Comments: CI, US econ, Kulim, RSawit, Tebrau

1) KLSE - It has breached the 940 resistance but not convincingly enough for me. While the trend seems to be rising, it has been rising on lower & lower volume. This divergence is very uncomfortable. Also the break of 940 was accompanied by the lowest volume in a month! Daily RSI & MACD are flat another weak sign. However the weekly MACD has just about made a golden cross (just). Hmmm many signs pointing to a downturn but prices are still rising & weekly MACD is turning positive. Read on!


2) US Economy & Bursa
Whoa there, whats happening to the US & oil prices? Well the Americans are sure worried about the economy, an early morning rally quickly fizzled out & the Dow ended up with a big loss. Latest news is that there is a BIG GLUT in new homes for sale & a major slowdown in real estate.
http://money.cnn.com/2006/08/09/news/companies/toll_brothers/index.htm
Oil prices are just shy of the record high & the hurricanes haven't started yet, but soon will & thats when oil prices will rise to US$ 80 & beyond.

Signs are slowly creeping in of a real slow down in the US economy. I think Asian markets will very soon react to this US slowdown and Bursa will also be affected. I expect to see the CI correcting today or tomorrow & a fall to 925 should be expected. A bigger fall should not happen but for that we have to wait for further signs. Anyone buying from this point on has to be very cautious. You have been warned!

3) Kulim - what a spectacular ride. Definitely one of the best performing plantation stocks this year. But weekly RSI is very overbought, prices are rising on lower volumes & maybe a correction is very much due. Rising CPO prices & analyst valuation at RM 10.00 are keeping interest in this stock going. But I think it has to slow down soon & it probably will UNLESS CPO prices continue to rise strongly (as suggested in today's NST, due to lower oilseed production in India for eg.) holders may start slowly selling down. The signals are getting weaker but there is no sell signal yet, thats why I didn't say sell now, but taking profits from this point will be a good strategy. The warrants are also overbought more than the mother stock. BUT do monitor CPO futures as further strong rise in CPO prices will keep prices of Kulim & other plantation stocks underpinned & they may continue to rise.


4) Rimbunan Sawit has formed a Doji Harami at the upper channel line. Does this mean a correction? Possibly because palm oil stocks have risen exponentially for quite a long time (in the case of the blue chips like KLK & IOI, for a year). However because of rising CPO prices maybe this correction will be mild. Nevertheless if RSawit opens down on Thursday, then it will probably be a correction with support at 1.42 & the lower channel line. Long term holders may just want to hang on for the ride but short term traders may want to take profit BUT wait for the correction to be confirmed with a lower open/close Thursday. However do note the point on CPO prices as stated above.


5) Tebrau has now had 9 down trading days, without a gain in sight. It sure takes patience to hold this stock. Yesterday it hit a low of 0.505, as close to the strong support of 0.50 as you can get. It has now formed a descending triangle & if it breaks 0.50, then its a very bad sign especially when you haven't had an up day in 2 weeks. I will sell if it goes below 0.50 (on closing). RSI & MACD are still going down. Next support is at 0.45. Looks like all the so called SJER stocks are down, incl UEM World & UEM Builders.