Talking Stock With The Doc

FKLI Doji Evening Star - Correction Again?

2007-02-16T00:50:00.000+08:00

Just a short post. I noticed a Doji Evening Star at the close on Thursday. Could be a sign of indecision or correction because it opened with a gap up & then a perfect Doji. Confirmation is only if the futures opens below 1260 & stays below it in the morning. If it opens above this or goes above this then the doji is invalid. It is worth shorting the market with a close position if it goes back above 1260.

The Doc is Back

2007-02-09T01:51:00.000+08:00

Hi everyone,

Yes I am still alive & kicking. Been very busy as I left UK in Oct & am now back in KL. The transition was a busy period & I also started on a major contract immediately when I arrived, so that has kept me busy. Unfortunately I am still very busy so will only post occassionally & that too only on the CI & Futures, sorry no time for stocks.

I have been following some of the postings & am very pleasantly surprised that we have a very active Futures Blog here despite my absence & none of the other sites have it. Hahaha someone once asked on the chatbox if I was still alive & Isaac was wondering why I am MIA for so long. Sorry guys just busy with work thats all.

The reason for my posting is I think the market has reached a peak & will probably correct very, very soon if not today (Friday), then it will definitely fall after CNY. The magnitude of the fall is hard to tell but probably it will correct to one of 3 levels (See the 3rd chart):
A - Fibonacci retracement 0f 23.6% i.e. Jan 2007 low of 1,164; or
B - Fibonacci retracement of 38.2% i.e. Dec 2006 peak of 1,103; or worse case scenario;
C - Fibonacci retracement of 50% i.e. Dec 2006 low of 1068 to 1080.

The reasons why I think it will fall are:

I see a Hanging Man pattern at a high resistance of 1,242 yesterday. Next resistance is 1,278 but its possible that will not be reached. If it is then that will be the high point.
In the Futures Vol has been falling despite index rising - such divergence is indicative of possible correction
There is also divergence bet Futures Vol & KLCI Vol, one is falling but the other is rising to record highs. It is not good to have such divergences esp. when we are reaching record highs.
There are far too many good reviews & mega predictions by all kinds of analysts recently. 6 months ago no one had a good word abt Bursa, now everyone, his uncle & the monkey are saying such great things. Either everyone was blind & just got back their vision or they are all bullshitting us & talking up the market so that their clients can sell high while all the poor uncles & aunties are jumping in. Generally this has happened at ALL market peaks from the 1980s to now (I am old enough to have seen it all). This is a sure sign that the current bull run is going to take a major correction. I have fallen for the BS before & lost everything I made in the run, so I am now older & wiser.
Finally all the uncles & aunties are at the brokerages buying everything in sight (hence the high volumes). When that happens, you can kiss goodbye to the market.

Well here are the charts, but make up your own minds, do your own homework, be very vigilant & careful. Happy Trading & good luck.

Stock Updates - All Positive on the Bursa front

2006-10-13T07:32:00.000+08:00

All my stock picks are doing well & should all rise Friday & this coming week. The only one that didn't do as expected is Cymao but as all indicators are still +ve I believe it will also come good.

Cymao is the only stock that didn't do well Thurs with a 4 sen fall. Despite that it is still above the 7-day MAV & all other indicators are still positive. This is just a temporary blip, I expect it to continue rising again after this.

Hiapteck - after 3 days of correction Thurs saw a bullish engulfing candle. Nice formation & all other indicators are still +ve. Needs to break 1.00 to continue its bullish moves. I expect it will do so today.

Leweko is looking very nice indeed. All signs +ve so it should continue its rise.

Permaju also looking good. Indicators all +ve. Resistance is 0.50 & a break above this will be very bullish. Nice stock to buy now.

Priceworth is moving up again as expected after 2 days of correction. It should continue rising strongly as all indicators are looking good. Vol also picked up Thurs.

Sime Engineering undergoing short minor correction but all indicators still +ve. Will resume up moves after minor correction. No change to charts.

Utama broke out of the resistance at 1.23 on higher vol. As expected the stock is showing strong momentum. All indicators are +ve. Next resistance is 1.37 but it must hold above 1.23 for the next 2 sessions, then I am confident 1.37 will be reached. Nice solid stock. BTW RHB is also +ve.

KLCI & Futures - Breakout?

2006-10-13T07:20:00.000+08:00

KLCI broke the 970 resistance today on increased vol. All indicators are positive. No sell signal yet even though its on a 6 year high. Next resistance is 984 & after that 1,000. Dow Jones closed up almost 100 points to a new record high. Asian markets will probably respond positively & a rising tide will mean all ships will float higher so KLCI may go for 984. After that we only have one week of trading next week before a 3 day closure of Bursa for the Hari Raya hols & we may see the pullback only after Wed next week. Today should be an up day.

Futures rose even higher than the CI today. All indicators looking better so it may continue rising too with resistance at 990.

Stock Updates

2006-10-12T03:42:00.000+08:00

Leweko - Still rising with mild corrections intraday. All indicators are positive but MACDH looks like it is at a peak. We still cannot call it 'the' peak so unless there is a fall its still positive. Many other timber/plywood stocks have risen especially the bigger blue chips Ta Ann & WTK, the smaller stocks should follow suit as the industry is fundamentally doing well.

Priceworth - despite the big correction after the large white candle on 6 Oct, indicators are still good for PWorth. In fact the correction may have been overdone & it should rise again soon. Its actually looking very good on the indicators. The low volumes are not a bad sign at this stage.

Cymao - is still holding steady. All signals still +ve. It should resume its rise again soon like other timber stocks.

Hiapteck - looks like it is turning weaker. 0.94 & 0.91 are strong supports & if they break then its going to turn bearish. I would sell at the break below 0.91 which is also the mid BB line. On a weekly basis it is still positive so the intermediate trend is positive but short term there is weakness. Long term holders should not sell yet but short term traders have to watch the 0.91-0.94 support & sell on breach. MACDH & DMI still +ve, MAV are also +ve & prices have not even fallen below the 14-day MAV, so we should not panic just bec prices have been falling. Just watch the support levels.

Sime Engineering. Mild correction but its staying above the 1.51 resistance turned support. All indicators are still positive & strong. Volume could be better. Still a hold as upside is still good.

Utama - is still positive. All indicators still ok. 1.23 is a strong resistance. As long as prices do not break below 1.15 Utama will remain strong & can break out of the resistance. Personally I think this is a good stock hold until the M&A issue is sorted out. It should remain quite steady until then.

KLCI & Futures

2006-10-12T03:32:00.000+08:00

KLCI - is still quite steady. Volumes are getting better & all indicators are still positive. However if it does not break 970 soon the bulls may get exhausted & give up temporarily. I cannot make a call at the moment so we shall just have to watch it for further signs. Dow Jones slipped slightly but it is still looking steady. Nothing to do but wait.

Futures are slightly weaker than the CI. The 7-day MAV has dropped below the 14-day MAV but prices remain above both these MAV. ADX is getting weaker & DMI is getting flat. H'ever the BB is narrowing & while index is still in the upper channel, something is bound to happen soon. If it narrows further there is a good chance that it may suddenly burst upwards but we cannot forsee what can happen. If it breaks downwards then short the market as the fall will be decisive.

End of Show - Kannaltec & Salcon?

2006-10-09T01:29:00.000+08:00

Some stocks have risen exceptionally well the last few weeks but have they reached the end of their run?

Kannaltec is one such stock. It has risen almost 160% in 6 weeks but seems to be highly overbought. The ADX at 68 is already very high & MACDH is also at a high peak. It has also reached its all time high 0.545 which is now a very strong resistance. Can it continue to rise or will it fall? I think it will start to correct from here. All good things must come to an end & this might be it for Kannal. So I rate it a SELL.

Salcon - also may start its reversal. Daily Candlesticks is -ve & the DMI looks like it is going to make a -ve cross. ADX is also starting to move down. MACDH is at a peak. Perhaps with all the new stocks like timber & other old favourites coming back maybe Salcon's run is over. SELL

New Theme Play - Timber Stocks

2006-10-09T00:41:00.000+08:00

The recent news about rising demand & prices for plywood & timber products led to a massive jump in prices of many of the stocks in this industry. Fundamentally, it looks like the industry is in for a good run for at least 6 - 12 months & with this stocks will generally rise. I pick a few here which are technically sound as well & use DocTS strategy to select investments.

Cymao - very bullish. All indicators positive - DMI, MACDH, MAV, BB & ADX is strong & rising. Initial resistance at 1.76 & the 2.28. There may be some minor correction after Friday's strong rise, but it should be well absorbed. Strong BUY.

Leweko - has had a good run already rising from 1.20 to 1.54 in the last 2 months. It has also risen above the resistance at 1.50. It was in a minor correction mode over the last few days but should start rising again now. All other signs are positive DMI, MACDH, MAV, BB and the ADX is also strong. BUY

Permaju - is another stock will all positive indicators - DMI & MACDH are +ve & rising. ADX is bullish & strong. Prices are in the upper BB channel & above all the MAV. All positive signs. But Permaju did not rise as strongly as Cymao or Priceworth on Friday & strong resistance at 0.50. If that can be breached then the bullish move will start. Watch with buy above 0.50.

Priceworth - all indicators are positive. DMI is +ve & ADX is strong - bullish momentum is strong. MACDH is rising, +ve sign. Price is in the upper BB channel, in fact it has shot above the upper line on Friday. Price is also above the 7, 14 & 30 day MAV and the short term MAV are above the longer term MAV giving further indication of bullishness. Price also rose above the 0.605 resistance on strong Volume but there is another resistance at 0.67. Pworth is also generally undervalued so further upside is expected. This is a good buy for the timber play. Some correction can be expected (though it may be well absorbed) after Friday's 10% rise but it should continue rising in a bullish run after the correction. BUY

DocTS Stock Update

2006-10-08T22:58:00.000+08:00

The pick of these stocks are Hiapteck & Sime Engineering. I will sell Dreamgate & Jotech and hold ACPI & Utama.

ACPI - is still ok but looks like we will see more sideways movement than bullish moves up. Prices barely below the 7 & 14-day MAV & the 7-day MAV has crossed below the 14-day MAV, all signs of weakness. But its still in the upper BB channel & DMI, ADX & MACDH are still ok. HOLD.

Dreamgate - is getting weaker. Prices have fallen below the 7 & 14-day MAV, MACDH, DMI & ADX are all flat. There is no strength in the bullish moves. It is still not yet negative but I don't see strong bullish moves, so I would sell because I can reinvest in some better stocks. SELL

Hiapteck - still looks very good. Correction supported at the resistance turned support at 1.00. All indicators still very positive. The rise should continue after selling pressure has been absorbed. BUY

Jotech - like I mentioned before is weak. The one day rise on Thursday did not have any follow thru, as it fell slightly on Friday. Jotech is no longer within my preferred parameters for DocTS. I will not write on this stock again (unless things change significantly to the upside) as I have sold out & recommended the sell a few days ago. The chart indicating weak indicators is given below. SELL

Sime Engineering - moving very nicely & riding the upper BB line. All indicators are positive & looking better. MACDH is positive, DMI is good & ADX is getting stronger indicating the upside move is very much intact. A breakout of the 1.51 resistance will be very bullish. BUY

Utama - it is still stable & within all the parameters of the DocTS indicators. No change to the bullish position. RHB is slightly weaker but also still within parameters. No sell signals for either, still hold for its upmove. Resistances remain at 1.23 for Utama. HOLD.

KLCI & Futures

2006-10-06T01:34:00.000+08:00

KLCI - rose Thurs & is still positive but unless it breaks above the 970 strong resistance it still cannot be called bullish. While it is still within the DocTS strategy, the MACDH, DMI & ADX are still flat & not rising bullishly. This shows that the market is still uncertain if it can break the resistance. Maybe the new high in the Dow & rising Asian markets pushed up the CI but what we need is for the CI to break above 970 on strong volume, if not it will correct downwards first. Long term it is still bullish but some short term corrections will be healthy. But if it breaks above 970 then 980 & 1000 are the targets.

FKLI Futures - while signals appear similar to the CI, it appears slightly weaker. DMI & MACDH are turning flat while ADX is getting weaker indicating that the bullish uptrend may be getting weaker. Like the CI maybe the Dow & regional markets gave it a big lift. But this was on very low volume. Lets see what happens over the next couple of days. A fall below 959 will be bearish, a rise above 968 will be bullish. What will we see Friday?

Stock Updates

2006-10-06T00:57:00.000+08:00

Hiapteck - this is my favourite stock as it is doing well & looking very bullish. But some minor correction Friday or Monday is possible before it continues its climb up. It has broken out of its first resistance at 1.00 & volume the last 3 sessions has been strong. All signals are bullish. 1.00 will act as a strong support. Next target is 1.20 & then 1.36. All time high is 1.70, reachable? Why not!

Jotech - while the price did rise on Thurs signals still haven't turned positive. Its still below the mid BB line, within the lower BB band, below the 7 & 14-day MAV, the 7-day MAV has crossed below the 14-day MAV indicating bearishness, the MACDH is still turning down, DMI still turning towards a negative cross & the strength of the upmove is weakening (ADX turning down). Thurs rise bounced off the 30-day MAV but vol on this rise is low, so it may be just a technical bounce. I still believe this stock is more bearish then bullish but I will change my mind if it rises above the midBB line into the upper BB channel & if it also rises above the 7 & 14-day MAV. Until then I would not buy this stock.

ACPI is softening. Prices have dropped just below the 7 & 14 day MAV but still within the upper BB channel. DMI is still ok but MACDH is moving flat to downwards. It is not yet a sell signal but needs watching.

Dreamgate - while still positive, is not very bullish. ADX is getting flat & so too the DMI. Prices are just on the 7 & 14-day MAV but still within the BB upper channel. Not much else can be said, we have to wait for its next moves to see if the positive trend continues.

Sime Engineering - all signals still positive. Resistance is strong at 1.51 but a break above this will make this stock a bull stock. Looking very good.

RHB is also still positive. Its not as strong as Utama but still within the required parameters of the DocTS strategy. 1.32 is a strong support.

Utama - all signals still positive. Resistance is strong at 1.23 & prices must break above this to turn the stock into a bull stock.

KLCI & Futures

2006-10-05T06:35:00.000+08:00

KLCI - is looking weak. DMI may make a -ve cross, MACDH at best is flat. More importantly the index has crossed below the 7-day MAV & is resting on the 14 day MAV. If 970 is too strong a resistance then the likelyhood is that it has to correct down first before making another attempt later. Futures are looking very weak as well, so I believe the CI will fall further & if it falls below the midBB line it will confirm the reversal into a downtrend. So watch out for this.

FKLI Futures are looking -ve. DMI looks like it will make a -ve cross, ADX is turning weak, MACDH is turning down as well. Index has fallen below the 7 & 14-day MAV & is resting on the mid BB line. A fall below this line coupled with the other weak signals will confirm the reversal & the futures will turn bearish. The 7-day MAV is also about to cross below the 14-day MAV another strong bearish signal. Time to shot the futures? Possibly bec going long would be very risky.

Stock Updates

2006-10-05T04:02:00.000+08:00

ACPI - is turning -ve. MACDH is flat & may be turning down, price is below 7 & 14 day MAV & the 7-day has crossed below the 14-day MAV. It may still hold up but cautious traders may sell out & move to other stocks. This stock is definitely turning weaker.

Dreamgate - generally still positive although ADX is starting to flatten. We may see some sideways movement for a few days. So we have to keep an eye on this counter for its next signals. Other signals are still positive.

Hiapteck - has hit strong resistance at 1.00. It will probably see a minor correction next couple of days before attempting to climb again. Other signals all still bullish though we will probably see it fall back into the BB channel before making another attempt to cross 1.00.

Jotech - has started a bearish phase. All signals turning bearish. MACDH is turning down, DMI moving to a -ve cross & prices have fallen below the 7 & 14 day MAV as well as the midBB line. It is currently being supported by the 30-day MAV. Also the 7-day MAV has made a -ve cross of the 14-day MAV another bearish signal. This shows that Jotech has turned very bearish. The 30-day may hold, but unless it can cross above the mid-BB line, the bearish move will be extended. SELL.

Sime Engineering - Looking good & bullish. All signals very positive.

Utama - Still looking strong but 1.23 is a massive resistance. Any break above this will be very bullish. All signals looking very positive.

Stock Updates

2006-10-04T02:12:00.000+08:00

The following stocks are still well supported by the DocTS trading indicators & the uptrend is still intact: Sime Engineering, Utama, ACPI & Dreamgate

1) RHB has strong support at 1.32. A break below 1.28 (the midBB line) will change the trend to bearish, so that has to be watched carefully. But for now it is still ok.

2) HiapTeck - very bullish. Broke out of the 0.91 resistance on strong volume. MACD, DMI, ADX & BB are all looking strong. Buy on corrections as next targets are 1.00 (strong resistance), 1.20 & 1.36. Indicators are strong & the bullish trend should be well supported. Any correction is a buying opportunity.

Jotech - has taken a turn for the worse. It has fallen below the 7 & 14 day MAV & importantly also below the mid-BB line. MACD is also showing signs of weakness but that is a slower indicator as is the DMI. Candlesticks also show a negative trend. If tomorrow (Wed) it does not pick up & rise above the midBB line then I would sell this stock as the bullish trend would have reversed. Keep a very close eye on this stock.

KLCI & Futures

2006-10-01T08:25:00.000+08:00

KLCI - slight correction on Friday but still no sell signals. Even the candlesticks show no reversal signs including the weekly. But 970 is proving to be a strong resistance. Nothing to do but wait for next moves, although if it cannot penetrate 970 next week then we may see it falling back a little or going sideways.

Futures - same as CI. No change to signals. Almost same level as CI, we'll just have to wait for its next move.

Stock Updates

2006-10-01T07:51:00.000+08:00

All stocks are still looking good, no reversal signals yet anywhere. I am adding a new stock which is looking very positive, Dreamgate. My only concern is that the CI may be peaking. If it suddenly reverses course then all our stocks may see selling pressure, so we have to be careful of that. Otherwise there are no sell signals for any of our stocks.

New Stock - Dreamgate also is starting to look good using DocTS strategy. DMI made +ve crossover & ADX is flat but at 31 is fairly strong on the bullish side. MACDH looking very +ve & about to cross above zero. Prices are above all the MAV & also in the upper BB channel. BB widening positively. We're seeing some healthy correction, breakout may be coming. Target Price is 1.62 & 1.72. BUY.

1) ACPI - all signals still +ve. No change in position from last posting. ADX at 36 is getting stronger & more bullish. Still good to go higher.

2) HiapTeck - some weakness, but still no reversal sign. 0.91 is a strong resistance, needs more than 1 attempt to breakout. Hold.

3) Jotech - still looking very good. Vol also rising slowly, all signals are good, only needs to breakout of the 1.22 strong resistance & we will see it shoot up. Hold.

4) Sime Engineering - we are seeing some weakness but no sell signal. Prices still above 14-day MAV & within upper BB channel, so movement is still up. No DMI or MACDH crossovers but DMI & ADX starting to get flat. These are signs of softness but not of reversals. It could just be a correction of the over bought positions, nothing to worry about but keep an eye for falls below the 14-day MAV or mid-BB line. Otherwise still hold.

5) Utama - similar to Sime, some softness but normal. No reversal signals, DMI & ADX still very positive. Strong support at 1.15. Breakout above 1.23 will be very strong & bullish.

KLCI & Futures

2006-09-28T23:04:00.000+08:00

Are the CI & Futures going to breach the strong resistances or not? "So close yet so far".

KLCI - is very close to its 970 resistance & it was tested intra-day. All other signs are positive including BB, price vs MAV, MACDH & the ADX is still strong. Will it or won't it? Well its hard to say but if it does not break out soon then it has to instead correct downwards, because the bulls will give up sometime. For now all we can do is watch.

FKLI - The futures index is slighter softer than the CI. DMI has turned slightly down, ADX is flat, MACDH is also flat. But it is still comfortably above the MAV & within the upper BB channel. There is a 3 pts discount to the CI. Again the 970 resistance is strong. Nothing we can do but wait for its next move to give us a better signal.

DocTS Stock Update + Hiap Teck

2006-09-28T20:37:00.000+08:00

Well its been 3 days since my last update, so lets see whats happening with my 4 stock picks. I am also adding another stock to watch - Hiap Teck.

1) ACPI - still looking good. All signals are still +ve & there are no sell signals. Prices still above the MAV & within the rising upper Bollinger Band channel. ADX still strong. MACDH also +ve. Resistance at 1.00 is still strong so it has to overcome this to continue its bullish trend. Still a hold.

2) Jotech - is looking good. It is still riding the 7-day MAV & all signals still solid. ADX is growing stronger, BB is rising & MACDH still +ve. A breakout above the resistance 0f 1.22 will be very strong for Jotech but this will be the 4th attempt in 5 months so we'll just have to wait & watch if it will be successful.

3) Sime Engineering - still looks ok. Signals getting a little flat but no sell signals yet. Thursday's close is stradling the 7 day MAV but still above the other MAV & within the BB upper channel. The latest news is that Sime Darby will buy Ramunia & not Sime Eng, but the ultimate benefit is to Sime Eng, so overall it is still good for Sime Eng. We have no idea how the market will respond but we are technicians & this is not bad news per se & good news long term, so we will watch the signals for our next move. For now its still a hold.

4) Utama - still looks very good. All indicators are fine. ADX continues to rise & is at 30. Very strong bullish signal. MACDH still rising & prices still above the MAV & within a rising BB. Immediate resistance is 1.23 to 1.25 & at this rate it should break above this resistance soon. Stock is still very bullish. Incidentally RHB is also looking equally good.

5) Hiap Teck - is another stock that is giving good signals using DocTS. ADX especially is quite strong & bullish. Resistance at 0.91 is very strong & 4 previous attempts to breakout, the most recent on Monday, were not successful. But if it does breakout, the rise will be very strong with a Target price of 1.18 (30% gain). So watch for high volume breakout to buy.

Summary - All stocks are still within trend. No reversal or sell signals yet.

DocTS Comments on Stocks, KLCI & Futures

2006-09-25T22:26:00.000+08:00

1) Utama - Corrected 6 sen today but no change seen in DocTS signals. It is still positive. I will only be concerned if prices fall below the 7 & 14 day MAV for a start. Besides after a big rise on Friday some correction is healthy. Same comments for RHB as well.

2) Sime Eng- formed a spinning top. May be a sign of reversal. Its also at a strong resistance. Whether its a major reversal or minor correction remains to be seen. Other technicals still +ve. Needs to be watched closely. A minor correction is ok as long as other technicals remain sound.

3) Jotech - minor correction. Still supported by technicals. Only a fall below the 7 & 14 Day MAV will create concern. Must breach resistance at 1.22 to extend next move up.

4) ACPI - same as for Jotech. Technicals still supporting. Wait for next few days to clear up next moves. 1.00 will continue to be a resistance.

5) CI might start moving sideways. No indication yet of bearish or bullish moves altho Futures appears more bullish. There is no market moving news anywhere altho oil prices below US$60 is positive for the market & airlines stocks.

6) Futures was rather bullish Monday, but 970 will continue to be a strong resistance.

DocTS - Buy Jotech, Sime Eng, Utama, ACPI

2006-09-24T20:44:00.000+08:00

Here are some stock recommendations based on my new trading strategy DocTS. BUT you must check it yourself & use your own judgement before making any trade. Never take my word for it, do your own homework.

1) Jotech - is starting to move positively. DMI crossed over on 22 Aug, ADX is now at 40, strong trend; MACDH crossed zero on 14 Sep; prices are above MAV & within BB upper channel, MAV short term are all above the long term, BB opening up bullishly. There is strong resistance at 1.23, so a breakout above 1.23 is the Buy signal.

2) Sime Engineering - is making its early move. DMI crossed over, ADX (28 pts) starting to move up, MACDH +ve, prices within upper BB channel & above all MAV. Only the 14 day MAV has yet to cross above the 20-day MAV (i.e. mid BB line). BB is widening positively. There is resistance at 1.52 but a break above this will lead it to new & strong highs. Fundamentally news flow has been very positive & if they do buy Ramunia it may be another KNM in the making, so this is a very good buy both Technically & fundamentally.

3) Utama has moved up strongly & confirmed its prior +ve signals. I believe this is just a start & it still has space to move up to a target of 1.37, a strong resistance. There is a possibility of a double top at the current level but all signals are bullish. A breakout above 1.25 is a possibility although a minor correction before the breakout is also possible. Any correction should be supported at 1.15.

4) ACPI - similar to Jotech, all indicators are positive. Only need to be careful of the strong resistance at 1.00. If breakout above 1.00 then it will rise to 1.25. It can be bought now but if 1.00 becomes a strong barrier & signals change then you should sell, so this is worth a punt because of its otherwise strong signals.

KLCI & Futures

2006-09-24T20:32:00.000+08:00

KLCI - possible double top at resistance of 970. It will be quite tough for CI to break 970, normally for a strong resistance it will take several attempts. Looks like a bearish harami formed on Friday, so possibly sideways or downside move is likely. Other indicators are neutral.

FKLI Futures - also appears weak. Resistance at 970 is strong. Weekly candle is a long legged Doji just above the previous week's candle. Might be a reversal sign at strong resistance, so likely move is down. 14 day MAV is crossing below BB mid-line (20day MAV), so things are starting to look more negative. Other indicators are neutral. Likely move is down.

DocTS - A New Trading Strategy Using TA

2006-09-23T01:39:00.000+08:00

As promised here is the new trading strategy using several different indicators/signals to predict stock price moves. It is a pure Technical Analysis strategy. I call it 'DocTS' (pronounced 'Doctors') - i.e. Doc's Trading Strategy. I would also like to give credit to Isaac who also uses many of these signals & shared them with us. This is a lower risk strategy with a strong success rate & is ideal for use by traders or investors who don't have much appetite for high risk.

The indicators we will use are DMI & ADX, MACDH (Histogram), Simple Moving Averages (7,14 & 30 day), Bolinger Band, Support & Resistance & finally Candlesticks. I explain briefly how the indicators are used but if you are not familiar with them then please read up more from the links I have provided & also use other sources. It will not be possible to discuss the merits of each indicator.

To demonstrate the use of DocTS I have selected Salcon, Utama & Tebrau. Salcon was a strong gainer over the last month, Utama is starting its strong trend now & Tebrau has been trending down. For you to truly benefit from DocTS you have to select & chart stocks yourself. I am happy to discuss your selections but I will not be able to provide anyone with tips if they don't do it themselves. So please don't ask "Doc, RHB how ah, can buy ah?". But if you say "Doc, RHB is meeting all the requirements, but its close to resistance what do you think?" then yes I will be glad to comment. God only helps those who help themselves & so will I .... 8))

The signals & rules are as follows:

1) DMI (Directional Movement Index) & ADX (Average Directional Index)
In DMI we have +ve & -ve DMI. When the +ve DMI crosses -ve DMI, then a positive trend is starting. To choose a stock that is making a positive move, this is the first signal we shall use (you can use others but I prefer this to point to a starting trend). [Click here for info on DMI - http://www.investopedia.com/articles/technical/02/050602.asp]

The ADX is used to gauge the strength of the prevailing trend. ADX is measured on a scale between 0 and 100. Readings below 20 are used to indicate a weak trend, while readings over 40 indicate a strong trend. ADX is not used to determine the direction of a particular trend, but only to gauge its strength. If the +ve DMI is above the -ve DMI & the ADX is above 40 then we have a strong uptrend. But if the -ve DMI is above the +ve DMI & ADX is above 40 then the downtrend is stronger.
http://www.investopedia.com/terms/a/adx.asp

Selling is indicated when -ve DMI crosses +ve DMI, that is when the trend changes & we have then to look at getting out of the stock.

2) MACD Histogram (H) is the 2nd tool. When the H turns upwards (even when it is below zero) it shows that the trend is turning positive & when it crosses the zero line it is a strong positive uptrend. When there are divergences between price & H then trend change is possible. The H is an early indicator of a trend change. Click for more on H - http://www.incrediblecharts.com/technical/macd_histogram.htm

Confirmation 1 - So when we see a +ve DMI crossover & also confirmed by H turning +ve, we have 2 early signs that the stock price is starting a positive move. This puts the stock on the watchlist immediately. But when H reverses itself & starts moving downwards after reaching a high, then a reversal could be beginning. Coupled with -ve DMI crossover, a Sell may be indicated.

3) The Moving Averages are the 3rd tool. Here I use simple MAV not exponential. Both can be used but I use simple MAV because the Bollinger Bands use the simple so to be consistent with BB I also use simple MAV. I use the 7, 14 & 30 day MAV. The BB middle line is a 20-day MAV so this basically gives us 4 MAV to use.

The first sign is look for prices to rise above the 7 & 14 day MAV. These are the early signals. When prices rise above 7 & 14 day MAV it shows a rising price trend. Next the MAV itself must make +ve crossovers, i.e. 7 day (7D) MAV must crossover the 14 day (14D) & ideally both 7D & 14D must crossover the 30D. They must also crossover the middle BB line (i.e. the 20D MAV).
When the shorter term MAV are above the longer term MAV then we have a solid trend in place. So 7D above 14D, 20D & 30D; and 14D over 20D & 30D; and finally 20D above 30D; then we have strong rising trend. See Salcon chart for this example point X marks the spot where this happens. Click to read more on MAV http://www.incrediblecharts.com/technical/moving_averages_three.htm

When prices are above all these 4 MAV we have a strong uptrend in the stock as shown in Salcon chart point X.

Confirmation 2 - when prices rise above MAV & short term MAV are above long term MAV & this compares to early signs in DMI/ADX and MACDH, then we have a consistent confirmation that a good trend is in place. When all are in positive territory a BUY is definitely indicated.

In reverse, when prices fall below the MAV starting with 7D a reversal may be in progress. But 7D is not strong indication. If prices fall below both 7D & 14D then we must be very careful as a reversal is a strong possibility. If it falls below the 20D (i.e. Mid BB line) then a reversal is definitely confirmed.

Also when the MAV themselves cross below each other a reversal is indicated. So when 7D cross below 14D or both cross below 20D then a reversal will already be in progress and a Sell is indicated.

4) Bollinger Band is a very powerful tool. While it is difficult to master all the nitty gritty of BB, it can be used in a simpler way when coupled with other signals. Here we will look for 3 moves in the BB.
- 1st the BB should ideally be either flat or starting to move upwards (widening with prices moving upwards & upper line moving upwards). A BB that is pointing downwards is still negative & needs to be observed.
- 2nd prices must move upwards within the BB. They can be moving up off the bottom channel line but price must not be going down (this is unlikely to happen if DMI & H are positive).
- 3rd prices must be moving up into the upper channel line or must already be within the upper BB channel (i.e. above the mid-BB line). If price is within the upper channel then it is a strong positive sign esp when BB is widening.

The ideal scenario is:
a) Prices that are in the upper channel or moving into the upper channel.
b) BB is moving up or starting to widen with prices moving up
c) A breakout from a narrow BB with prices moving up is a powerful sign of strong upside breakout. Read more on BB -
http://www.bollingerbands.com/services/bb/

Confirmation 3 - When prices are positive re BB, coupled with DMI/ADX, H & MAV, we have 4 powerful tools to confirm a strong bullish sign and a strong BUY. But when prices cross below midBB line into the lower channel & BB also starts trending down, a Sell is indicated. When this is confirmed with -ve DMI crossover or -ve MAV crossovers then a Sell is a definite possibility.

5) Support & Resistances
In all cases S&R are very important. When prices are rising & hit a strong resistance we can expect it to either slow down the rise or stop it. But if it breaks out of the resistance then a continuation is likely. We will always continue to monitor S&R, but mostly R in uptrends.

6) Candlesticks - While we can see the buy signals using above indicators it is still necessary to spot early signs of price exhaustion & impending reversals. Candles are very good to show top reversals. Look for bearish engulfing, harami, shooting star or evening stars both in daily & weekly charts. The earlier signals are trend indicators, change in trends using DMI/ADX, H, MAV & BB may be slower but coupled with candles we should be able to spot reversals quite well.

Summary of DocTS
So here we have it, 4 strong trend indicators & 2 reversal indicators. With these 6 signals we should be able to spot good BUYs and SELLs. Some examples are given below.

DocTS - Examples of the Strategy

2006-09-23T01:27:00.000+08:00

Let us look at some examples of how the strategy works. Click on the chart to see comments.

1) Salcon which we could have spotted very early in the uptrend & made 50% profit

2) Utama which is making a move now, but we could have spotted it on 11 Sept & made 18% already.

3) Tebrau we can see both the buy signals & also the sell signals. As you can see this is a powerful tool & also less risky.

4) Can you spot others?
Can you also spot the buy signals for Puncak (15/9), RHB (8/9) & LKT (15/9)?
Can you find other stocks that are just beginning to give buy signals that we can buy into next week? Share & discuss & lets find a winning strategy for everyone.

KLCI & Futures

2006-09-22T01:02:00.000+08:00

KLCI - rose as expected Thurs, but is now reaching the strong resistance of 970 same as the Futures. Indicators are still positive, its riding the upper Bollinger Band channel, above the 7,14 & 30-day MAV, MACD is also +ve & there is no candle reversal pattern. On the -ve side there is strong resistance at 970 & the possibility of a double top if it cannot penetrate the 970 decisively. Again at this stage we have to be rather cautious as it has reached decision time, to cross 970 or fall back.

FKLI- Futures are same as CI, indicators positive but reaching strong resistance at 970 too. Its certainly toppish.

We'll have to see what happens Fri. Are there any drivers that can help push it even higher today or is sentiment weak & a fall back is the most likely outcome. Dow dropped 100 pts (expected as it was rather toppish) & oil prices rose (but still within very comfortable range). But Thailand seems to have resolved itself & there is no otherwise negative news around. Impossible to make a call other than to advise caution.

KLCI & Futures - Up Again Thursday?

2006-09-21T07:07:00.000+08:00

KLCI - continued its minor correction Wed but found critical support at the mid BB line & the 7 & 14 day MAV. The 953 support is also holding it up. I have used the MACD Histogram today for a change instead of the usual MACD. MACDH is flat perhaps an indication that the correction will not get worse tomorrow. The trend may continue up today as the supports above are quite good. There is also a small hammer indicating a possible rise today.

Still the 970 resistance will be hard to break but if it does then prices may rise to 980 or even 1,000. But if it fails to breach 970 then further correction or sideway movement will follow; which it will be will depend on the candles. Fundamentally the Thai coup seems to have been settled with the King apparently favouring the Generals, the US Federal Reserve did not raise rates, Dow & Nasdaq moved up & oil prices fell further. So fundamentally, there is no bad news in the market, all good news externally. The market should rise based on both fundamentals & TA. For now the trend is still up.

FKLI - CI Futures reversed Tuesday's fall & rose quite strongly Wed. Good support at mid BB line & also the 960 level. Indications are that it will continue the rise today. Next target is 968.

RHB & Supermax

2006-09-20T01:28:00.000+08:00

RHB has formed a Doji at a strong resistance level at 1.32. If tomorrow it opens below & stays below 1.31 then it will confirm the evening star & a reversal of the uptrend. Support is at 1.15. RHB is thus in negative mode.

Supermax on the other hand is looking good. It bounced nicely off a long term support at 2.67 with a nice hammer candlestick. It is also in the upper channel of the Bollinger Band. We may see a couple of days of flat moves but it is likely to continue up after that. MACD Histogram is also looking positive. Only concern is that Vol is not rising as much. Resistance at 3.14 & 3.52. If it can breach that then stronger resistance is at 3.96.

Ordinarily this would rate a buy after 1 or 2 days of some correction but the coup in Thailand & the Aeneas/Priam investigation may create some tension in the market, so it may be better to hold off buying until those issues resolve themselves (at least the coup issue anyway).

Syndicated Stocks Update

2006-09-20T01:06:00.000+08:00

Well the call to buy syndicated stocks could not have been timed worse. The investigation into manipulation by Aeneas & Priam exposed by the media Tues sure cut down penny stocks very fast. The 4 stocks at the centre of the investigation Iris, Mobif, Farms Best & Kosmo were the worst hit. Unfortunately news like this cannot be worse for all penny stocks & all those I recommended also fell.

Bad timing or is there something more sinister. Did they push up penny stocks last week because they were selling out before the news came out? There is no way to know this. Regardless, if you had bought these then you should have cutloss & got out by now, thats the purpose of the cutloss. If you did lose out then my sincerest apologies. The lesson is never listen to anybody even me, make up your own mind & have your own system.

I will work very hard to give you some recommendations on which you can make some money just to make up for this loss. So please be patient. All the best.

KLCI & Futures

2006-09-20T00:52:00.000+08:00

KLCI - The news of investigations into Aeneas & Priam may have affected sentiment on penny stocks but most analysts don't think it will affect the CI. That remains to be seen. We saw some weakness but that is also due to it reaching close to the strong resistance of 970. There is good support at 953 & the mid Bollinger Band line. A breach of these will be negative. And the futures will play a part too.

Futures - is worse off. It could not stay above the 960 strong resistance & is now at a 6 pts discount to the CI. There is support at 951 & mid BB line. But a breach of this will lead to further selling & possibly will also pull down the CI with it. Generally the CI & Futures are slightly weaker. Will the coup in Thailand cause a bigger fall on Wed? Caution is required this week.

(No charts today bec Blogger is not quite working as well, its not loading the charts).

Bursa Update

2006-09-19T07:04:00.000+08:00

KLCI - at 965.5 is just at a 2 points discount to Futures. If futures climb it looks like CI will too. There is very strong resistance at 970 & it may take more than one attempt to break this strong resistance. Good support by MAV & it is within upper Bollinger Band channel. Still bullish but must break 970 to progress further. Vol is also picking up, another positive sign.

FKLI - CI Futures are on a strong uptrend. It has crossed the 960 resistance & now targeting 990. Daily MACD almost golden cross, another up day & it will cross. It is within upper Bollinger Band channel. So it looks positive. Any pullback will be supported at 960. As long as this is not breached bullish momentum will be maintained.

Syndicated stocks did not move much yesterday. Just some very small moves either up or down. The daily candles do show slight weakness but after some strong rises last week this is to be expected. As long as cutloss is not breached I will hold & watch. It is still very early days yet. Monday's strong rise in CI & component stocks means retailers stayed on the sidelines yesterday. Lets see what happens over the course of the week.

Time To Buy Battered Up Syndicated Stocks?

2006-09-16T07:45:00.000+08:00

This week was a very interesting week for all those recently battered up & bruised syndicated stocks. Many had fallen anywhere from 50 to 75% from lofty unsustainable highs to perhaps some ridiculous lows. Thats the problem with syndicated plays, on the downside even real values can be ignored during panic falls. However, I have been waiting for a sign that the correction may well be over & that the time for syndicated plays to return has finally come. Syndicated stocks never die...they may fade for a while but they will always be back.

Before we look at stocks, what signal or pattern am I looking for to indicate a reversal in trend? The most important is a bullish candle, the Bullish Engulfing Candle (BEC) pattern. When we find a BEC at price bottoms it is a strong indication of a trend reversal. We have seen that in the futures daily chart where a BEC in mid August caused a strong reversal of the futures into a strong bullish formation that went up from 874 right up to todays high. When this happens in a weekly chart the pattern is even stronger. Remember it must happen after prices have fallen badly, then only is the reversal very strong & bullish. In all these cases the Daily MACD & RSI are +ve & rising, weekly RSI are flattening & starting to show possible rises. Weekly MACD lag prices but are a low levels.

The downside in all these cases are is limited because you are buying at the bottom and the risk-reward ratio is high (except for Iris, I would not recommend this for the faint-hearted).

Iris - we start with the grand daddy of them all. Despite falling from a double peak of 1.38 punters have still been chasing this stock. Amazing, I don't admire their stupidity but you have to give them credit for sheer guts. The recent falls h'ever were very bad & it fell from 1.38 to 0.15 a whopping fall of 89%. But last week it formed a strong BEC off a strong support at 0.16. This is very bullish. Resistances are at 0.38, 0.44, 0.65 & 0.72. The signs are that it will rise next week but I am very very wary of this stock so I advise traders to keep an eye on this but don't buy if you are the cautious type. There are equally good buys below.

MTD Infra - fell from a double top high of 1.52 to a low of 0.93, a fall of 39%. It fell to the strong support of 0.94 & formed a strong BEC last week. This happened twice before to MTDi & both times it rose off the 0.94 support to a high of 1.50 giving gains of 58% each time. The BEC this time is large & strong, so next week we should see good upside. Resistances at 1.10, 1.20 & 1.40. If prices reach 1.40 gains will be 36%. BUY with cutloss at 0.93.

Poly Tower - fell from a high of 1.45 to a low of 0.555, a 62% fall. It hit the bottom of 0.555 the previous week & last week rose to form a BEC. The last time PTV too a big fall in May/June it reversed when a bullish piercing candle formed at the low & it rose from 0.58 to 1.45 for a huge gain of 150% in just a month. Last week's BEC at a strong support level indicates the correction is over & prices should reverse up. Resistances at 0.74, 0.85 & 1.00. Very strong resistance at 1.20. Even if prices hit 1.00 this gives a gain of 50%. Buy with cutloss at 0.57.

Satang Jaya - fell from a high of 2.38 to a low of 0.985 a 59% fall in just 2 months. It found support at the historical low of 1.00 (+/- 0.015) & this week it formed a strong BEC. Price falls on Wed & Thurs & a small rise on Fri have basically corrected the strong rise on Tues. BEC at a strong support level is very positive. Resistances at 1.11, 1.18 & 1.30. Further Resistance at 1.52 & 1.60. Even a rise to 1.30 will give a return of 20% but likelyhood of a rise to 1.52 is strong (returns 40%). BUY with cutloss at 0.985.

SYF - fell from a recent high of 1.18 to a low of 0.63, a fall of 46%. It started rising off its lows on 8, 11 & 12 Sept & then fell for 3 days. Despite the 3-day fall it still formed a BEC (see B on chart). The same BEC formed after the previous large fall from a high of 1.86 to a low of 0.68 (May to June - see A). That BEC preceded the rise from 0.68 to 1.18 a gain of a whopping 73%. If the BEC is true this week then prices should rise from now until resistances at 0.85 & 1.09 for a potential gain of 58% (if it hits 1.09). Buy with cutloss at 0.62

Versatile - fell from a high of 0.985 to a low of 0.29 a staggering 70% fall in almost exactly 2 months. At the bottom we saw a Doji the previous week & this week a strong BEC. Is this an indication of the reversal to come next week? After a strong rise on Tuesday it has corrected for 3 days yet shows a weekly BEC. If we follow CS charting this is a strong buy signal. Resistances are at 0.40, 0.44 & 0.49. If it can cross this then next res are 0.55 & 0.65. Even if prices rise to just 0.49 thats a 42% gain. BUY with cut loss at 0.29.

Update KLCI & Futures

2006-09-16T07:34:00.000+08:00

KLCI - is still in bullish mode. Prices remain above support of 953 & within upper channel of Bollinger Band. It is also riding the 10-day MAV upwards. No golden cross of daily MACD yet but RSI has stopped falling & should move up again if prices go up next week. Weekly MACD & RSI are still positive.

FKLI - CI Futures are also in bullish mode. Trending upwards & is above the resistance of 960. Another 2 days above 960 will be very positive. Daily RSI trending up & MACD is close to making a golden cross. Weekly MACD & RSI are +ve & the weekly candle shows a bullish trend as well. It is just 2 points above the CI & signs indicate continued uptrend next week.

Update: KLCI & FKLI (CI Futures) & Theme Plays

2006-09-15T07:20:00.000+08:00

FKLI- made a very bullish move off the mid-Bollinger Band line today. Next it has to breakout from the strong 960 resistance. A strong high volume b/out would bring it into bullish territory. All we need then is for the Daily MACD to stage a positive crossover & for the BB to rise & expand. RSI seems to have bottomed out at 38. Weekly RSI & MACD are positive. Again any fall back should be strongly supported at the mid-BB line. It will only turn bearish if it breaks below this line. The 10 & 30-day MAV is also providing support. Now if only Vol was higher.... Anyway, I called for going long yesterday & those who trade futures would have been amply rewarded with a 7 point rise. Anyone want to buy me teh tarik & roti canai? ...8))

KLCI - is still finding good support at the mid-BB line & support level of 953. A breakdown below these 2 supports will be negative. However, Futures is now at a 3 point premium to the CI & that is a positive sign that perhaps the main market will soon trend upwards. So maybe the correction is over at the 953 support level. Traders could start accumulating good stocks at this level but keep an eye on the mid-BB & 953 support & be prepared to retreat if they are broken.

Themes - There also seems to be a new theme play (of an old theme play) i.e. construction stocks. They seem to be moving up strongly this week with IJM, Road Builder, UEM World & MTD all positive. I will do a thematic review this weekend but these are starting to look good again. Traders may want to consider accumulating some of these stocks selectively. Do your analysis before picking stocks.

Another theme play that moved up Thursday is palm oil stocks. However, we need to see if it can be maintained or whether its just a technical rise which will not hold up next week. Again I will do a review on the weekend.

The most interesting is the Penny Stock Theme Play. I have been monitoring these under my "Buy when no one wants to buy" strategy & many of them are starting to show bullish signals, mainly strong weekly candlestick bullish engulfing at the bottom. This is how the last play started & now we are seeing them again. As long as prices of these stocks either stay flat or move up today (Friday) the pattern will confirm. Stocks incl here are PolyTower, Satang, SYF, Versatile, MTD Infra, Oilcorp & even the dreded grand daddy of them all IRIS. I will do an analysis over the weekend once the weekly chart is complete for the pattern.

Happy trading.... 8))

SJER Theme Review - Mulpha, Tebrau, UEM World

2006-09-13T21:15:00.000+08:00

As requested by Goldman, perhaps its time for a review of the SJER theme.

1) Mulpha - is quite resilient. Despite overall market falls it has managed to remain within the upper BB channel & also above the 10 & 30-day MAV & 1.20 support line. Daily MACD & RSI are positive altho the weekly are negative & falling. As long as it stays in the upper BB channel its fine & a breakout above 1.27 will be very bullish but that may take a few attempts first as it is a very strong resistance. You can buy & hold this with a cut loss below 1.19.

2) Tebrau - is this a one day wonder? Nice long white candle on Tues & then a long leg Doji today. If tomorrow prices open below 0.455 & stay below then it is confirmed -ve & it should fall back. Daily RSI turned +ve Tues but MACD still has not made a golden cross. Weekly MACD & RSI still -ve.

Also today prices were stopped righ at the mid BB line. It couldn't cross this & the BB is still falling. I view this as -ve. It must also cross above the downtrend line (A-C) currently at 0.49 which is also the point of the mid BB line. Double jeopardy, prices stopped by midBB & downtrend line so 0.49 is a strong resistance now for Tebrau. If it crosses above this tomorrow then it will be +ve if not then prices will continue their fall & its a one day wonder confirmed.

3) UEM World - is looking positive but with a caution because it is still within a Descending Triangle (A-B-C). A DT is generally a negative pattern but within this, UEMW has some positives. It hit the lower BB line & bounced up to cross above the mid-BB line. The BB also narrowed but with today's close is opening up again. If prices can stay in the upper BB channel it will be +ve. The other positive from this is that it bounced off the strong support line at 1.29 which was also the point from which it bounced off the BB. When this happens it is positive. Daily RSI is rising again & MACD just made a golden cross.

On the negatives it was stopped at the 1.50 resistance line so tomorrow's price action is crucial. Vol is also still low. Weekly RSI & MACD still -ve. Finally it is still below the downtrend line (B-C) which constitutes the DT & a strong resistance. It must break above this line on high Vol for it to turn bullish. Next 2 days will be interesting. Cut loss is at 1.29, a fall below this is very negative.

Analysis: KLCI, FKLI (CI Futures) & Dow Jones

2006-09-13T20:12:00.000+08:00

KLCI - seems to be holding out reasonably well. Technically positives are:
1) I especially like it that the mid-Bollinger Band is giving it solid support. BB is still in rising mode & it has not turned downwards. If it can stay within the upper BB channel then index has the potential to rise again from here.
2) The support line of 953 is holding up well so far.
3) A bullish Hammer has formed & when this happens at a support line it is positive. This has formed at the mid BB line so technically it is a good sign showing that buyers are coming in at the support line
4) It is also comfortably above the 30-day MAV another good support line for the index
5) Weekly MACD & RSI are still positive.
6) Finally Vol is rising, even though it is 40% Mesdaq volumes, but that was also the case earlier in the year & in June/July. If this Vol is maintained it is a good sign that maybe Buyers are returning to the market.

Technical negatives:
1) Daily MACD & RSI still turning down. But this may lag the market a bit & if in next 2 days market moves up, then they should reverse upwards.
2) Hmmm hard to find other negatives altho the last minute push to keep the CI up over the last few days does not give a true picture of the market. But this has happened before & in the end the support was enough to keep it steady until selling pressure dissipates leading buyers to come in & the market to rise.

Fundamentally:
1) Oil price falls are a good sign not just for the CI but for global economies. It eases inflationary pressures & may mean the Federal Reserve will hold rates steady, good for us & the world economy.
2) Commodity prices have also been falling & this eases raw material pricing pressures & eases inflation concerns.
3) Tun Mahathir's tirades against the Govt will still be there but it will be of less concern to everyone incl foreign investors. Reuters carried a report on Monday entitled: "UMNO Humbles ex-Premier Mahathir". Foreigners will take such headlines to mean they can worry less about Tun & that the PM's hand is stronger. Unless Tun can come up with some really dirty laundry on Pak Lah, otherwise this is less of a concern for now.

Overall, the CI is looking positive again. The one signal we must watch is the mid BB. If index falls below this then be prepared to get out, if not then the bear is losing & the bull may just be on the verge of returning.

FKLI (CI Futures) - the same comments hold for Futures. It is following the same trend as the CI & also has support at the 10 & 30-day MAV. As long as it holds above the mid-BB it should move up. Going long is indicated here with a sell order in place if it falls below the Mid-BB.

Dow Jones is bullish. BB is rising & index is in the upper BB channel & rising. Weekly MACD made a golden cross early Sept & weekly RSI is +ve. Daily MACD is about to make a +ve cross. Volumes are rising. With falling oil prices & rising corporate profits prices are being well supported. Falling commodity prices ease inflation worries & the bet is that Feds will hold interest steady. Only worry is a falling housing industry but economists seem to think it will be a soft landing, I am not too sure about that. Regardless, TA is positive on the Dow. A rising Dow will lend support to world markets & that will also support the CI.

Update KLCI, Futures & Penny Stocks

2006-09-13T08:57:00.000+08:00

KLCI- made a hammer pattern yesterday & bounced off the middle Bollinger Band line. Ordinarily that would be a bullish signal but the only problem is we all saw that it made about 2 points up in the last minute before market closed. Thats what my friend Isaac calls the "magic last minute push". If it wasn't for that bit of magic, we would instead have a black candle & not a hammer. That is one problem with using TA in M'sia, sometimes TA looks good but the underlying issue is manipulation to make it look good. So a one day candle is not good enough & thats why I always look for a few days before making a call on the market. So I would prefer to wait for further signals before I make a "state of the market" address in this blog. And the volume is not related to the CI its mainly because of the play up in the penny stocks.

FKLI - the futures seems to be still in corrective mode. No new signals to change my opinion that it is still bearish.

Penny Stocks - "One day of sunshine does not a summer make!" Penny stocks surprised us with a sudden high volume & price rise yesterday. There were no major reversal signals on the charts Monday to indicate this rise. All I can say is that the syndicates must have decided that prices have gone low enough to start playing the market again. This will probably bring all the market punters jumping in to buy penny stocks because they are afraid they will miss out on a new bull run. They may just lose another pair of pants by doing that. For me I will wait a few days to see how this turns out. If prices rise for another day or two, then have a mild correction & THEN rise again, then maybe, maybe I may enter some of the better stocks. Until then I will just watch the market. Better to be safe than sorry.

Analysis: KLCI & FKLI (CI Futures)

2006-09-10T22:17:00.000+08:00

Last week was a significant week for the market & for M'sia politically & economically. Politically Tun Dr.M, the most ardent critic of the PM & the Govt dramatically lost in his attempt to win a delegates seat to the UMNO Assembly from his old stronghold of Kubang Pasu. He polled 9th out of 17. Only 7 delegates were elected. His son also bore the brunt of the backlash & only polled 5th. In 2005 he was 1st. Politically it was a severe embarassment for Tun & strengthens Pak Lah's position. If even Tun's own stronghold does not support him then he can never say that he has UMNO's backing. But knowing Tun he will find another excuse to speak out but definitely his strength politically has waned & he can say what he wants, but this is the final straw & he has now been put to pasture. Thanks for everything Tun, but long live the new PM.

Without Tun's criticism perhaps Msia can get back on track to doing what we really should be doing, building up a new economy based on human capital, new technologies & new initiatives.

Economically Budget 2007 & 9MP should boost the economy & keep it humming despite fears of more interest rate hikes & a recession in the US. Fears - maybe there will be a soft landing, we don't know that yet but a slowdown for the next 3 years can be expected. Msia will also be affected as the US is our major trading partner, so we need to keep domestic demand up & Govt pump priming will be very necessary.

KLCI - we saw the expected correction at the 970 level. The rise from 900 pts is unsustainable without a decent correction. The question is at what support level will the CI stabilise & reverse back into a bullish move upwards towards my target of at least 1021 by Chinese New Year 2007. Is it 950, 940, 921, 900 or 883? I analyse the CI here & compare it to the last fall from a Rising Wedge (RW) in May 2006.

Chartwise, Friday the CI found some support at the 10-day Exponential Moving Average (MAV) & formed 2 spinning tops (almost Dojis) on Thurs & Fri. The 2 ST can mean a possible reversal but it is unlikely, more likely it is just indecision. H'ever Vol even when falling has been low, so there is no large scale selling. Is that because retailers are out of the market bec of previous falls in penny stocks like IRIS, Mobif, etc? Maybe or maybe institutions are still holding on to their blue chips.

On the positive side, prices remain above the middle Bollinger Band within a still rising BB. It is also above the 10 & 30 day MAV (red & green lines) & above the 953 support line. Contrast that with May when it fell below all the above. When prices fall below the BB, MAV & support then we know for sure that it will be very bearish. So for now the optimists may hope that the correction may be short (but I doubt it).

On the negative side, RSI has fallen sharply & MACD has just made a bearish cross. The same thing happened in May & it was followed by big falls in the index.

So what to do next? Well, overall the index is weak. Will we see strength & buying coming in to push it up again this week? I doubt it. But technically speaking it is weak but not totally bearish. H'ever this is not the time to enter the market. Signs are that there is a greater likelyhood of a fall than a rise. I will watch the market for it to show its direction. Will it fall below the mid BBline, will the MACD fulfil the bearish cross, will it fall below th 30-day MAV & 953 support? Or will it give us a strong white candle & move up again. These are signals I will watch out for & until then I will wait patiently by the sidelines.

FKLI (CI Futures) - formed a bullish engulfing candle on the daily chart at the middle BB. Interestingly in May at the same point (mid BB line) it formed a white harami candle, normally a bullish sign, yet the next day it fell below the BB line. Will this happen again tomorrow? I am not into crystal ball gazing, but thats possible bec FKLI has a bearish MACD cross, falling RSI & the white candle had low Vol (so its not very convincing). Will the 940 support hold? If it falls below the BB line, 940 & 30-day MAV (green) then will see bigger falls as happened in May. 921 & 905 provide possible strong support if it falls.

Another strong indicator of bearishness is the weekly candle which is showing a very bearish black engulfing candle. We should never ignore the weekly candles which to me are even more important than the daily. Based on this the Futures is in for a definite fall this week. A good opportunity to short the FKLI.

Overall Analysis: The CI & Futures are still going to fall. Futures are also at a 7 point discount to the CI & if it falls further the CI will also follow. So the market is still in a very bearish state.

How To Trade In a Down Market?

2006-09-07T07:56:00.000+08:00

Basically - You Don't. There is no rule that we have to trade all the time & that we have to rush into buying some stocks just because it may have fallen to what looks like cheap prices. Never be tempted into buying simply because prices have fallen considerably. Buying when prices are falling is like sticking your neck out under a falling sword, you'll get it chopped off.

When you buy at this time you are hoping & assuming that the fall will stop & suddenly prices will rise again & you will make a ton of money! If you have read that anywhere then thats a load of rubbish. When you assume - you just make an "ass of u n me". Never assume, hope, guess or pray that you are lucky. Doing any of these means you are gambling & thats neither using fundamental nor technical analysis. Its just luck & trust me in the market the only luck you ever get is bad luck.

Be patient. If you have to stop trading stocks for a week or two or more, don't worry. You don't have to trade all the time. In fact the wise trader is the most patient trader. Wait until the fallout is over & when you see a strong technical signal then go in. If that means a 2, 3 or 4 week wait, so be it.

What are buying signals? Look for candlesticks like morning stars, hammers, piercing & bullish engulfing candles at support levels. When these form at support levels then it is a stronger signal. If this is coupled with supports at long term Moving Averages like the 50, 100 or 200 day MAV, then it is further confirmation that the bearishness may be at an end & a new trend may be starting. Also look for positive candles & signals in the weekly charts, they are excellent for changes in trend.

The key to making money is patience & a plan. That plan is a good TA plan. But patience....well only you know if you can be patient. If you want to win then patience is a virtue!

KLCI & Futures: Breakdown from Rising Wedge

2006-09-07T07:39:00.000+08:00

KLCI- Yesterday (Wed) prices broke down from the Rising Wedge (RW) in a big way confirming the top reversal pattern. However, despite the big falls Vol has not been very high. But note that for bearish moves, volumes do not have to be very high, as prices can breakdown very fast because there are basically no buyers. The first initial support is 953. We may see a technical rebound at this point but because the market is weak the rebound will most likely be small & only a temporary delay of the inevitable further fall towards 940 & 921. Whether it falls further to 900 or 883 remains to be seen. Regardless the trend in the CI is weak with further downside likely.

FKLI - Futures had a big drop on Tuesday & some stability today. The discount to the CI is only 8 points now. Daily MACD has made a bearish cross & RSI has fallen, indicating a weakening market. If the CI stabilises temporarily today, so might the Futures. At this moment there is a bearish slant to the market & we definitely cannot state that this is the end of the correction. The likelyhood is that bigger corrections are in store & this is just a temporary respite. Strong support at 940 & 921.

SJER Theme - Loss of Interest?

2006-09-06T08:36:00.000+08:00

Stocks based on the South Johor Economic Region theme seem to be among the biggest fallers this week. Yesterday Tebrau & UEM World took big tumbles.

Tebrau - took a BIG fall yesterday. There has always been a Descending Triangle (A-B-C) & that generally is a weak pattern with which we must be extra careful. The cutloss for the DT was 0.50 which I have stated many times in this blog. Anyone who has read my blog should have sold once it fell below 0.50 & if you did that yesterday you would only have lost 1-2 sen not the massive 12 sen or 23% drop. Weekly MACD has made a bearish cross down so this is not good for Tebrau. This is a major breakdown but there is support at 0.33, 0.28, 0.23 & a very strong support at 0.20. Actually 0.33 & 0.28 are also strong supports but panic sellers may dump & force prices below these supports.

Mulpha - also took a tumble & has a bearish engulfing pattern at a top. Weekly MACD has been negative for a few weeks. Vol has however been low despite the fall. Still the bearish engulfing candle indicates further falls.

UEM World - should by all accounts hold up quite well as fundamentally it has a lot going for it incl. the award of the 2nd Penang Bridge, huge landbank in Johor & as a major construction Co owned by Khazanah it will definitely benefit from the Govt's construction pump priming in Budget 2007 & also 9th Msia Plan. But technically it is weak, so we may see further falls yet. Two large black candles Mon & Tues, very negative weekly MACD & RSI, falling below the 7,14 & 21-day MAV all show the weak technical picture of UEMW. Only consolation is low volumes during the drops so maybe the institutions are still holding this stock. Support is at 1.25, 1.07 & 0.90. General direction is bearish & down. Don't re-enter until we see positive candlestick pattern.

Bearish KLCI & CI Futures

2006-09-06T07:54:00.000+08:00

So the prediction that I have been making for the last week or so about an impending reversal in the CI & Futures has finally come to pass. In fact on Monday I said very clearly that we may see a major correction in both the CI & Futures on Tuesday & here it is. Everything I said about this situation has been based almost purely on TA. We even saw the Rising Wedge & I even quoted what Edwards & Magee said about the RW & its reversal potential. TA has clearly shown its strength, how can anyone even doubt the validity of TA now?

KLCI - saw a major top reversal at a strong resistance with the appearance of a dark cloud cover pattern (a large black candle that closes more than 50% into the prior day's large white candle). When this black candle appears after a large white candle esp at a resistance line this shows the bulls could not take take control of the market & have given up. The next move should also be down. When this is coupled with the rising wedge, if prices close below 959 (the Z-Y line of the RW) then it will be a major breakdown. Expect the fall to be fast & furious. Futures is at a discount of 14 pts to the CI so there is still some catching up for the CI to do (to the downside). Initial support is at 953 (weak) & 940. Strong support is at 921 & 900. Again I would not like to predict where the correction will stop, for that I will watch the candlesticks for a bottom reversal. But for now wise traders would STAY OUT of the market.

CI Futures - FKLI - also saw a major reversal today (Tuesday). It was the biggest drop for 3 months & is now trending 16 points below the CI, perhaps an ominous sign that the CI is due for a bigger correction in the next few days. It has formed a bearish engulfing pattern (large black candlestick, almost "engulfing" the prior day's candle) on higher volume, so it is clearly bearish. The weekly is also showing a major bearish engulfing pattern. Although we should ideally wait for a complete week to call the pattern for the weekly candle, I have no doubt that it will be bearish for this week. Supports are at 940, 933 & stronger support at 921. Below that we have support at 905 & 876 which will be very strong. We cannot predict where the correction will stop, we just have to watch the candlesticks for the downside reversal. The only way to trade the futures is to short it until we see a reversal.

Euphoria but what next for CI & Futures?

2006-09-05T08:12:00.000+08:00

As expected Monday's Euphoric response to the budget came true. BUT risers & losers were about equal & volumes were very very low - not very convincing for whats supposed to be a 6 month high for the Index is it? So whats next?

1) KLCI - is getting close to its 970 strong resistance line. Volumes are low & there have been equal numbers of losers & gainers the last week including Monday. I am not at all convinced that the market can make new highs this week. Why?
a) The rise has been very steep without much of a correction to correct the overbought conditions. The steeper the rise, the harder the fall.
b) If the market is really bullish there should be much higher volumes but they have actually been falling while the index has been making new highs. This divergence is very disturbing & so not at all bullish. Even Euphoric Monday had very low volumes.
c) Even though the index is rising steeply there are as many losers as risers among stocks, not exactly a bullish market is it?
d) Technically the appearance of a wedge indicates a weakening market. The same thing happened in May & the market true to TA fell. Why should this time be any different? A breakdown from a wedge will be fast & furious.
e) RSI & MACD have been flat even when the index has been rising, another divergence that is not very comforting.
f) 970 has been a support/resistance line on many occassions before & in May stopped out the rise. Because the market did not correct adequately along the way it does not have the strength to rise strongly to break 970. From 18 July to 4 Sept (1.5 months) it rose from 900 to 968 with only one real correction (for 2 days) on 15 & 16 Aug. This is inadequate to correct the overbough position. So the market has no real strength.
g) Finally FKLI (CI Futures) did not rise on Monday & is at a discount to the cash market. Another strong indicator that the CI may correct.

When we take all these indicators into consideration the only conclusion is that the market is on its last legs. It will reverse very very soon, on that you can be sure.

2) CI Futures - is at a 7 pts discount to the CI. On Monday it did not follow the bullish CI trend & instead rose only 3 points compared to the cash market's 8. It is at the 960 resistance line & may soon fall. Vol also has been very low & falling despite the index rising. When we see such divergences in TA it is an indication of weakness & that the rise does not have strong market support. Maybe local institutions were holding it up for the budget. In any case Futures may also reverse soon, maybe even today. Initial support is at 940.

Budget Euphoria, CI Futures & KLCI

2006-09-02T22:20:00.000+08:00

Budget 2007 presented by the PM on Friday is generally a good all-round budget. Nothing spectacular but it is an expansionary budget with goodies for everyone including corporations esp the reduction in Corporate taxes by 1% each year over next 2 years. This reduction is still quite minimal & will not have a significant impact on listed companies. But overall its another feel good budget which may see a 1 or 2 day euphoria before reality dawns & it falls back into a corrective mode. Longer term the Budget is very positive for the market & I see the CI hitting 1021 by February 2007.

Futures - In the meantime technically the CI Futures Index (FKLI) is hitting a strong resistance at 960. This level stopped the FKLI rise on 2 recent occassions on 3 Aug 2005 & 8 May 2006. It may do the same again this week. However some euphoria over the budget may see it rise temporarily but overall it will probably correct downwards. H'ever if it does break above 960 strongly for at least 3 days then it is possible for it to stage a run towards 1000 but I very much doubt this. The rise so far, since hitting the bottom at 876 on 17 July, has been very steep. When this happens a reversal to correct the overbought situation is normal & expected. Perhaps towards the end of the week this will happen.

KLCI itself should also see some euphoria & a short term rise to 970 is likely. After that we have to be very cautious of the correction because of the rising wedge I mentioned in Friday's article. The correction will be very steep. Pls refer there for the chart.

Dangerous Times for KLCI

2006-09-01T06:48:00.000+08:00

I thought that headline would capture your interest .... 8))
But I am not kidding...read on.

KLCI - Is history going to repeat itself? I see a rising wedge (RW) pattern in the CI (X-Y-Z) that is almost a mirror image of the Wedge (A-B-C) that preceded the last major correction in May/June this year from a peak of 970 to a low of 883, an 83 point drop. A breakdown from a RW is bad news & almost always leads to a major correction.

This is what Edwards & Magee say about it. "A RW typifies a situation which is growing progressively weaker in the technical sense. Prices ...fluctuate within the Wedge's confines for at least 2/3 of the distance from the base to the apex, in many cases they rise clear to the apex & in some actually go a short distance beyond pushing on out at the top in a last-gasp rally before collapsing. Once prices break out of the Wedge downside, they usually waste little time before declining in earnest. The ensuing drop ordinarily retraces all of the ground gained within the Wedge itself & sometimes more".

What E&M say is that a RW indicates the potential of a price collapse & the drop will be fast & furious & it will lose all the gains made within the Wedge.

Thats what happened in May/June. It rose from 910 to 953 (just like now), then had a last-gasp rally (M) from 953 to 970 including a gap up of 7 pts & then it collapsed & dropped 50 points in 2 weeks. Then it fell further to 883 beyond the base of the Wedge (C) of 910.

There are 2 scenarios today:
a) Prices may rally beyond 958 to 970 (only 12 points) just like May/June & then collapse first to 940/930 then later on to 900 or worse 883.
b) Prices may not rise any further today but collapse nevertheless to 900 or 883.

We have been seeing market weakness for the last 2 weeks. While the index has been rising, on many days we have more losers than winners. Also Vol has been falling despite index rising, a very uncomfortable divergence. Also while index is rising, RSI & MACD have remained flat. Finally 970 is a very strong resistance & has stopped the index on numerous occassions in the past.

Taking it all together the overwhelming conclusion is that the RW will come true. We may see a small burst in activity & then I predict a fall to 900 or 883 (unless 930 holds it up - possible but unlikely).

If you follow Dow Theory then the only call to make is to sell asap & get out of the market until the RW formation clears itself. Time for me to take that long holiday I have been promising myself. Good luck everyone.

KLCI & Futures

2006-08-28T07:34:00.000+08:00

KLCI is staying positive but it is coming up to a very strong resistance at 953. On a weekly basis it is very strong with a long white candle & positive RSI & MACD. On a daily basis MACD has just barely made a golden cross & RSI is just turning up. So if it can convincingly break 953 on higher vol then we may see a stronger rise to 980. CI will receive a boost since BNM has kept interest rates the same at its Friday meeting. But on the negative side oil prices may rise bec of hurricanes in the US Gulf Coast. H'ever with the Budget coming up on Friday interest will be kept up. So we may see a flat CI this week with a slight upside bias.

CI Futures - are also rising slowly. It is tracking the CI & at 951 is almost the same as the CI. There is strong resistance at 959. RSI & MACD are rising very slowly. Friday h'ever gave a spinning top candlestick formation. Nothing to be particularly worried about but if it opens below 951 Monday & closes below this then maybe a reversal will be indicated, then support is at 940 & 933. I believe interest will be kept low until the conclusion of the Budget on Friday.

Plantation Theme

2006-08-28T06:56:00.000+08:00

Plantation stocks have been correcting for 2 weeks now in line with the fall in CPO prices. Soy Bean prices have also been falling for almost a month now & coupled with lower oil prices the past week this has led to a correction in plantation stocks. Oil prices may rise this week because of worries about hurricanes in the US Gulf, the latest being Ernesto. Its the season for hurricanes. There have also been press reports on worries that if CPO rises above RM1700 or RM1800 (differing reports) biodiesel may not be feasible & would be more expensive than oil. All these have kept CPO down & with it plantation stocks.

Plantation Index is still rising. It is above the 5,10 & 15 day & within the upper channel of the Bollinger Band (BB) so it is still positive. Daily MACD & RSI h'ever are negative. Weekly RSI & MACD are still positive. It will turn very positive if it can take out the recent high of 3742. Vol has fallen significantly. I think PI is being kept up by interest in the larger index stocks like IOI, KLK & PPB. Fundamentally if CPO prices keep falling I expect PI to also start correcting down, but if oil prices rise & soy prices also rise then CPO will rise & so will Plantation stocks.

Kulim is bucking the trend & rose strongly the last 2 days. It has stayed in the upper BB channel which is a positive sign & its also above the 5,10 & 15 day MAV. Resistance is at 4.88 & 5.20 but it has to break above the 4.60 recent high first. After falling, the daily RSI & MACD are starting to rise though the MACD has not yet made a golden cross. The weekly RSI is h'ever VERY overbought at 97 & may have to correct soon. Technically on a daily basis it looks like the rise will continue but it is hard to say for sure as I am concerned that it is rising when others in the industry are flat or falling & the weekly RSI is overdone. Anyone who buys at this time should only do so if it breaks 4.60 but be very cautious.

RSawit - is starting to flatten. Its right on the central line of the BB & also the 7, 14 & 21 day MAV. Vol has fallen considerably & RSI & MACD are sharply down. We may see a sideways trend this week & a rise will be dependent of CPO prices & the trends of the bigger stocks like IOI & KLK which have to lead the market again.

Other stocks - Most other stocks are following the trend of RSawit: so IJM Plantations, Kretam & PPB Oil are all correcting & then staying quite flat. IOI & Asiatic are rising very slowly but may turn flat soon.

Update KLCI & Futures

2006-08-24T07:31:00.000+08:00

Finally got my data sorted out but some stocks still had some corrupted data. Took some time to correct then all. However, I see no significant changes in many of the stocks we have been following so I didn't find it necessary to post them today.

KLCI - Is still rising, but my concern is that volume is still very low. If Vol remains low it will never penetrate 950 so we may have a flat CI for a while. Two issues will be of concern to investors. Firstly whether Bank Negara will inc interest rates at their meeting on Friday. China increased its rates by 0.25% on Monday, will M'sia follow. If there is no rate inc, then the CI may fly, if there is then expect a big correction next week. Secondly of course is the budget on 1st Sept. Investors want to see what's on offer. Expect more money for construction, announcements of some major projects, more money for agriculture & aquaculture and the usual suspects, tax on alcohol & cigarettes. So if there is no rate inc & the budget is favourable, then construction stocks will do well post-budget. UEM World & Builders, Gamuda & IJM would be the picks.

In terms of TA, RSI & MACD are still flat, index is up but on low volume, support is at 940 & strong resistance at 950.

CI Futures - Is also rising & is maintaining the premium to the CI. It is actually looking quite positive but I expect the same factors as above will affect it. Resistance at 960 & support 940.

Update KLCI & Futures

2006-08-23T07:50:00.000+08:00

Again my stock data is corrupted. Tuesday data became Monday & Monday disappeared, so I cannot analyse stocks but the Indices are ok.

KLCI - Another day up. But the Bollinger Band (BB) is narrowing. That can indicate flat trading for a short term. Unless there is a major catalyst I don't see CI bursting up or falling down. This is one fo those times when its too tough to call either way. As my reader Isaac says, its pretty blur. He's staying out of the market for now & that may be good advice. Anyway there is no reason to sell & really no reason to buy either. Maybe everyone is waiting for the budget to be presented.

CI Futures - Is continuing to rise. It is at a small premium to the KLCI. Is that indicative of future upward movement for the CI? That is very possible. From all indicators from BB to RSI & MACD as well as the 5,10 & 15-day MAV all are indicating continued rise for futures, so thats the trend for now, rising, slowly but surely. 940 is still a strong support & 960 the resistance.

Trading Bursa - Trust No One Not Even Yourself

2006-08-22T08:15:00.000+08:00

I had a reader yesterday who said he read my blog posting on RHB where I said due to the large fall in prices it would be best to stay out of the stock & so he missed out on what was a surprising & big rise in the stock. He must have been pissed off but he was very polite in saying he missed the boat bec he read my blog & didn't buy RHB although his instinct was to buy.

Here I must thank my many readers like Tii288, GLC & TC who came out in strong support of my blog & TA. Thank you guys, its nice to be appreciated.

H'ever the point I would like to make is that TA is NO GUARANTEE that you can get a trade right or wrong. BUT it is still the best method we have of making profitable trades. Yes we will miss out on some opportunities & yes we may even lose money sometimes but on the long term we will make money using TA. I have been trading since 1983 & I bet that is a darn sight longer than some of you, heck, many of you probably were still in diapers when I first started trading... 8))

I have lost money on so many occassions & I lost my pants in 1994 & 1997/8. After that I took up TA & thank goodness I have been making money since then. Sure I have still missed many opportunities but I managed to get out before any major falls & got in maybe not at the earliest stage but early enough to make money. I have tried the "instinct" bit & lost money 80% of the time, thats why I say don't even trust yourself bec instinct does not work.

But do not, I repeat, DO NOT just read a blog & then make a trade bec of what someone says in a blog. Go and learn TA & fundamental analysis as well. Be a master of the trade & not a slave of the blog! When you are good in TA then read what others have to say in blogs bec as good as you are you may still miss some signal or other & someone may have spotted it. Then check it out yourself & when you are certain that the TA is sound & the signals are good then make the trade.

But don't just punt, don't listen to rumours & worst of all don't use your instinct. Thats the sure receipe for losing everything.

Update: KLCI & CI Futures

2006-08-22T07:52:00.000+08:00

Some of my stock data downloaded from my data provider has been corrupted so I am unable to post individual stocks today. However, the indices are fine.

1) KLCI- despite some earlier signs that the CI was due for a correction, it hasn't happened. Based on the charts, it is still in a positive mode. Crucially it is still above the 940 support, its within the confines of the upper band of the BollingerBand (in purple) & staying there & the BB is still rising. H'ever the BB is starting to narrow. This can prelude a minor correction or if prices burst out upwards, then it can be the start of the next run upwards. Daily RSI is flat & MACD has made a negative cross down. H'ever the weekly RSI & MACD are positive. Hmmm, what can we make of this? Difficult to say. If it breaks below 938 (the BB support) then a correction will happen, but if it continues to stay above 940, then the BB will probably narrow & then burst upwards for the continuation of the run. At the moment anything can happen & there is no clear-cut direction.

2) CI Futures - just like the CI it is still staying positive. It is well within the upper BB which is still rising. It is also above the 5, 10 & 15-day MAV. Daily & weekly RSI & MACD are positive. Support is at 940 & resistance is 960. If it stays above 940 for another 2 days then I have to say it will be more bullish than bearish. But for now its still positive but barely so bec volumes have been very low the last few days.

Update: RHB & Utama

2006-08-21T00:00:00.000+08:00

RHB - Has fallen for 5 days straight after breaking thru the support line at 1.16. Friday was a big fall. Its now at the support level of 0.93 & next support is 0.80. RSI & MACD are both down. It is a major breakdown so don't get into any new positions until we know for sure whats happening & until we see a strong reversal of the fall in a bullish candle pattern. Stay away from RHB for now.

Utama - Has been falling for quite a few sessions & fell badly on Friday. When it broke down from the symmetrical triangle (ST) on 3 Aug (red circle) that was a sign of major correction. It has continued falling since then & culminated in a big fall Friday. H'ever it has now formed a long legged Doji & if Monday it opens above 0.91 & stays above, that will give us an evening star & maybe the correction will be over. That is the optimistic scenario, but if it stays below 0.90 then next support is only at 0.82. I would stay out for now.

Updates: Tebrau & Impressive Edge

2006-08-20T22:55:00.000+08:00

Tebrau- No change in TA since I last wrote. Its still within the descending triangle (DT). RSI & MACD are still down. I am getting very uncomfortable with this position bec a DT is a weak pattern indicating downside movement & bearishness & a breakdown will be very bad for the stock. The "hoped for" (shouldn't really be hoping should we?) breakout from the DT has not materialised. Keep an eye on 0.50, if it falls below this then SELL. Next support is 0.45 & 0.40.

Impressive Edge: It has formed an Ascending Triangle (AT) with 0.275 being a strong resistance. Prices have been rising & it is still bullish as its in the upper channel of the Bollinger Band & also above the 5,10 & 15 day MAV. Vol has been receding as it gets closer to the apex of the AT which is typical of distribution within this formation i.e. holders selling at 0.275 are diminishing & once sellers at 0.275 disappear buyers will take the upper hand & prices will burst out of the top & rise strongly (at least thats what Dow Trading & AT is theoretically about). So based on technicals, we should soon see an up move provided it breaks 0.275 on strong volume. Traders can take a position in this stock but cutloss if prices fall below 0.245.

Update KLCI & Futures

2006-08-20T22:38:00.000+08:00

KLCI - is showing more signs of weakness. A Doji formed on Friday & its still just above the 940 support/resistance line & almost equal to the futures which is at 942.5. Daily MACD & RSI are trending down tho the weekly are still positive. The more interesting chart is the weekly chart (shown below) which is showing a Doji for the week. That is a stronger indicator of a possible correction, as candle reversals signs on a weekly must not be ignored. If Monday opens below 942 & closes below it, then it is a better indication that we will see the correction we have been expecting. BUT if Monday opens up & stays up then the Doji is invalid. So we have to wait for the market to give us its cue.

CI Futures is a diffcult call. It made a bullish strong white candle Friday & is still barely above the 940 support/resistance level, but volume is getting smaller. Daily MACD & RSI are flat. It is still above the 5,10 & 15 day MAV. Weekly it made a strong white candle which is bullish. Weekly MACD & RSI are still positive. Its one of those times when its almost impossible to make a call. So best I can say is that we have to wait for another 2 days to see what happens. I would not short or go long at this stage, just be patient & wait for iys next move.

Comments Bursa Malaysia

2006-08-18T02:27:00.000+08:00

What a day on Bursa Malaysia. If its not Iris its something else. Mobif is the latest "champion" to free-fall from dizzying heights to drowning depths. Together with it went all the other speculatives or maybe in M'sia we should call them "Syndicatives". This shows what a risky place a stock market can be. You might make a million today but chances are you'll lose 2 million tomorrow. Don't blame Bursa or SC, this sort of syndication must be stopped at all cost. Otherwise far too many people will lose all their savings in the market.

So if you want to trade, go for the slow but sure winners, the good stocks in good industries. One example was the plantation industry. You would have made good money without running the risk of disasters like Mobif & Iris.

Take care when trading in the next few days & avoid the "syndicatives".

Updates: CI , Futures, Eden, Leader, Tebrau

2006-08-18T01:46:00.000+08:00

KLCI - Surprisingly it rose today. The piercing pattern is bullish & even the Vol is up BUT don't be fooled. I am not convinced that this means the CI will rise from here as it is not convincing enough. Tho the vol is up it is not very high & MACD has made a bearish cross, RSI is down. The 940 resistance must be convincingly taken out & we need to see if it can stay above 940 for 3 days. So I still think it is bearish & will not buy in yet. Lets see what happens on Friday.

CI Futures - Still negative as it did not follow the CI up & remains below the 940 level. Its now at a discount to the CI. Vol is quite low though. Its hard to make a call as it is not exhibiting any major sell/buy signals but its more negative than positive.

Eden - I don't advocate trading these highly speculative & syndicated stocks & I don't buy them but since some of you might I thought I'd blog it here bec I see a very strong SELL signal. There is a strong bearish Dark Cloud Cover candlestick pattern Thurs. When this happens after a large white candle the previous day it is very bearish & indicates further downside. So I would SELL this stock asap.

Leader - Another stock I don't advocate trading but as I see a bad sign I am providing this advise for traders who are involved in Leader. It has also formed a very strong Dark Cloud Cover & when that appears after a large white candle it is very bearish. This is a clear SELL sign as the next move will be down.

Tebrau - No break out . The poor sentiment for penny stocks affected Tebrau as well so Wed's positive move has fizzled out. A descending triangle is bearish but a strong high volume breakout would have been positive but now it has formed a very bearish engulfing candle, so the next move is definitely down. Unless penny stock sentiment improves considerably tomorrow (which I seriously doubt), otherwise it may even crack down below 0.50 & such a break below the lower line of the triangle is extremely bearish & traders must SELL. So keep a very close eye on Tebrau Friday & sell if it breaks down. Next support is 0.45.

Update: Tebrau

2006-08-17T02:32:00.000+08:00

Tebrau - A nice rise today on high volume. Is this the signal that it is going to turn bullish? It closed above the 0.55 resistance but it is still within the confines of the descending triangle. A bullish breakout from a descending triangle (abv 0.57) must be accompanied by high volume. If it does then next resistance is 0.65 & the stronger resistance of 0.725. RSI just turned up but MACD still negative & all the MAV are still flat. We need to see more, but I think it is turning positive. Traders can accumulate with cutloss below 0.50.

KLCI & Futures

2006-08-17T02:06:00.000+08:00

1) KLCI - Finally the correction came. The CI was already exhibiting weakness for a few days & the divergence bet declining volume & rising prices as well as a flat daily MACD & RSI were all indicators of weakness. The Harami at a peak on Tuesday was a strong sign that a reversal was coming & even a 130 points rise in the Dow could prevent it. Today's long black candle portends further falls on Thurs/Fri. Support will probably be at 924 the IHS neckline. I don't think we will see a major downturn, it is most likely a correction within a bullis uptrend.

2) CI Futures (FKLI) - No more discount to the CI. Both the FKLI & CI are now the same at 938. We have 2 black candles at a peak so I expect the FKLI also to correct down. There is support at 933 & 921, but I think it will fall at least to 921. MACD & RSI are flat & Vol is moderate, so there are really no bullish daily signals altho the weekly MACD & RSI are bullish. So this will most likely be a moderate correction, not a big fall.

Comments: Plantation Theme

2006-08-17T01:52:00.000+08:00

As mentioned in this blog yesterday plantation counters were due for a correction & I had SELL recommendations on all of them. So if you had followed my advise you would have made some decent money & sold out by now. The Plantation index is also correcting with strong support at 3567 which will also be at the centre Bollinger Band. It may not hit that level but if it does & remains above it then we may see round 2 of the run.

Oil prices have also fallen & if CPO remains high, this makes Biodiesel unviable as an alternative fuel. So CPO prices may fall in the short term. H'ever the hurricane season is upon us & all it takes is one major hurricane to push oil prices up & with that CPO prices. For now avoid plantation counters until the correction is over, although it may just be a short correction. So keep a keen eye on this space.

CI Futures, KLCI & Tebrau

2006-08-16T07:08:00.000+08:00

Futures - Formed a bearish Harami at a strong resistance zone (940). Reversal signal indicating prior trend has ended. Should correct downwards with initial support at 933 & further support at 921. Only question is if the 132 points rise in the Dow today delays the correction.

KLCI - Bearish Harami formation Tuesday. Volume has been declining but prices rising. This divergence in trend is not a good sign. Other indicators are flat. A correction is due but a strong rise of 132 pts in the Dow on Tues may hold it up for a while. If not the question is will it be a minor correction to 939 or 931 or a bigger correction to the IHS neckline of 924? Either way a correction is due & coming.

Tebrau - still no sign of strength. Getting closer to end of descending triangle. Vol is very low. Indicators still negative. Its still a game of wait & see but be prepared to sell if it falls below 0.50. Resistance is now 0.55

Plantation Theme - Sell or Hold?

2006-08-16T01:22:00.000+08:00

Plantation Index- first black candle after 3 days of white candles. Can portray a reversal or maybe just a minor correction. We need another day to say for sure. However, individual stocks are showing possible reversals. Today is bottom-up trading, as different stocks within this industry may act differently. The smaller players may be in for a bigger correction as we can see below.

1) Asiatic - very strong reversal bec of the dark cloud cover (DCC) pattern on Tues. A DCC at a strong resistance (3.92) & when it pierces below the half way point of the prior long white candle is a strong signal of a reversal. SELL. Support at 3.58.

2) IJM Plantation - candlesticks indicate a reversal of the uptrend. On Monday we had a shooting star & Tuesday a hanging man, both are signs of weakness & when they appear at a peak it indicates a reversal of the prior trend. Strong possibility of a downward correction with strong support at 1.62. Traders should sell & pick it up after the correction.

3) Kretam- has formed a spinning top & possible evening star at a peak. If prices do not open & go beyond 0.65 & if it falls below this then a correction is confirmed. Support is at 0.62, 0.585 & then 0.52. If it cannot stay above 0.65, then traders should sell & buy back later.

4) Kulim - has formed a large bearish engulfing pattern at the peak of a rally. Though volume is low, such a formation portends a change in trend & a correction is more than likely. Support is at 4.24 & 4.12 (Bollinger band support). Traders should sell Kulim & buy back later.

5) Rimbunan Sawit - finally a correction after a big jump on Friday. This is to be expected as it has also risen above the uptrend channel. Technically it looks like a Harami so we can say that is negative. But as other smaller stocks show reversals, RS would not go against trend. If prices do not stay above 1.72 then SELL & buy back later.

Plantation Theme + Stocks

2006-08-12T01:08:00.000+08:00

1) Plantation Index - Moving up very strongly. Broke thru resistance of 3567 very strongly with long white candles on high volume on Thursday & Friday. Also in the upper band of the Bollinger Band & above the 5,10,15 & 20-day MAV. Daily & weekly RSI & MACD are positive. It should continue rising with short corrections in between. One reader said that Hedge Funds are involved in pushing up CPO prices & this Index. That may be true but that does not mean we shud avoid this sector. We shud benefit from this but keep an eye on technicals & take small profits along the way. However fundamentals are there with lower peanut & soya yield in India & USA respectively, higher demand from India, China & from biodiesel usage & also lower stocks of palm oil in M'sia & Indonesia. Rising oil prices will also mean more interest in biodiesel & higher CPO. Just like oil prices, lower supplies & higher demand equals higher prices. This play may still have some legs to go. Enjoy the ride & if you had bought some of my early picks, you'd be up very well. Some stock analyses follow.

2) Asiatic - Broke out of its recent resistance at 3.58 very strongly on high volume. Daily & weekly RSI & MACD are positive, its also above the 5,10,15 & 20-day MAV. Looks good to hit its next target of 3.92 & beyond that is its all time high of 5.15, but that is a pretty high target, possible, but we have to watch the signals. But for now its should still continue rising.

3) IJM Plantations - One of my early recommendations. Superb stock & Friday it shot through its recent & historical high of 1.62 on very high volume. Its above the 5,10,15 & 20-day MAV, its just above the upper Bollinger Band (still ok) & MACD just made a golden cross. RSI is positive. Overall a very good stock & still a BUY.

4) Kretam - I am reviewing for the first time. Just started its rise so its a laggard stock. The bollinger band has just started expanding & prices are within the upper band & rising. It has moved above the 5,10, 15 & 20 day MAV, RSI & MACD are positive & Volume is rising. The weekly signals are also positive. This laggard is showing signs of catching up with its bigger cousins. Initial resistance are at 0.62 & 0.70. Signals indicate a BUY.

5) Kulim is another recommendation that has done well. It is above the 5,10,15 & 20-day MAV & is also riding along the top end of the Bollinger band. The rise has been punctuated by intermittent corrections which is healthy. Daily RSI & MACD are still positive & despite the rise are not overbought, although the weekly RSI is very overbought. Historical high is 5.20 & its 50:50 that it may just reach that high. Rising CPO prices may take it there. Bec of the swift rise I am keeping an eagle eye on the candlesticks looking for a correction & also if it falls below the 5 & 10-day MAV I will consider a top, but for now all signals still do not show a correction.

6) Rimbunan Sawit - Another one of my early recommendations has performed admirably. It is currently above the 5,10,15 & 20-day MAV & within the rising channel. As a recent listing, we don't have enough data to plot & seek many signals like MACD, RSI etc, so the use of several MAVs is suitable. I will continue to hold this until it falls below the 10-day MAV, only then will it trigger my sell call.

Update: Plantation, Asiatic, KLCI, Landmarks, Tebrau

2006-08-11T01:21:00.000+08:00

1)Plantation Index has broken through the recent resistance of 3567 on higher volume. Looks like rising CPO prices and dwindling stocks will underpin the index. Look for further rises in most plantation stocks. IJM Plant, Rimbunan Sawit & Asiatic are good buys.

2)Asiatic broke through the recent high of 3.58 on high volume. Next target is 3.92.

3)KLCI is rising slowly but surely above 940. This is a good sign & Thursday also had higher volume. If it can stay above 940 on Friday then we have the 3-day rule, i.e. if prices can stay above a resistance line for 3 days then we can say that resistance has been surpassed positively. Next target is 950. Other signals are flat to positive. A break below 940 will be negative.

4)Landmarks - Has formed a long legged doji star at a peak. Possible indication of a change in trend & correction but this needs confirmation with an open & close on Friday below 1.80. If prices close above 1.80 then the doji is invalid. No other indicator is signalling a correction though, so traders must wait for additional signals after Friday.

5)Tebrau - Finally after 2 weeks of down days we have a bullish engulfing pattern. It still has to rise above 0.55 to be positive again but today was a good signal. The only negative is that volume is still down. Keep an eye on the resistance of 0.55 & support of 0.50. A break above resistance is positive & below support is negative. The descending triangle is still there & until prices break out of the triangle, Tebrau is still not bullish yet.

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

2006-08-10T07:46:00.000+08:00

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.

Comments: KLSE, MTD Infra, Tebrau

2006-08-09T02:39:00.000+08:00

1) KLSE is still flat. Still needs to break above 940 to turn positive but any external weak factors will lead to a fall. Support is 931 & 926. I believe upside is limited & trend will be to the downside. No budget rally this year? Maybe if it falls to 926 then there will be one.

2) MTD Infra - is still holding above its support level of 1.00. Daily RSI & MACD are turning up. There is also a 2-year old trendline (A-B) which is holding up prices at this level. Technically it is still providing support & coupled with low volume this may be the low for MTDI. Reader Doraidd is sceptical of this stock & feels that stock holders like EPF may be selling on strength, but we can only base our judgement on TA not what holders may be doing. Doraidd has some valid points but I hold my view that technically there is support. Also fundamentally MTDI is not a rotten stock like Iris, because it has a fundamentally valid business and does have intrinsic value. That means it will have a support level & that may be just about right here at 1.00. However, like all speculative stocks you trade at your own risk but with tight cutloss levels I believe this stock is worth the risk with cutloss below 1.00.

3) Tebrau- In a slow downtrend. Formed a spinning top today below the first support line of 0.55, not very good. Strong support is at 0.50. If it breaks 0.50 then traders have to sell as it will weaken the chart considerably. It is still touch & go at the moment because it is forming a clear descending triangle & other indicators are all negative. The only consolation is the low volume, so maybe, just maybe it may bounce back. 0.50 is the key. See previous charts, not much change.

Review: Old Favourites - PTower, SYF, Verstl & MTD Inf (BUY)

2006-08-06T23:58:00.000+08:00

Lets review old favourites that reached unbelievable heights just to plunge fast & furious leaving a lot of losers. Based on the "Buy when no one wants to buy" strategy, we review 4 stocks, in case of new buy signals bec. many old fav will always make a return to be new fav again.

Strategy: For buy signal we use weekly charts & look for:

- Candlestick buy signal (Hammers, Bullish Engulfing, Doji, Morning Star etc)

- Minimal or negligible volumes - weak holders have sold out & selling on upturns will not be very strong

- Prices must have fallen close to previous bottoms & strong support levels

1) Polytower - The last fall from a peak of 1.53 to a low of 0.58 turned around with a piercing pattern in early June (A). It had also reached supports at 0.58. The turnaround was strong & it reached a high of 1.45 giving a return of 150% for followers of this strategy. However, current prices have NOT reached their lows yet (B). There is no candlestick buy signal although volume is reaching its lows. Also it is still about 0.10 above strong support levels. So PTwr still is in correction mode, no turnaround yet.

2) SYF - After reaching a high of 1.86, SYF fell fast to a low of 0.68. Then it turned around with a hammer/bullish engulfing pattern in mid June (A) & climbed to a high of 1.18 giving a 73% return. Vol reached negligible amounts & it had reached a support level at 0.68. However current prices while close to a support level & on low volume, does not show a candlestick buy signal yet (B). So the turnaround has not come yet, so we cannot buy in yet.

3) Versatile - The last fall reached a low of 0.38 then showed a hammer followed by a strong bullish engulfing pattern. Today vol is very low & it is close to the 0.38 support level but candlesticks still do not give a buy signal. So again we have to wait.

4) MTD Infra is interesting. On 2 separate occassions (A & B) after big falls, prices reversed & rose very strongly when a bullish engulfing candle appeared at the bottom signalling the turnaround. On both occassions it found support at 0.945. This time we saw a long legged spinning top last week & this week a Doji (C) (both bullish patterns) & both found strong support at 1.00. Volume is also negligible. So it meets all our 3 criteria - is this the turnaround?

I call a BUY here & as long as prices do not fall below 1.00 (cutloss) , we might just see a turnaround in MTDI. Resistances at 1.10, 1.20 & 1.40. Lets see if this strategy works. Good luck.

Comments:Kulim, Prolexus, Tebrau, Eden

2006-08-06T08:10:00.000+08:00

1) Kulim has formed a spinning top with a slight gap above Thursday close. Is this the sign of an inpending top correction? Probably yes as it has run up quite a bit. If Monday price opens below 4.20 & stays that way, then expect a correction & change in trend. Support at 4.06 & 3.90.

2) Prolexus has broken out of the resistance of 0.75 on fairly high volume. The trend is positive & it is above the 10,21 & 30-day MAV. MACD just made a golden cross. It is a trading buy with resistances at 0.88, 1.00 & 1.36. Cutloss is 0.70.

3) Tebrau is still in a consolidation mode, still flat. Support at 0.55 & stronger support at 0.50. A break below 0.50 will be very negative but a bounce back from either support will be a good sign. Volumes have dropped considerably so the selling will probably not be too bad from here on. Daily MACD & RSI are still trending downwards but weekly MACD is still positive. I expect 0.55 to hold up the share & for it to rise again once it breaks out of its descending triangle with a breakout above 0.60.

4) Eden - Is forming a Flag, a bullish pattern. A high vol breakout above 0.60 will be bullish. Next resistance is 0.66, 0.77 & 0.95. Volume has dropped to almost negligible adding further confirmation to the Flag pattern. But a break below 0.50 will be very negative and a definite cut-loss. If you want to trade this stock place a cutloss & make sure you observe the cutloss very strictly. Don't fool around with these type of stocks. However, at 0.53 & above it is a trading buy with extreme caution. Cutloss 0.50.

Update: KLCI, CI Futures & Plantation Index

2006-08-06T07:40:00.000+08:00

1) The KLCI daily appears to be losing momentum & is consolidating. Volume has been receding for the last 3 weeks while the MACD & RSI are getting flat. It has tried on several occassions to break the 940 resistance but has failed. What is more interesting is the weekly chart (see attached). There appears to be a spinning top formation this week which may show an impending correction. It still needs confirmation. If Monday opens & closes below Friday's close, then we may have the confirmation. Then the correction will be confirmed & the next support levels are 931 & 925 (the IHS neckline). A correction to the neckline will be good for the market. But a break below this will be bad with next support at 906 & 900. Lets hope it stays above 925.
Interestingly everyone I know is calling for a correction especially the Technical Analysts but so far the market is not complying. However, I think its just a matter of time.

2) CI Futures is still bullish with a bullish engulfing pattern on Friday. There is still a 17 point discount to the KLCI but the margin is narrowing. However 921 is a fairly strong resistance, so it will need some volume to break it. Vol has been rising, so it may happen. I think we have to wait for Monday's action to find the next trend. RSI & MACD are both flat.

3) Plantation index rose again Friday after a week of falling. However this was not accompanied by rising volume. It looks like 3443 will lend it some strong support, so if it bounces off this level then expect to see the bullish trend resume again which will bode well for plantation stocks. However, the weekly chart is showing a spinning top formation. This indicates a possible correction, so if prices open below Friday & stay below that on Monday, we may see the correction which should hopefully be a mild one. The weekly MACD & RSI are rising, so it is still very positive. A bigger correction will take it to the neckline of IHS at 3352 & it should bounce off this & then rise to the target of 3639.

Update: Kulim, Dialog, Mulpha, UEM World

2006-08-03T23:24:00.000+08:00

1) Kulim - has reached a 9-year high at 4.18 supported by rising CPO prices and its high NTA of 10.50. However 4.24 is a fairly strong resistance & stopped its rise on Thurs. RSI is still rising & at 74 is not overbought so there is further upside. Prices are also still quite close to the 10-day MAV line, so there is no massive divergence that may indicate a correction. Candlesticks also do not show a sell signal. Further upside is still possible with next strong resistance at 5.20. FYI, I called a buy on this stock on 21 July together with IJM Plant & Rimbunan Sawit. I still think there is much upside for plantation stocks.

2) Dialog - Its at a crucial point at the base of the long term uptrend channel (blue lines) and also the downtrend line from the peak of 15 May. A fall below the lower channel line at 0.53 will be negative but quite unlikely as this channel has been holding it up since Nov 2005. Volume has been negligible, so a high Volume breakout above 0.56 will be a very positive sign. Support is at 0.50 & resistance at 0.58. If you think the channel will provide support, then this is a trading buy now with immediate upside of 0.60-0.61. A stronger breakout can take it to 0.66.

3) Mulpha - Is at a crucial point staying just above the midterm trendline. A fall below the line is negative but support is at 1.13. Volume lately has been very low, so there are no weak holders & strong holders may have accumulated the shares & are holding on. A Volume breakout above 1.27 will be very bullish. Next resistance is 1.50 then 2.12 & 2.90. MACD & RSI are flat but prices are holding above the 10,21 & 30-day MAV so its still positive. Fundamentally because of its landbank & projects in SJER, I doubt it will see any prolonged fall. A fall to 1.13 will be a buying opportunity. Nothing to do next except wait for its next move.

4)UEM World - despite the award of the 2nd Penang Bridge UEMW actually fell today. The dreaded M'sian "Buy on rumour, Sell on news" curse strikes again. Technically it is at a crucial point in the long symmetrical triangle. A break below 1.60 will be negative with support at 1.50 & stronger support at 1.26. Strong resistance is at 1.72, but a break above 1.72 on strong volume will be very bullish with resistance at 1.82 & strong resistance at 2.10. RSI & MACD are almost flat with a slight downward bias. Nothing you can do here until we see its next move. If you own the stock SELL if the fall below 1.60 is accompanied by high volume BUT this is quite unlikely because the fundamentals are good. A low volume fall below 1.60 will not be too bad with the supports likely to hold at 1.50.

MTD Infra - Buy When Nobody Wants to Buy?

2006-08-03T00:03:00.000+08:00

MTD Infra is our discussion stock today on the "Buy When Nobody Wants to Buy" strategy. You can read about this strategy under the "Trading Strategies" section on the right.

When a stock has fallen considerably & all short term sellers have been shaken out of the stock, then it may present a buying opportunity because downside will be limited & unside potential greater. MTDI is displaying this characteristic. It fell from the Double Top high of 1.50 to a low of 0.98 and is now hovering at 1.00. Volume has fallen considerably from a high of 43 mil shares at the peak to just 1.68 mil today, a fall of 96% in trading volume. In fact volume has been steadily falling from the peak & today is almost the lowest.

This indicates that all the weak holders are out. The last time it fell from the first peak of 1.50, it fell to a low of 0.94, then began its steep ascent to the second double top of 1.50. Based on this 0.94 will provide a very strong support. The current level of 1.00 is also a strong support. RSI & MACD are also flattening, showing that selling is getting weak.

The weekly chart is more interesting. The last time it rose after big falls was when we had a spnning top followed by a bullish engulfing pattern (A) and next it was a hammer & bullish engulfing (B). Today we do not yet see any positive candlestick pattern. When we do, it will signal the start of the upside.

Advise- Users of this strategy should WAIT until weekly candlesticks give the buying signal. It might take a 2-3 weeks but when it happens, start picking up shares from that point. The upside resistances are 1.05, 1.10 & 1.20. The potential to rise to 1.50 is there but that would be optimistic. However gains of up to 20% are possible.

So the suggestion is to be patient just for a while longer.

Update: KLCI, CI Futures & Plantation Index

2006-08-02T22:50:00.000+08:00

1) KLCI is trending flat. Not much action & no major signals. Support remains at 931 & a breakdown below this will find support at the IHS neckline at 926. I expect the neckline to hold. Fundamentally, external forces may have an impact on the CI. Higher oil prices are a worry though the Dow & world markets seem to be holding steady so far. I will be more concerned when we head into September when the hurricane season starts in the US. If there is a bad one & some refineries are shut down we may really see a big spike in oil prices.

2) CI Futures - August futures started slowly Monday but rose strongly with a bullish engulfing pattern today. On this basis we will see it narrowing the band with the KLCI soon. Futures are bullish at this point with initial resistance at 921 & then 940.

3) Plantation Index is getting weaker. Prices are falling but volume is getting higher. This diversity is a concern. As mentioned earlier I expect the index to fall slightly and possibly hit the IHS neckline support at 3360. The only possibility of negating this is if the strong support at 3443 holds, then the index may bounce back up again. However, despite rising CPO prices, the general opinion is that plantation counters have risen beyond CPO fundamentals & a slight correction will be healthy. Due to fundamental demand for CPO this correction will not be severe & the index & plantation Co share prices should continue their uptrend again soon.

KLCI, Futures & Plantations- Pullback to Neckline?

2006-08-01T03:59:00.000+08:00

1) KLCI - In an Inverted Head & Shoulders formation, it is common for prices (or the index in this case) to pull back to the neckline to correct the overbought condition before prices then march on to the measurement target (976/980). In our case will we see a pullback to 926 (the neckline of the IHS) soon? Well prices have been moving up for almost 10 days (with only 2 minor corrections) from a low of 900 to a high of 938. Though this is not a huge amount, the rise is getting smaller & weaker. On the whole I believe we'll see a correction soon with a target of 926. A breach of the neckline would not be good so lets hope it stays above 926.

2) Futures - Also the futures have risen even faster & stronger than the CI and it is definitely due for a correction.

3) Plantations - the same is happening here. We may also see a pullback to 3360 though in this case the support at 3443 is quite strong. If there is a pullback then 3360 is the target & then a rise to 3639. A pullback is very healthy though because prices have risen too fast in the plantation stocks.

Comments: Tebrau, Plantation stocks, Kretam, MVest

2006-08-01T01:19:00.000+08:00

My Data provider is down today so I have not received today's KLSE stock data & so cannot provide charts. However, my comments are:

1) Tebrau - The expected upside due to the SJER announcement by the PM didn't materialise, no doubt a case of buy on rumour, sell on news. However, technically there was no significant change. Support is still at 0.55. Minor resistance has formed at 0.63 - 0.635. Should traders sell above 0.55 or wait? Technically there is nothing to indicate we should sell, there are major no sell signals. Trading is still flat if anything. Volume was surprisingly low. So following TA, its a case of no signals either way, no Sell no Buy.

2) Plantation Stocks continue to see lots of interest. Kulim rose strongly & so did Kretam no doubt due to the Star write-up on underperforming plantation stocks. Kretam has resistance at 0.62 & 0.70. MVest also rose on higher volume. MVest resistance is at 0.50 & 0.565. Should you jump into these shares? Kretam does inhibit better signals with the MACD & RSI positive & the 10,21 & 30 day MAV all positive, even before Monday's rise. But Tuesday may see some mild correction due to the huge rise.

Unfortunately I do not know much about the fundamentals of these stocks. If fundamentals are sound, then perhaps its worth a risk with a tight cutloss BUT I would not be jumping into stocks on the basis of possibilities. And I am not advocating anyone doing this either.

Market Play 2 - Plantations - Kulim, IJM Plant & Rimbunan Sawit

2006-07-30T01:42:00.000+08:00

Our second market play is the Plantation theme. CPO prices have risen to a record high above RM 1,600 a tonne & the Plantations Index is at a 12 year high. CPO will continue rising as it is still at a discount to soya & rapeseed oils. The Biodiesel theme & future purchases by Biodiesel factories will underpin CPO prices, so plantation stocks will be making extraordinary profits for 2006 & 2007. Major stocks like IOI & KLK have risen strongly for a year & will continue to rise. I have selected 3 stocks to review Kulim, IJM Plantations & Rimbunan Sawit (a newly listed stock associated to the Rimbunan Hijau Group).

1) Plantations Index - I have written about this before. It has formed an IHS & is now on a low volume correction with support at 3443. It has also formed a Harami candlestick pattern so it may start rising again Monday. The upside target is 3639. RSI & MACD are positive & it is above the MAV. Next moves will be up unless it decides to test the 3443 support first but then its up, up, up all the way.

2) Kulim - Has been rising in an uptrend channel since 2002 & rose very strongly from 2.60 to 4.06 in last 3 months. It is now above the channel but on a low volume mild correction. Daily & Weekly MACD are positive, but daily RSI has turned down slightly. Weekly candlesticks have formed a potential shooting star but an open above 3.86 & close above 3.88 on Monday will negate the weekly s-star. It is also above the MAV & strong support is at 3.84. After the mild correction it should rise again but a break below 3.70 (the 21-day MAV) will be negative. A strong break above the recent high of 4.06 will take it to 4.24 & possible mid term target of 5.20.

3) IJM Plantations - Rose strongly to 1.62 & is on a low volume & mild correction now. Has formed a good uptrend channel but rose above the channel on strong buying. Strong support at 1.55, RSI & MACD are positive, prices are above the 10,21 & 30 day MAV. A very good buy. Upside is not known as historical high is 1.62 so we have to watch the candlesticks.

4) Rimbunan Sawit - Has risen strongly since its debut on Bursa in June. It has formed a nice uptrend channel & is now in the middle of the channel. Support is at 1.30 & resistance at 1.42. A break below the channel at 1.27 will be very negative but this is highly unlikely. I expect prices to continue rising & to breach 1.42 anytime soon. This is a very good mid term buy (3-6 mths). Target price is uncertain as it is a new stock so we will have to keep an eye on the candlesticks for pointers.

Market Play 1 - SJER - Mulpha, Tebrau & UEM World

2006-07-30T00:54:00.000+08:00

There are currently 2 themetic plays on Bursa M'sia, the South Johor Economic Region (SJER) & the Plantation sector. I will consider both plays & some selected counters for each. We start with SJER. This is about the multi billion Ringgit masterplan in the 9th Msia Plan to develop the Southern Johor Corridor, basically around Nusajaya which will be the location for the new State Government & also to take account of the 2 major Casino/Tourism projects in Singapore. The idea is to develop the corridor which consists of major tracks of under-utilised landbanks for housing, industry, government and theme parks to attract tourists from Singapore. As this will inevitably provide major construction works & also increase the value of the landbanks there it will benefit some of the major construction Cos. & landowners in SJER. The PM will make the announcement on development of SJER (headed by Khazanah) tomorrow (Sunday 30 July) & it should be the catalyst to move these counters up.

The three selected counters Tebrau, Mulpha & UEM World, are all major landowners & developers in SJER & have already been part of the "play" on SJER. Is there still room to move, technically? Lets see.

1) Tebrau - Positive break out of the symmetrical triangle on Thursday on better Vol, then had a mild correction Friday. Immediate support is at 0.61 & a pullback to the triangle has support at 0.55. A break below 0.50 is very negative. It is above the 10,21 & 30 day MA but daily MACD & RSI has not made positive moves yet. Hence there is no firm direction unless it has a positive move on Monday. The MA offer strong support at 0.55 also. A break above 0.725 will be very positive & will take it to 0.84 & 1.08. A positive announcement by PM may be the catalyst. So watch this counter for its next move. Aggressive traders can buy but place cutloss at 0.54. Others may wait for another day of positive move before buying.

2) Mulpha - Has been trading rather flat for the last 2 months. It is above a rising trendline, volume has been extremely low, Daily RSI & MACD are flat, but it is just sitting on the 10, 21 & 30-day MA, which is a good sign. Immediate resistance is bet. 1.21 & 1.27. A high volume break above 1.21 & 1.27 will be very positive & will take it to 1.50, then 190/2.00. Signs are good for a positive breakout but a breakdown below 1.14 will be negative. You can place a cut loss at 1.13.

3) UEM World - It has formed a very large symmetrical triangle with prices reaching the tip of the triangle. Something has to happen soon. If it breaks out of the triangle on the upside on high volume, then it is very positive & will have strong upside because the triangle took 3.5 months to form. An upside break on high volume must breach the immediate resistance at 1.82 then 2.10. If that happens then it will possibly reach 2.26 or if there is very strong interest then 3.00. However, a downside break can take it down to 1.50 (cutloss) or 1.26. Daily RSI & MACD are flat but prices are sitting just on the 10, 21 & 30 day MA (which is a very good sign). If the announcement by PM is positive, then expect a positive breakout for UEM World (which is controlled by Khazanah anyway).

KLCI & Futures - IHS confirmed

2006-07-30T00:37:00.000+08:00

1) KLCI - The Inverted Head & Shoulders pattern has been confirmed with the CI staying above the 932 resistance & the 928 neckline of the pattern. While a pull back to the neckline in IHS pattern is common, it is not necessary. As the Dow Jones closed higher on Friday & there are no real negative sentiments, CI will likely stay above 932 & then rise to the Target of 976-980. Oil price has also fallen slightly. The only concern is the slowdown in US economy. Will this affect the world economy or is it good because now the Fed will not raise interest rates anymore? Generally it should be viewed positively as there is still growth.

2) CI Futures - Has finally corrected after 8 consecutive days of rises. Support is at 933 & 921. A pullback to 921 will be very healthy. Further support is at 905. Daily RSI & MACD are positive & index is above the 10,21 & 30 day MA, so all indicators are very good. Upside will resume after a mild correction probably to 921 max.

Comments: Eden, Jadi, Polytower, IPower

2006-07-28T01:50:00.000+08:00

I am providing these comments on the request of readers. I know some of you have been badly hit hence these comments. Personally, with the exception of Jadi, I will avoid these stocks because they are only speculatives & very risky.

1) Eden - Its too early to tell bec its the first day of correction after the big rise. Support is at 0.55 & 0.52. A fall below 0.52 will be very negative. Resistances at 0.665 and 0.77.

2) Jadi - Its consolidating at the 0.30 - 0.325 levels & just at the 10 & 21 day MA line. Healthy consolidation, low volume. Breakout above 0.325 on higher vol will be positive. Other signals not positive yet.

3) Polytower - no positive signals. It is still consolidating at very low levels. Low vol. Needs to break 0.92 to turn positive.

4) iPower - starting to consolidate at low levels, no volume. No positive signals. Needs to break above 0.95 to turn positive.

Generally for Jadi, Ptower & iPower, there are no buy calls for any of these shares. However, it seems that the major selling may be over & they are consolidating. Jadi is in a slightly better position but still no buy call.

Update KLCI & Futures

2006-07-28T01:26:00.000+08:00

1) KLCI is again in positive territory at 936. Thats the 2nd day of closing above the 931 resistance. If it can stay above 931 for another day, then breakout is confirmed. The only issue I have is a lack of vol. Higher vol is desirable. Downside support is now 931, a break below this will not be good. Assuming it stays above 931, then we have a confirmed IHS with target of 976/980. On positive side index is above the 10,21 & 30-day MA, Daily RSI & MACD are positive. Weekly MACD turning up but still no golden cross yet & RSI is turning up too.

2) KLCI Futures has performed amazingly well. It broke through the 921 & 933 resistances strongly & though the Doji star appeared the formation was not completed because the index shot right up. Its now coming to resistances at the 940-944 band (blue arrows) & a tougher resistance at 960 (red arrows). It has been moving right up since it hit the 876 support so we should expect a correction but so far it has not disappointed us. Maybe 940/944 will slow it down. Maybe but I am sure 960 will!

BUY CALLS: Tebrau, RHB, Utama

2006-07-27T21:53:00.000+08:00

Tebrau (BUY)- Finally it has broken out of the Descending Triangle on higher vol. Positive signs - MACD starting to turn up, RSI is up, 10 & 21-day MA provided good support, support at 0.55 held up & 0.50 is very strong support. This is the buying opportunity for Tebrau. Target 0.84 & 1.08 if there is aggressive buying. Initial Resistance 0.72. Cutloss below 0.55.

RHB Trading Buy - Has come to the base of the channel which has provided support now on 4 prior occassions. Trend followers may want to buy here as odds are that prices will rise from here. Also Utama is on an uptrend, so RHB will follow. MACD & RSI still down but the 10 & 21-day MA are providing good support. Target 1.32 then 1.54.
A tight Cutloss is below 1.15 which has been the low on several occassions recently (green line) but aggressive players may cut loss at 1.10 (10%).

Utama - Is almost breaking out of the 2 week symmetrical triangle. Vol is higher. If it opens up on high volume Friday, then it will be a buying opp. Resistance 1.23 & 1.37. Target 1.37. It is also supported by the 10-day MA & 1.08 support level. MACD still down but RSI is flattening & may turn up. Cut loss is below 1.07.

Update: Tebrau

2006-07-26T23:25:00.000+08:00

Tebrau is still within the descending triangle (DT). So far attempts to break out of the DT have failed on 4 occassions, so unless there is really high volume & a real push, I feel that Tebrau will find it difficult to breakout. It is coming close to the edge of the triangle so something needs to happen soon. Daily MACD is negative & RSI is flat. Weekly MACD is still positive but RSI is also flat. So the pattern is increasingly turning negative.

Support is at 0.55 & strong support at 0.50. A break below 0.50 is very negative & in a DT such a breakdown is very bad. If that happens I can see Tebrau falling back to 0.45 first then 0.40 & the very strong support at 0.33.

Will the impending announcement this weekend by the PM on SJER be the catalyst needed to push Tebrau up for the next run? Its hard to be sure, but its best that traders keep their stop loss targets very tight just in case the DT breakdown happens.

(Sorry no chart today, Blogger is acting up. Yesterday chart still applies)

Update: KLCI, CI Futures & Plantation Index

2006-07-26T22:31:00.000+08:00

1) KLCI - has crossed over the 931 resistance on increased volume tho' volume is still not significant (i.e. it has not exceeded 1 billion shares). This could mean that it is confirmation of the IHS with just 1 shoulder. However, for confirmation I would like to see the index stay above 931 for at least 3 days, then only can we confirm the breakout. If it falls back below 931 then the breakout is false & we may still see one more round of consolidation before the true breakout happens.

2) KLCI Futures - Truly amazing the strength of the CI Futures, it blasted through the potent Doji Evening Star & closed well above it at 929. The margin between the Futures & daily KLCI is now just 5 points. Does the futures have enough legs to cross above the CI? That would be bullish for the CI in the near term. There is a strong resistance at 934, so that may cap it for now. But Daily RSI & MACD are still positive & rising, Weekly MACD is rising but still negative yet to make a golden cross. It will be interesting to see if 934 will stop this baby. Anyone who went long at the bullish engulfing pattern at 877 support on 18 July will be laughing all the way to the bank.

3) Plantation Index - has formed a potential shooting star, so we may see a minor correction. Support is at 3443 the previous strong resistance. With rising palm oil prices I believe that this correction is just to correct the overbought position in plantation stocks & after a correction the rise will continue. This is also based on the fact that the weekly MACD just made a golden cross, weekly RSI at 58 & rising is just in the early trend of rising. Daily MACD is still positive & RSI at 84 is slightly overbought but still has room to move up.

Update: Tebrau, Kulim, IJM Plant & Johor Land

2006-07-26T07:33:00.000+08:00

1) Tebrau - Is this the time to buy Tebrau? It has formed a Descending Triangle [DT] (marked as A-B-C in chart) with support at the base of 0.50 (B-C) which supported Tebrau's prices on 2 occassions. In TA a DT is not a good sign. A fall below the base will be bad & a cut loss should be placed below 0.50. For the picture to turn positive it must break out of the DT at 0.60 with much stronger volume than Tuesdays, at least 750k to 800k lots. A break below the triangle will trigger massive selling & support of 0.45 may not hold. On the positive side Tuesday's candle can be called a piercing pattern & is a strong sign. But is it time to get back in? I would wait for a breakout above 0.60 first.

2) Kulim - Since I made my call on Friday 21 July, Kulim has risen strongly. Daily RSI at 75 is just slightly oversold but still has room to move up, MACD is positive. But after 6 continuous positive days we will probably see a correction soon, maybe today. However, the support at 3.85 should hold & after a small correction prices should continue to rise. BUT watch palm oil (CPO) prices, if it starts falling then Kulim will too but this is quite unlikely to happen soon. CPO prices are on the up & up.

3) IJM Plantations - Has also been rising like Kulim. It has been stopped at the all time high of 1.62 on Tuesday. There may be a small correction, but after that it will continue rising again. Same story as Kulim.

4) Johor Land - Although prices rose yesterday there was no volume, so this is NOT a Flag breakout. We can draw a new Flag/Channel & prices still have to break out on strong volume for confirmation. Wait for that.

KLCI & Futures - Doji Evening Star in Futures

2006-07-26T07:20:00.000+08:00

KLCI - the rise on Tuesday is not convincing enough. It barely breached the IHS neckline at 927 but volume was only mediocre, not high enough to be a convincing breakout for IHS. Also index was stopped at the very strong resistance of 931. I am confident that the CI will reverse & correct down & possibly form a double shoulder. No IHS breakout yet. Also there is a Doji Evening Star in the CI Futures (see below), so a reversal & correction in both CI & CI Futures is most likely outcome.

There is a massive Doji Evening Start reversal formation in the CI Futures. It gapped up strongly by 6 points over Monday's close in forming the Doji & this makes the pattern more likely to happen. If it opens BELOW 924, then the possibility of a reversal is very likely. Support is at 905 level. I call a SELL on CI Futures here.

Watchlist: Johor Land Consolidation & Flag

2006-07-25T08:33:00.000+08:00

Johore Land Bhd has been consolidating in a possible Flag pattern since reaching its recent high of 1.17, close to the highs of 2002 & 2004. Volume has fallen considerably to almost negligible amounts fulfilling the requirement of the Flag pattern. Current price of 0.955 is close to support levels of 0.92 - 0.90.

A breakout has a measuring level of 0.35 (to be added to the breakout price). If breakout on high volume happens at 0.92, the Target Price is 1.27 to 1.30 the next resistance level. Assuming that interest in SJER is still high, then this consolidation has the potential for strong breakout potential.

Cut Loss is below 0.90 BUT buy only on strong volume breakout out of the Flag & not before.

Palm Oil & Plantations Index

2006-07-24T20:07:00.000+08:00

The plantations index is again rising and may continue to do so in the near future BUT it may need to take a short breather first.

Palm oil prices have risen to a 2-year high & Oil World is predicting higher prices. I quote from their site:
"Jun 30: Growing Risk of Global Production Deficits in 2006/07 and Weather Concern Is Likely to Lead to Higher Prices. Current stocks of oilseeds and oils at record level. But increasing risk of an excess of world demand over production in 2006/07, necessitating a reduction in stocks. Three years of unprecedented demand growth will finally create a situation in 2006/07 in which world consumption of 17 oils & fats and of 10 oilseeds will exceed production. In the medium term we expect higher prices for oilseeds and products. Most likely vegetable oils will be the price leader upward (i.e. palm oil being the biggest of the vegetable oils).
See http://www.oilworld.biz/app.php

So we will likely see higher palm oil prices this year which will be good for the plantation counters.

The index itself has reached a high last seen in 1994 which is now a strong resistance A-B). This may hold it back for a while & we will likely see a correction. The Inverted Head & Shoulder pattern has been confirmed with a breach at the 3333 level on high volume. For H&S a pullback is normal before continuing. Measurement target is 3639.

Update KLCI & Futures

2006-07-21T23:05:00.000+08:00

KLCI closed up at its high again this week despite regional markets falling. However, it still has not breached the neckline of the IHS formation which is at around 927. The biggest concern is that despite rising index, volume is actually falling (see chart). Thats a bad sign. Daily MACD & RSI are still rather flat while the weekly are still negative.

I will throw my hat in the ring and call for a CORRECTION in the CI this coming week. If prices fail to hold above 924 or rise above 927 then it should fall to 913 or even 906. If after the fall it then rises we may see the true unfolding of the 2-shoulder IHS & then a big rise in the index. So I would be quite cautious this week.

FKLI (CI Futures) have been trending up this week but is there a correction coming? The weekly chart shows strong resistance at the 921 level at several points in the chart since 2004. That level has stopped the FKLI at least 5 times will it do so again? Considering that the CI itself may correct down I believe that 921 will again stop the FKLI this week. Also the weekly MACD & RSI are still down but coming to a flat position while the Daily have just turned up with a golden cross in MACD. However the over whelming indication is for a correction. So if you are still bullish on Futures tread with caution.

Watchlist: Plantation Stocks - IJM Plant & Kulim

2006-07-21T22:29:00.000+08:00

These are two interesting & lower priced plantation stocks that may interest traders.

1) IJM Plantations has been trending up since March & is close to its peak of 1.62. Daily & weekly MACD have made a golden cross & daily RSI is only at 62 & rising. Friday's volume is also the highest in 2 months. It is also trending above the 10, 21, 30 & 50-day Moving Averages. Looks like a good stock to buy. If the Plantation Index IHS comes true then this should also run up quite nicely. Stop loss is at 1.39.

2) Kulim has formed a nice uptrend channel since 2001. However everytime it hits the top channel line there is a major correction. It just hit that line again this Friday as seen in the weekly chart attached. Also while prices rose strongly this week they were NOT accompanied by high volume. The daily volume on Friday when prices gapped up & hit the peak were actually very low. Higher prices but lower volumes is a divergence of some concern.

Also Weekly RSI at 94 is oversold & MACD is positive. Daily RSI is 66 & just turned up, daily MACD is positive. Resistances are at 3.85, 4.24 & the all time peak of 5.20.

However the bullish momentum in plantation counters should just push Kulim above the channel at least in the short term towards 4.24. Whether it remains there is another matter so buyers have to keep an eye on this if they buy. But being one of the cheaper plantation stocks no doubt it will see a lot of interest next week.

Plantation Stocks - Next Bull Run & IHS in Index?

2006-07-21T22:09:00.000+08:00

Interest is building up in plantation stocks with the run up in crude palm oil prices. On Friday 21 July plantation stocks were the market leaders.

Interestingly there appears to be a very bullish Inverted Head & Shoulders pattern forming in the KL Plantations Index (PI) which is at a level last seen in Sept 1994, the next high being the all time high of 5 Jan 1994 (the super bull run, when CI peaked at 1332). The PI closed right on the neckline of the IHS at 3406, and close to the Sept high of 3443. It looks like the bullish momentum is there & no doubt the newspapers this weekend will spotlight palm oil & thus bring in the hordes of punters buying plantation stocks next week.

If it breaks out on high volume the IHS measurement target is 3834, close to the all time high. All that we need is a high volume breakout. But remember, in 50% of IHS breakout, prices will pull back to the neckline before resuming the uptrend so watch out for possible selling to emerge after breakout to shake out all the punters before it rises to the all time high.

Readers' Articles

2006-07-21T21:56:00.000+08:00

As requested by my readers I have created a spot where you can post articles of relevance & interest here. All you have to do is email me the article either with your name or pseudonym and a contact email (optional) & if it is ok I will publish it.

However, if it is not your article then I will need the consent of the writer or publisher before I publish it. This is to ensure that copyrights are protected. Alternatively, you can write a brief of the article & provide a link to the article, thats fine too.

So lets get this going..... 8)

Taliworks Cup & Handle

2006-07-20T18:54:00.000+08:00

The ChargingBull & Pitbull have been discussing the possible formation of a Cup & Handle in Taliworks & they are right, it looks like a very nice formation. The handle is tapering down but prices remain above the half way point of the cup (1.56). Volume is also low, which is preferable at this stage. As CB says this is possibly accumulation by players.

Daily MACD & RSI are tapering down but both their weekly are up. This is to be expected as volume on daily accumulation is low & daily prices are falling slowly. This pattern will breakdown if prices fall below 1.56. Players can accumulate at this stage but risk averse players should wait for breakout above the 1.80 level for confirmation. Cut loss will be 1.55 (thats about 10% below today's price).

CI Update & Double Shoulder IHS for KLCI?

2006-07-20T18:32:00.000+08:00

The CI did not penetrate the long term uptrend line again despite regional markets flying. This shows lack of conviction of market players despite lower than expected inflation, probably no rise in interest rates in M'sia & 9MP announcements. If CI does not take out the 922 level convincingly then it will probably correct again to 906 or 900 before making another attempt.

This throws up an interesting possibility of a double shouldered Inverted Head & Shoulders pattern (see Chart). It is just as powerful a pattern as the one shoulder IHS. For the breakout to occur it still has to cross the trendline possibly at 'Z' around 925. On high volume that would rate a strong buy. For now unless there is breakout above 922 soon, I believe the market will correct itself first. Today's candle & volume is not very convincing, so I believe a correction will be the next action.

Buy When Nobody Wants to Buy - Refresher

2006-07-20T08:40:00.000+08:00

It appears that this strategy was not exactly clear to some of my readers. So when is the time to buy?

Firstly do NOT buy when prices are falling like Iris did yesterday. Like someone said, that is like trying to catch a falling sword, it will cut you in half. No, thats not the time to buy.

The time to buy is AFTER the selling has been done & the stock enters a "quiet" period, i.e. low volume, prices do not fall too much (small fall is ok) & you do not see many sellers waiting to unload. As an example, the time to buy in MTD Inf & Iris is shown in red and times NOT to buy in blue. I have used stocks that have taken big falls because this strategy is the only strategy to use in these highly volatile stocks.

I believe this should clarify this strategy.

The Dow, US Economy & KLCI

2006-07-20T04:05:00.000+08:00

Dow Jones moved up strongly today to recapture the 11,000 points level. While this is a positive move coming on several days of downward pressure, it is based three factors.
1) The most important seems to be the market's perception that the Fed may stop raising interest rates. According to CNN: The Fed expects economic growth to slow this year and next, which "should help to limit inflation pressures over time," Bernanke said in testimony to the Senate Banking Committee. This is of course good news for interest rates & lower inflation is good for the economy too but if US growth slows down too much then world growth too may slow down too much.
2) The second factor is that US companies are reporting good earnings in the double digits. So a slowing economy is not slowing down corporate profit growth. Hmmm, so far so good.
3) Oil prices have fallen from the $78+ to just about $72. OPEC has stated that high prices will be bad for the world economy & that a slow global economy is bad for oil producers as demand will slow. So keep pumping it up boys. Nothing new here, but markets like this. Also US oil reserves have gone up despite it being the summer driving season when oil demand is highest. Maybe those blokes in the US are actually driving less? No they are driving more, just about 3% more, but nevermindlah, thats not too bad, could have been worse.

Anyway how will this affect Bursa? For one Asian markets will definitely rise. The triple whammy of lower inflation, stop in interest rate rises & lower oil will help. So Bursa should rise too. Now if this triple whammy maintains for the long term then we will see a rally on the markets incl. Bursa. That may provide the Inverted Head & Shoulders I spoke of in an earlier posting & a rally to 976. http://talkingstock.blogspot.com/2006/07/kl-futures-ci-ci-head-shoulders.html

However, first the CI must return above the uptrend channel & breakout above 922 & maintain above that. Then it must take out the very strong 930 level. Only then will we see the rally to 980. Chances of this happening? I am not into crystal ball gazing, so I will let the charts do the talking & if the above targets are met then its "Game On". If not then back to a mild correction again.

Last Update: Iris & Versatile

2006-07-20T03:58:00.000+08:00

This will be the last update on Iris & Versatile. Thats because these syndicated stocks are so heavily manipulated they are not easy to trade & because of this, TA may not have much value. Also I don't want to encourage trading in such stocks, as losses can be too great. The risk-reward ratio is not worth the trouble. So unless some very interesting Technicals form, I will not bother with these 2 stocks in my posts.

Iris - The fall today was below that of Monday. It is resting on the 1.00 support but selling was intense & volume very high. Next meaningful support is at 0.72. Daily & Weekly MACD & RSI are negative. The recent high also forms a Double Top. I would stay out of this stock unless you want to have a heart attack.

Versatile - Has also fallen below Monday's close. This stock tracks Iris because it is a substantial shareholder in Iris. Daily MACD & RSI negative. Weekly MACD is still positive but may not remain so for long. Weekly RSI is down. Next support is 0.55. I would also stay out of this stock.

Update KLCI, Tebrau, RHB, Utama

2006-07-19T19:56:00.000+08:00

1) KLCI - While movement has been positive since coming off the 900 low on Monday, volume has not been great, Daily MACD & RSI are still trending down (despite index moving up, thus a divergence, which is not a good sign). The 10, 21, 30 & 50-day Moving Averages still not in uptrend yet (X), so we still cannot say the CI is positive. There is very strong resistance at the long term uptrend channel A-B. Index has to break strongly above 922 to move positively into this channel. While I don't want to appear too negative, I think this short term rise will be capped at this level & CI might trend down again but good support is at 900. I would hold off buying till indicators turn more positive.

2) Tebrau - has formed a downtrend channel (A-B, C-D). It will only turn positive if it can break out of this channel with high volume (i.e. above 0.66). Until then the trend is down. Supports at 0.55 & 0.45. Break below 0.45 should be viewed very negatively though its unlikely to happen. RSI is down, Daily MACD trending down tho still positive. It is resting on the 10-day MA, but the 21-day MA should offer better support. Outlook is therefore for a short term downtrend from here.

3) RHB - Seems to be going nowhere. The trend is flat because volume is drying up. Support is at 1.16 & 1.05. Daily MACD negative & RSI is down. Chances are it will fall below 1.16 & find support at 1.05, but don't sell unless this happens. Don't buy either until a better signal is seen.

4) Utama - is trending flat to down. Though the candle looks like a bearish engulfing it is not. An engulfing candle only has real significance at a top or bottom to show a reversal. However the black candle coupled with Daily MACD & RSI trending down and the fact that it has slid below the flagpole top is not so good for Utama. If 1.07 holds & it goes above 1.08, then it is ok. But if not then look for support at 1.00. It is also right on the 10-day Moving Average, but this is not a strong support. The 21-day support at 1.00 is a better support. If it falls below 1.00 then it will turn very bearish with next support at 0.80 - 0.82.

Update: KLCI, Iris/Versatile, RHB, Utama,Tebrau, FKLI

2006-07-19T07:57:00.000+08:00

1) KLCI - Should still be ok, with support at 906 & resistance at 913. It needs to break above 913 for next significant move to 920 & 930. Dow closed up & Oil down, so CI would be ok today.

2) Iris - Has made up half of the loss from the large black candle last Friday. If volume buying continues, prices may continue to rise. Resistance is at 1.24. Once a syndicated stock always a syndicated stock. Trust me this stock will beat all expectations & make new historical highs this year. BTW Versatile will also follow Iris & continue its rise from the major correction on Friday.

3) RHB - The candle that looks like a shooting star isn't one at all. Shooting Stars are top reversal patterns. This candle is not at the top, so it is not significant. RHB can go anywhere at the moment but more likely will be flat for a few days. Support at 1.16 & Resistance at 1.32.

4) Utama - Has formed a Doji Evening Star, a reversal pattern to confirm correction is over. However, I would have liked to see 3rd white candle close higher into the 1st black candle (see 3 candles in the red circle). The strength of the reversal is not high bec of low volume. While it should not fall below 1.08, it will need vol to breakout of recent high of 1.23. Good chance it will go flat for a few days to gather strength for a breakout action. A fall below 1.08 will be negative.

5) Tebrau - is trending up nicely. Breakout above 0.645 (out of short term downtrend) is positive & vol breakout above 0.725 will be very bullish. Daily & Weekly MACD has remained positive even thru the recent major correction & RSI is only 68 & moving up. All good signs for Tebrau. BUY with cut loss below 0.55.

6) CI Futures (FKLI)
Candles show bullish Engulfing pattern at the recent lows. Based on candlestick, this is a definite bullish pattern, next move will be up for FKLI.

Idaman - Morning Star

2006-07-18T21:48:00.000+08:00

At the request of ty2ls & T5 (my readers) I am posting Idaman's chart & analysis.

It has indeed formed a morning star candlestick pattern today, which is generally bullish & confirms the end of the correction. The 3 candle pattern (circled in red) started with the long black candle on 14 July, the short white candle (17 July) that is below the black candle & finally the strong, bullish white candle on 18 July which opened above the 2nd small white candle & closed right above the first black candle.

I have also posted the 1 year charts for targets. The next target is 0.28 (very strong resistance) and beyond that 0.34. Anyone buying this for short trades should cut loss at 0.23 the opening price of the long white candle.

Good spot ty2ls, good analysis T5 ... 8))

Update: Utama, Tebrau, IJM-W, Versatile, RHB, MTD Infra

2006-07-17T21:27:00.000+08:00

1) Utama
Has formed a very nice Doji which opened & closed at the recent high of the Flagpole 1.08. If the price opens above 1.08 tomorrow, then the correction is over & prices should rise from here. This Doji after a downtrend is a bullish sign.

2) Tebrau
For followers of Candlesticks, today's pattern is NOT a piercing pattern which is a bullish bottom reversal pattern. For a piercing pattern the candle must push beyond the half way mark of the prior black candle i.e. 0.60 but in this case it closed at 0.58. The pattern is a "Thrusting" pattern & is sometimes viewed as a bearish pattern in a downtrend. However, since Tebrau is still on a higher high (i.e. this high is higher than the high of 11 May) one could say that it is not in a downtrend but its just a minor correction in an uptrend. In this case the thrusting pattern is viewed as bullish. Hence if tomorrow Tebrau opens above 0.58, then the trend will be up & today's candle is a bottom reversal of the minor correction.

3) IJM-WB
This stock has formed a beautiful hammer today. If it opens above 1.08 & stays above that throughout the day, then we have confirmation & price reversal to stop the downtrend. After that we have to follow the charts.

4) Versatile
A spinning top (ST) has formed at the bottom of yesterday's long black candle. This shows that the bulls & bears are in a struggle. It can presage a change in trend. If tomorrow there is a white candle & prices move up, then this ST can be considered a morning star, a bullish pattern & we can say the correction is over for Versatile & prices should move back up. Tomorrow's price movement is all important in calling the change in trend.

5) RHB
This is also displaying a thrusting pattern though its stronger than Tebrau. Its almost a piercing pattern. Its bullish & should end the downtrend.

6) MTD Infra
It closed above the support of 1.08 but is not displaying any further bullishness. Tough to say that the correction is over, we have to wait for further confirmation.

KL Futures, CI & CI Head & Shoulders

2006-07-17T20:49:00.000+08:00

Futures
For those trading CI Futures & for a bearing on the CI itself its interesting to study the movement of KLCF. Today's low of 876 has fallen to the strong support level of 870-876. This level has shown strong support for the last 2 years (see circles on chart) & the Index should again bounce back from here. This will also lend support to the CI. Futures traders may want to go long from here, with a cut loss below 870.

CI
The CI itself found support at the 900 level today & as shown in the Chart below, the 900-906 level has provided strong support over the last 2 years. The downside risk is 883, the previous double bottom support. If the CI breaches 900 & falls to 883, that level will be a very strong support for the market to restart its bull run. However, 900 may hold up the market. I would start nibbling quality stocks from this point on & buy strongly if it falls to 885 or so.

Inverted Head & Shoulders?
The last point is whether we will be seeing an Inverted Head & Shoulders formation soon. Certainly there is a possibility of that formation now that it has fallen to 900. From the chart below we can see that today's fall can give us S2 the second 'shoulder' of the IHS. If prices rise to 925 & breakout from that point on high volume (X), we have a neckline (A-B) breakout & prices can rise to 976 (C) which will take it to a strong resistance & complete the IHS move. This is very interesting & we will probably see confirmation soon so keep an eye out for it. Plenty of money to be made if this comes true.

Be A Contrarian - Buy When Nobody Wants To Buy

2006-07-16T17:26:00.000+08:00

The greatest profits are made using this contrarian strategy:

Buy When Nobody Wants To Buy & Sell When Everybody Wants to Buy

Buy when nobody wants to buy.

This does not mean buying when everybody is selling. It means when a market has fallen and all the selling has subsided and there are no real sellers and buyers, then you buy.

Sell when everybody wants to buy

This is simple. When the stock is churning and volume is heavy with a lot of buyers & sellers and the stock is reaching a peak, this is when you sell.

Lets use an example we are familiar with MTD Infra. The chart shows the previous BUY & SELL periods. Will history repeat itself? If it does, then the BUY period is shown & if volume does dry up and there are no buyers, thats where the Contrarian buys. Your chances of making extraordinary profits come from such buying not from buying at or close to peaks.

Dare you be a Contrarian? We'll try an experiment shortly and buy some of these stocks and watch what happens.

Note: Also read this post on further clarification on this strategy:
http://talkingstock.blogspot.com/2006/07/buy-when-nobody-wants-to-buy-refresher.html

The Doc's Stock Trading Rules

2006-07-16T01:18:00.000+08:00

In light of the recent fall in the market, I thought it would be useful if we set some Trading Rules which will help traders make and not lose money. If you have comments or other rules that you think we should add to this then please add your comments & I will add them to the rules.

The Doc's Stock Trading Rules

1. Trade only with what you can afford to lose. Do not trade beyond your means

2. Be cautious in your trade. Do not be a day trader if you are a newbie to trading. Day trading is complex and more people lose money on day trading than on buy and hold trades. Leave the day trading to experts. For newbies, day trading benefits only your Remiser/Broker.

3. Holding for the long-term is not a wise move for stock trading. Long-term investments are only for risk averse investors who are more interested in dividends and long-term stock growth. Trading is best done in shorter periods to take advantage of price fluctuations. Even if you buy at 20% above a low and sell at 20% below a high, you will do better than a long-term investor who holds a stock for 5 years or more. Long-term is for Investors not Traders. Decide who you are, an Investor or Trader, then act accordingly.

4. Set Stop Loss targets - Always set a Stop Loss price for every trade. This is very important and will always minimise your losses. This can be in the form of a percentage below the market price or based on TA, but always set a stop loss. Learn more here
http://www.investopedia.com/articles/02/050802.asp

5. Take Profits – As prices rise, take profit. Many people lose money because they never take profit on winning trades and often winning trades become losing trades. You can run with prices but selling small amounts of stocks to take profits is always a good idea.

6. Run With Price Rises – If the stock price rises, run with it, BUT always set trailing stop loss prices. That way as long as prices rise you continue to benefit but if it turns against you, you will still make money. Learn more about trailing stop loss here:
http://www.investopedia.com/articles/trading/03/080603.asp

7. Follow the trend. In any market there will be industry trends and individual stock trends. Don’t go against the trend. In TA you can draw trend lines and if the stock follows a trend assume that will be the future direction until there is a firm indication that a change in trend has occurred. If global markets are falling then assume your market will also follow that trend, similarly if markets are rising you can be safe in assuming that your market will rise as well. It may be a laggard or a leader but it will generally follow the trend. Unless there is a specific factor affecting your market otherwise follow the trend.

8. Have a trading system and use it. Change it only if it is flawed or if it has failed you when you have used it in the proper way. No system is fail proof but having a system is better than no system at all. Technical Analysis or Fundamental Analysis or a combination of both can be used to set up a trading system.

9. Don’t let emotions rule. Whether it is buying or selling use rational analysis not emotions to make a trade.

10. Share knowledge and ask for advice. No matter how much you know about trading and whether it is TA or fundamental analysis, sharing your knowledge and learning from others will only make you a better trader. BUT make sure you only listen to rational advice and not rumours.

Copyright © 2006 Talking Stock with the Doc

What Next For MTDi, RHB, Utama, Tebrau & Versatile

2006-07-15T22:42:00.000+08:00

Some of our favourite stocks took big tumbles so I will review them here.

1) MTD Infra - took a big tumble. Cup & Handle & Flag both have failed dramatically. If you had followed my blog, I put a cut loss at 1.40. It found support at the long term support of 1.08. Further support is at 1.00. If you have not sold, then you may want to sell on rebounds. Resistance is at 1.20 & 1.25.

2) RHB held on at the support level of 1.16. Further support exists at 1.05 & 0.93. Due to the EPF buyout proposal, it should hold at 1.05.

3) Utama - This is a very good stock. Despite the falls elsewhere it held up close to the support level 0f 1.11 which was half way up the candle & also a long term support. Additional support is at A 1.08 the top of the flagpole & B 0.92 a long term support. Volume is low despite the fall. I would hold this stock.

4) Tebrau - It found support at the long term support of 0.55. Further support is at 0.45. I am still holding this stock & would buy again if it goes to 0.48 - 0.45, as I believe 0.45 is a strong support. However, unless the market continues to bleed, Tebrau migh hold at 0.55. It is surprising that earlier many people were so sure that it was a good stock & were prepared to buy at 0.72, but now everyone wants to sell at 0.55. This is the time to buy not sell.

5) Versatile. The Flag has failed. However, if you had followed my posting a fall below 0.875 was your cut loss because that meant failure. It found support at a previous high of 0.65. Further support is at 0.55. Despite the fall, volume was not abnormally high at 17 mil as on 12 July it was at 23 mil. If you have not sold & can afford to let it fall to 0.55 before rising again, then you may want to hold on. It will probably rise again as all good syndicated stocks do... 8))

Incidentally the same applise to Iris.