difficulties with trading execution. Once I stopped viewing trading as speculation, my trading improved. Once I realized that I was not going to get rich quick, that trading was not easy money, my trading improved. Once I realized that almost no businesses are successful overnight, my trading improved. Once I realized that I had to make an investment in the business, both in terms of my own education and in equipment and working capital, my trading improved. One concept that is commonly taught in business schools is that of 'barriers to entry.' This is a very simple concept that has important ramifications as you consider trading as a business. The basic principle is that the higher the barriers to entry in a business, the higher the investment to establish market share but ultimately the higher the margins and profits. A good example is the beer business. Controlled by several large breweries, it would be financially very difficult to start up a new brewery and acquire significant market share. When Phillip Morris bought Miller, they spent over a billion dollars to acquire the business and do the advertising and promotion necessary to obtain market share. But Miller was successful, and when they achieved the share of market they wanted, the profits were outstanding. The reverse is also true. If an industry has low barriers to entry, and there is a relatively small up front investment, there is much competition for profits and lower margins. This is the case for many service businesses, real estate brokers, securities brokers, cleaning services, etc. Restaurants are also a relatively low investment business. All you need is some decent space for tables and some cooking equipment and you are in business. However, the competition for customers is intense and thus the margins are low. There is no good or bad when analyzing barriers to entry for a particular industry. If the investment is low, the stress comes from being smarter and superior than everyone else at making money. If the barriers are high, the stress comes from taking the large financial risk and the uncertainty of obtaining the target market share. Either way, the business is always difficult. Trading is a low barrier business. You basically need a computer, a broker, and a modest amount of capital and you are in business. But because of the low barriers to entry, the competition for profits is very high. There is no such thing as gaining market share. Many people wrongly conclude that low barrier businesses are easy to start and trading is no exception. Many new traders think that trading will be easy and they will get rich quick. Experienced traders know that this will not happen. Trading is as difficult as any business I have ever been involved in. The main point to remember is that trading is a business with low barriers to entry. This means that the competition for profits is very high and you will have to be smarter, more disciplined or more creative than the majority to make money."

Article source : http://www.michaelcovel.com/archives/cat_trading_101.html

Technical Analysis Definitions

2007-07-17T09:24:00.000+08:00

Micheal Covel wrote on the definition of technical analysis :

A definition of technical analysis seen recently:

"Technical analysis uses deviations from the efficient market hypothesis to make best guesses about future movements in the financial markets."

I have a different take in my book:

Now here is where the understanding of technical analysis gets tricky. There are essentially two forms of technical analysis. One form is based on an ability to "read" charts and use "indicators" to divine the market direction. These so-called technical traders use methods designed to attempt to predict a market direction. Here is a great example of the predictive view of technical analysis: "I often hear people swear they make money with technical analysis. Do they really? The answer, of course, is that they do. People make money using all sorts of strategies, including some involving tea leaves and sunspots. The real question is: Do they make more money than they would investing in a blind index fund that mimics the performance of the market as a whole? Most academic financial experts believe in some form of the random-walk theory and consider technical analysis almost indistinguishable from a pseudoscience whose predictions are either worthless or, at best, so barely discernably better than chance as to be unexploitable because of transaction costs." This is the view of technical analysis held by the majority—that it is some form of superstition, like astrology. Technical prediction is the only application of technical analysis that the majority of Wall Streeters are aware of as evidenced by equity research from Credit Suisse First Boston: "The question of whether technical analysis works has been a topic of contention for over three decades. Can past prices forecast future performance?" However there is another type of technical analysis that neither predicts nor forecasts. This type is based on price. Trend followers form the group of technical traders that use this type of analysis. Instead of trying to predict a market direction, their strategy is to react to the market’s movements whenever they occur. Trend followers respond to what has happened rather than anticipating what will happen. They strive to keep their strategies based on statistically validated trading rules. This enables them to focus on the market and not get emotionally involved.

Article source : http://www.michaelcovel.com/archives/cat_trading_101.html

Top 10 Ways To Lose All The Money In Your Trading Account In 30 Days Or Less - Guaranteed!

2007-07-10T09:40:00.000+08:00

I came across the list below from 'Craig' here. It is a great list:

#10 - Put all of your efforts into finding the perfect technical indicator. Once you find this magical indicator, it will be like turning on a water faucet. Go all in. The money will just flow into your account!

#9 - When your technical indicator says that the stock is oversold, BUY IT RIGHT THEN. Always do what your technical indicator says to do. It takes precedence over price action.

#8 - Make sure to visit a lot of stock trading forums and ask them for hot stock tips. Also, ask all your friends and family for stock tips. They are usually right, and acting on these tips can make you very rich.

#7 - Watch what other traders do and be sure to follow the crowd. After all, they have been trading a lot longer than you so naturally they are smarter.

#6 - Pay very close attention to the fundamentals of a company. You MUST know the P/E ratio, book value, profit margins, etc. Once you find a "good company", consider going on margin to pay for shares in their stock.

#5 - Forget about developing a trading plan. If you see a good stock just buy it. Don't worry about when your going to sell. No need to get caught up in the details. Besides, you'll probably get rich the first year of trading anyway.

#4 - Buy expensive computers and trading software. While your at it, buy a couple more TV's so that you can watch CNBC on multiple screens! You NEED all of these gadgets in order to trade stocks successfully. Then watch the money roll in!

#3 - Always follow your emotions. They are there for a reason. If you feel nervous, sell the stock! If you are excited, buy more shares. This is the best way to trade stocks and fatten up your trading account.

#2 - Don't worry about using stop loss orders. When the time comes, you will be able to sell your shares and take a loss. Your emotions won't even come into play. Besides, stop loss orders are for sissies!

#1 - Absolutely, without a doubt, FORGET about managing your money. Don't worry about how much you can lose on a trade. Only think about how much loot your gonna make. Then start planning that trip to Fiji

Article source : http://www.michaelcovel.com/archives/cat_trading_101.html

The Ten Trading Commandments!

2007-07-10T09:23:00.000+08:00

One man's Ten Commandments (PDF). An excerpt:

"Discipline trumps conviction. No matter how strongly you feel on a given position, you must defer to the principles of discipline when trading. Always try to define your risk and, above all, never believe that you're smarter than the market."

Article source : http://www.michaelcovel.com/archives/cat_trading_101.html

Introduction To Trend Following Trading

2007-07-03T12:29:00.000+08:00

The best tour of Trend Following trading you can find is the book Trend Following. However, even if you have not yet had a chance to read it, continue reading below to learn more about this still relatively unknown style of trading. What is Trend Following trading? A good definition:

Let's break down the term Trend Following into its components. The first part is "trend". Every trader needs a trend to make money. If you think about it, no matter what the technique, if there is not a trend after you buy, then you will not be able to sell at higher prices..."Following" is the next part of the term. We use this word because trend followers always wait for the trend to shift first, then "follow" it.

Trend Following (and the Turtle trading system) is reactive and systematic by nature. Trend Following does not forecast or predict markets or price levels. Prediction is impossible!

Trend Following demands that you have strong self-discipline to follow precise rules. It involves a risk management system that uses current market price, equity level in an account and current market volatility. Trend Followers use an initial risk rule that determines your position size at the time of entry. This means you know exactly how much to buy or sell based on how much money you have. Changes in price may lead to a gradual reduction or increase of your initial trade. On the other hand, adverse price movements may lead to an exit for your entire trade. Historically, Trend Following trader's average profit per trade is significantly higher than the average loss per trade.

Trend Following is not a Holy Grail. It is not some passing fad or hyped-up secret black box either. Beyond the mere rules, the human element is core to the strategy. It takes discipline and emotional control to stick with Trend Following through the inevitable market ups and downs. Keep in mind though, Trend Followers expect ups and downs. They are planned for in advance.

What must all trend followers consider?

Price: One of the first rules of Trend Following is that price is the main concern. If a market is at 60 and goes to 58, 57, 53 - the market is in a down trend. Despite what every technical indicator might predict, if the trend is down, stay with the trend. Indicators showing where price will go next or what it should be doing are useless. A trader need only be concerned with what the market is doing, not what the market might do. The price tells you what the market is doing.
Money Management: The most critical factor of Trend Following is not the timing of the trade or the indicator, but rather the determination of how much to trade over the course of the trend.

Risk Control: Trend Following is grounded in a system of risk control and money management. The math is straightforward and easy to learn. During periods of higher market volatility, your trading size is reduced. During losing periods, positions are reduced and trade size is cut back. The main objective is to preserve capital until more favorable price trends reappear. Cutting losses is the way to stay in the game.

Rules Rule: Trend Following should be systematic. Price and time are pivotal at all times. Trend Following is not based on an analysis of fundamental supply or demand factors. Trend Following does NOT involve seasonals, point and figure, Market Profile, triangles or day trading.

Trend Following answers these critical questions:

1. How and when to enter the market.
2. How many contracts or shares to trade at any time.
3. How much money to risk on each trade.
4. How to exit the trade if it becomes unprofitable.
5. How to exit the trade if it becomes profitable.

Conclusions

If you want in-and-out day trading, we can't help. Good Trend Following systems (including the Turtle trading system) average five or six trades per market per year. What do you need to get started?

An active mind, willingness to learn and passion to win.
No knowledge of what an Italian bond is worth or what companies comprise the S&P or FTSE index. The key is the price on the chart.
Discipline and common sense to do the right thing per all rules.
About an hour each day at the end of the day to check trades.
A PC and telephone line (or internet connection).

Trading is a zero-sum game. For every winner, there is a loser. What's the difference between winners and losers? Smarts and strategy. For every loser in the NASDAQ implosion there was a winner. Does this mean that there are traders with neither strategy nor smarts actively losing, effectively shifting their funds to the winners, armed with strategy and smarts? Yes, absolutely.

Article source : http://www.turtletrader.com/it.html

Wonder what makes a professional trader?

2007-07-03T12:23:00.000+08:00

Brett Steenbarger writes on his blog about what makes a professional trader. Nice article. Below is the complete article :

Here are a few observations that have hit me between the eyes over the past several days:

1) Many of the best traders follow and trade a variety of markets. They go where the opportunity is. When volatility dries up in one market, they have others to turn to. The small, neophyte retail trader often becomes pigeonholed in one market and overtrades it, desperate to turn a small account into a larger one. The professional trader may have a top-down or bottom-up perspective on markets (developing ideas from big economic trends or from individual company and sector results), but they have a framework for how to think about markets. Inexperienced traders lack such a framework.

2) Many of the best traders think big--as in big picture. Because they follow multiple markets, they are aware of the relationships among these markets. This enables them to develop trade ideas that connect one market to another, capitalizing on big picture themes. Knowing how interest rate differentials around the world affect capital flows is an obvious example of that. Another example is knowing how one asset is priced relative to others to capitalize on mispricing. The novice trader trades small patterns, losing sight of the context in which those patterns occur. They lack a framework for thinking about proper and improper pricing.

3) All of the best trading firms have risk managers. They stay on top of how individual traders (and the firm as a whole) are performing. They help traders adjust their position sizes to fit their portfolio needs, and they help traders during drawdown periods. It is very difficult for individual, solo traders to fill this role for themselves. The excellent traders spend significant time and effort on risk management: they know how much they want to gain and put at risk in each trade. Small traders tend to put a far larger portion of their capital at risk with each trade than large, professional traders.

4) Many of the best traders think small--as in very reasonable profit goals. This is very interesting. I never hear the pros talking about tripling their money in a year. It's the small traders, feeling a desperate need for a kill in order to make a living, who take those kind of risks. Many of the best traders I know focus on consistency and favorable risk-adjusted returns. I essentially never hear small, retail traders focus on risk-adjusted returns. I don't think I've ever met a retail trader who knows what his or her Sharpe Ratio is, for example. I don't think most newer traders could even explain the concept of VAR.

5) Many of the best traders use psychology to amplify strengths. This is one thing that a majority of "trading coaches" don't get. They are so accustomed to working with small, retail traders that their vision becomes limited to the kinds of problems that beginners have. On average, if a person lacks discipline, emotional control, etc., they don't get hired at a good firm. The best traders do experience drawdowns, but they work on themselves to identify and build strengths, not to develop simplistic "trading plans". A great deal of what's out there labeled as "trading psychology" could be relabeled as the psychology of the beginning trader. It's not that it's useless; it's that it doesn't speak to the seasoned professional. To the extent that trading shrinks emphasize positive thinking as the key to trading success, they don't understand trading--and what it takes to generate alpha--at all.

Ultimately, whether one is a professional or an amateur is a function of their approach to their work, not their setting. It is, of course, easier to live up to professionalism when you're surrounded by professionals. The best traders I know spend significant time generating trade ideas, researching markets, and staying on top of developments world wide. The ratio of time spent in preparation to time spent actually in trading has, in my experience, been a worthwhile measure of a trader's professionalism--regardless of setting. The best traders, like the best athletes, are always working on themselves, always refining what they do. In an important sense, they don't just use psychology to improve their performance. They work on their performance as a means of extending their personal mastery.

A small trader can approach his or her craft professionally. There are few models, however, for such professionalism--particularly when many of the "gurus" themselves do not begin to approximate what the pros are doing.

Article source : http://traderfeed.blogspot.com/2007/05/what-makes-professional-trader.html

Taking a loss!

2007-07-03T12:20:00.000+08:00

From Trader Daily:

The most common reason traders are reluctant to take a loss is their fear that once they do, the trade will rebound. Sound familiar? If this is how you think about taking losses, try to recognize that this kind of thinking might well prevent you from reaching your potential. It might even destroy your career. So stop trying to be right all the time - trading is a game of probabilities, which means winning and losing are necessary components. No one gives a bonus check to the trader who was 'right' the most over the course of the year. To coin a phrase, wrong happens. Great traders know how to implement damage control and are willing to take a loss. Are they scared and hesitant? Of course, but that doesn't prevent them from doing what they need to do to stay in the game. If George Washington hadn't decided to abort the Battle of Brooklyn and cede Manhattan to the British at the start of the Revolutionary War, for example, we'd all be eating 'crisps' and watching the 'telly' right now. He took a loss - but lived to fight on. That's what true champions must sometimes do. A client of mine - I'll call him Aaron - is a bond trader at a major bank. He was earning seven figures annually but envisioned taking his game to another level. During our first meeting, Aaron showed me his numbers, proudly pointing out that he was winning a healthy 81 percent of his trades. He rambled on, saying that his number was the highest in his group and telling me his managers had asked him to train other traders to be as 'consistent as I am.' I looked Aaron straight in the eye. 'Was your performance bonus based on your winning percentage?' I asked him. He paused. 'No,' he replied. 'Exactly my point,' I told him. Put simply, Aaron needed to stop obsessing about being right and start focusing on making money. Several follow-up meetings made it clear that he was taking his winners quickly and holding his losers way too long, even adding to them in some cases. I challenged him to think about what might be triggering this tendency. 'The trade can always come back,' he told me. 'Maybe I'm just not giving it enough time.' That's not an answer; it's a rationalization. 'Come on,' I told him. 'You're either a control freak or a perfectionist, but you always seem to have to be right. And this is limiting your ability to reach your potential.' Aaron, I was discovering, was afraid to admit when he was wrong. So I presented him with a simple formula to help him get out of his own way: H + W + P = E. Hoping + Wishing + Praying = Exit the trade now!

Doug Hirschhorn, a former Division I baseball player and commodities trader, has a Ph.D. in sport psychology. He is the coauthor of The Trading Athlete and has served as trading coach for Deutsche Bank, Schonfeld Securities and Balyasny Asset Management. He is currently a consultant for financial institutions, trading firms and hedge funds. E-mail him at headcoach@tradermonthly.com.

Article source : http://www.michaelcovel.com/archives/cat_trading_101.html

The Da Vinci Code : Application To Stocks, Futures & Currency Market

2007-06-29T16:14:00.000+08:00

WHAT'S THE CONNECTION BETWEEN THE STOCK, FUTURES & CURRENCY MARKET, WITH THE DA VINCI CODE?

This book attempts to show the application of the Da Vinci Code to financial markets by relating some interesting questions to the contents of Dan Brown's famous book, namely :

1. What has a stock, futures or currency's market's movement in common with the way Sauniere's body was found inside the Louvre - naked and posed like Leornardo Da Vinci's famous drawing, the Vitruvian Man, with a cryptic message written beside his body and a Pentagram drawn on his stomach in his own blood?

2. What has a stock, futures or currency market's movement in common with Leonardo's famous works, including the Mona Lisa and The Last Supper which Sauniere had an obsession with?

3. What has a stock, futures or currency's market's movement in common with the following cryptic numeric and two anagrams scribbled onto the parquet floor with a black-light pen by the dying-curator?

13-3-2-21-1-1-8-5

O, Draconian Devil!

Oh, lame saint!

For more info, visit http://www.picapital.com.my/

Kuala Lumpur Crude Palm Oil Futures : Forecast for the day, 29th June 2007 !

2007-06-29T11:33:00.000+08:00

Kuala Lumpur Crude palm oil futures: Stopped out/S.A.

SEPT CPO futures closed higher by RM49 at 2383 on relatively high volume of 6,956 lots.

1. We were stopped out of CPO yesterday at 2364.

2. Yesterday we had called to go long if 2364 is touched.

3. We are going long because the stochastic is on buy signal from near an oversold area.

4. Also, price has move up above the lower Bollinger band.

5. But strictly speaking, we should not go long as this market is prone to U-turn back down.

6. As such a conservative trader (and we) would rather stay aside instead of going long today.
If you are aggressive then you can turn long, but place sell-stop below day before
yesterday’s low, i.e. @ 2314 OL.

7. The next up target is 2560 and the next down target is 2153.

General commentary: We were whipped by the rebounding market yesterday and stopped out at 2364. It was a tricky market alright, hence our suggestion to stay out today.

Next upside targets: 2560/2749 (hit)/3313 (targets revised on June 5)

Downside support: 2153

Ichimoku chart: (Based on kumo (clouds), CPO is long. Kumo support is at 2111. Ichimoku chart will turn short @ 2110 OL (updated on June 11, 2007)

Average True Range for CPO: A.T.R. is 85.36 for CPO. This implies you need to put a stop above/below this A.T.R. or you can get stopped out due to the volatility factor. We advocate a 1.5 x or 2 x the ATR. We are using a 5 days ATR.

To get the daily KL Stock Crude Palm Oil Futures, subscribe to our daily stock and futures newsletter at http://www.picapital.com.my/

Kuala Lumpur Stock Index Futures Outlook : Forecast for 29th June 2007 !

2007-06-29T11:29:00.000+08:00

Kuala Lumpur Stock index futures: Stop out/SA

June futures closed lower by 6.0 point at 1347.5 on relatively low volume of 8,992 lots.

1. We continue to stay out as price closed within the Bollinger bands.

2. But if FKLI can close below 1348 today we would turn short.

3. Otherwise, any close above 1348 could be a “buy”.

4. We know that July is already below 1348. July closed at 1339.

5. But it is possible for July to rise to cover the down-gap and close above 1348 today.

6. If you are a contrarian, you would be buying July at the open and place sell-stop at 1334 OL but do not short yet.

General commentary: The Dow rebounded by 90 points and the ringgit was up by 160 pips but FKLI did not rebound in tandem. What a disappointment. Let us see if we are just as anemic today. If FKLI closes below 1344.0 OL (June contract), then cut loss on longs. If you are trading July contract, the stop loss would be 1334.5 OL.

Upside Fibonacci target 1466(Revised on June 15)

Downside targets: 1294/1257/1212

Ichimoku chart: (Based on Kumo (clouds) FKLI is still long. Kumo support is at 1206. Ichimoku chart will turn short at 1205 OL) (Updated on June 11, 2007).

Average True Range for KLFE: A.T.R. is 15.61 points for FKLI futures. This implies you need to put a stop above/below this A.T.R. or you can get stopped out due to the volatility factor. We advocate a 1.5 x or 2 x the ATR. We are using a 5 days ATR.

To get the daily KL Stock Index Futures Outlook, subscribe to our daily stock and futures newsletter at http://www.picapital.com.my/

Kuala Lumpur Stock Market Outlook : Forecast for the day, 29th June 2007 !

2007-06-29T10:43:00.000+08:00

KUALA LUMPUR STOCK MARKET OUTLOOK: Forecast for Friday, June 29, 2007: KLCI can fall further if 1348 breaks down but any rebound can ‘save’ the market from a downtrend. Watch!

Technically speaking:

1. As at Thursday’s close at 1350.72 the KLCI was lower by 6.71 points or 0.49%. Losers led gainers 511 to 393. Trading volume was 1.0 bln shares.

2. The local bourse was under selling pressure alright with stocks like BAT, IJM, KLK, IOICORP, BURSA, ASTRO, HLFG, SIME and COMMERZ weighing down on the KLCI.

3. Stocks are weak, and many of our stocks have triggered sell signals, like MRCB, EMICO, ENCORP, AIRASIA, ATIS, FABER, KUB, PBBANK-CA.

4. They are sold out as they have hit our sell-stop levels.

5. Right now, with the KLCI at the brink of falling below the lower Bollinger band, we would rather be safe and reduce positions by selling out those that have hit our stops.

6. But if the KLCI does not fall below 1348, the lower Bollinger band, but instead stage a rebound today, we may have to r-enter some stocks that we have sold out.

7. But as of yesterday’s close, we would classify this market of ours as weak.

8. Today we would wait-and-see, and stay out of the market.

9. There is no stock to watch.

10. The ringgit strengthened back from 3.4810 to 3.4650 for a gain of 160 pips. This could be a hint of a stock market rebound today.

CONCLUSION: The Dow rebounded 90.07 points, yet we lost 6.71 points or 0.49%. What is going on? It would seem that nothing works for the Malaysian market, regardless of how the Dow performed. What a disappointment. We hope to see a rebound today as any fall below 1348, the lower Bollinger band support may result in lower lows. Note that the RSI, stochastic and MACD indicators are already on sell signal.

Long-term Upside Targets:1492 (Target amended on 15/6/07).

Immediate downside targets: 1319/1291/1222

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Kuala Lumpur : Crude Palm Oil Futures

2007-06-19T15:28:00.000+08:00

Kuala Lumpur crude palm oil futures: Maintain long/Sell-stop @ 2424 OL/F.B. @ 2501/T.P. @ 2560
SEPT CPO futures closed higher by RM32 at 2457 on relatively high volume of 11,525 lots.

1. We were again correct in calling for a buy and a “gap” to make up for the change of contract
month.

2. We are maintaining long but place sell-stop at 2424 OL to exit longs. If you want a tighter
stop, then use yesterday’s low, i.e. @ 2444 OL to exit longs.

3. If CPO breaches 2500, then “further buy” @ 2501 OH.

4. Next target is still at 2560.

General commentary: We were right about our “F. Tam white inside out up” pattern, which resulted in a higher close, up by RM32. Today CPO may consolidate or may rally to test 2560. We doubt it will stage a sharp pullback. But in case it does, our sell-stops are either at 2444 OL or 2424 OL.

Next upside targets: 2560/2749 (hit)/3313 (targets revised on June 5)

Downside support: 2466(hit)/2393(hit)/2307/2223/2153

Ichimoku chart: (Based on kumo (clouds), CPO is long. Kumo support is at 2111. Ichimoku chart will turn short @ 2110 OL (updated on June 11, 2007)

Average True Range for CPO: A.T.R. is 112.36 for CPO. This implies you need to put a stop above/below this A.T.R. or you can get stopped out due to the volatility factor. We advocate a 1.5 x or 2 x the ATR. We are using a 5 days ATR.

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Kuala Lumpur Stock Index futures

2007-06-19T15:06:00.000+08:00

Kuala Lumpur Stock index futures: Turn long/Sell stop at 1368.0 OL
June futures closed higher by 26.5 point at 1384.00 on relatively high volume of 6,960 lots.

1. FKLI leapt by another 26.5 points to close outside the upper Bollinger band, at 1384.

2. This is a strong buy signal. We have turned long at 1362.0 and we are maintaining longs.

3. Place sell-stop at 1368.0 OL.

4. We expect a strong rally today to “flush” out heavy shorts.

5. We should continue to see sharp rallies for now, until FKLI hits at least 1466.

6. Thereafter we will look for a toppish Japanese candlestick pattern to exit and maybe
even short.

7. For now, expect the “shorts” to be slaughtered!

8. Upside Wave 5 target is 1466. After that we look for a toppish Japanese candlestick
pattern before shorting.

General commentary: Finally, we have an upside breakout of a consolidation, exactly as we had anticipated. This consolidation started at least from April 5 and is therefore a 2½-month consolidation. As such, now that it is seen breaking out – you can expect a powerful rally. Shorts beware! Expect FKLI to hit 1466.

Upside Fibonacci target 1466(Revised on June 15)
Downside targets: 1294/1257/1212

Ichimoku chart: (Based on Kumo (clouds) FKLI is still long. Kumo support is at 1206. Ichimoku chart will turn short at 1205 OL) (Updated on June 11, 2007).

Average True Range for KLFE: A.T.R. is 19.54 points for FKLI futures. This implies you need to put a stop above/below this A.T.R. or you can get stopped out due to the volatility factor. We advocate a 1.5 x or 2 x the ATR. We are using a 5 days ATR.

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KL Stock Market : Forecast for the day!

2007-06-19T14:19:00.001+08:00

KUALA LUMPUR STOCK MARKET OUTLOOK: Forecast for Tuesday, June 19, 2007: KLCI expected to breakout, but only select stocks are in demand. Pick your stocks wisely. SLB/Hold.

Technically speaking:

1. As at Monday’s close at 1372.28 the KLCI was higher by 11.63 points or 0.31% but on slightly
higher volume of 1.36 bln shares. Gainers led losers 499 to 403.

2. Yes, we are just a whisker away from the all time high close, which was registered on June 6,
when it closed at 1372.38.

3. After witnessing this “breakout” of the Bollinger bands for a close above its upper band, you
can expect a “gap” up opening if the Dow closes in positive territory last night.

4. Note that the Dow is also a hair’s breath from its all time high. The Dow closed up 85 points, at
13639.50 on Friday while its all time high is 13692.00 clocked on June 1.

5. It doesn’t take a genius to figure out that if the Dow closes at a new record high on Monday,
you can expect our KLCI to “gap” up.

6. But, we are very disappointed with the performance of individual stocks even as the KLCI is
about to make another new record high close. There just isn’t much oomph at all on many of
our stocks as they remain lackluster and lacking in follow-through buying.

7. It is only a few situational stocks from the strong sub-sectors like property, oil and gas,
construction stocks that spice up what would otherwise be a very dull market.

8. Our stocks lack buyers. Where have all of them gone? Take a look at Singapore, Hong Kong,
Korea, Australia, China, Indonesia, Philippines and even Thailand where its index still sparkle
despite the political uncertainty caused by the military junta. It’s a crying shame for
Malaysian stocks not to be played up. Instead, at best we are only playing ketchup (catch-
up).

9. It is frustrating, as it would take a sharp-shooter to be able to buy the right stocks to see
some monetary gains. Again, what a shame!

10. Still, we are sharp enough to “zero in” to a few prospective ones like SAPCRES-WA, FAVCO,
BRDB, SAPTECH, EDEN, MUHIBAH, MUDAJAYA, BURSA, COASTAL, etc.

11. RANHILL was suspended after it was reported that it struck oil! It closed up 37 sen to close
at 2.18, off the high of 2.35. Based on Elliot wave, the targets are 2.65 and 3.70.

12. We think BURSA is potentially breaking out and the cheaper buy would be BURSA-CC,
which is at-the-money. It is good for 30 sen, at least, if Bursa hits 12.90.

13. New stocks-to-watch are KPS, BURSA-CC, SPSETIA.

14. PJDEV and PJDEV-WB also looks good.

15. The ringgit rose strongly by 350 pips from 3.4550 to 3.4200, and this should translate into
a stronger market for our stocks.

CONCLUSION: We expect a bullish breakout for the KLCI. Not all stocks would rally, as such if you want to capitalize on the KLCI rally, switch to stock index futures. If we are right about the Dow making new highs to 14400, our KLCI could test 1492 and FKLI to test 1466. This will be another good round for trend followers. Finally, our KLCI should be trending up for now!
Long-term Upside Targets:1492 (Target amended on 15/6/07).
Immediate downside targets: 1334/1291/1222

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Profitability of Technical Analysis

2007-06-12T00:20:00.001+08:00

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