Still corrective Wave-B

Wall Street rebounbed sharply after technology stocks such as Intel, Oracle and Dell surged after Seagate, the world's largest maker of hard-disk drives, boosted its profit and revenue forecast. Apple also rallied on speculation it will start selling new versions of the iPod soon. Dow rose 247pts while S&P500 added 31pts or 2.2%. Tech-heavy Nasdaq saw its biggest rally in a year, adding 63pts or 2.5%.

What does this means for both the STI and KLCI? Well, it means that I was wrong to judge yesterday's fall would be the start of a wave-C down. Instead, it is still in its corrective B-wave that could last for another week or 2. The KLCI could range trade between 1,250 and 1,300 while the STI could range trade between 3,200-3,450.

I am still a believer that there is a C-wave will take place soon. I also believe that it is only AFTER this C-wave that the market can rally again into 2008-09. So ppl, be wary of this 'rally' as B-waves are usually bull traps. Maintaining the sell on strength strategy.

Financials lead US stocks lower

Last night decline on Wall Street erased all of last week's gains. The Dow lost 280pts while the S&P500 shed 2.4% or 34pts. 487 of 500 counters on the S&P fell last night, led by the financial stocks such as Lehman Brothers, Citigroup and Bear Stearns Cos after Merrill Lynch & Co 'downgraded' from 'buy' to 'neutral'.

SELL - has been the call for last month or so.. with the exception of last week, where there were opportunities for a short trading buy. This week is no different. On Monday (Aug 20), I mentioned that the rebound could last 2-3weeks max. The 2-weeks period is up. Again, I said that the upside would be limited 2 days ago. Investors who sold on strength would be the one laughing to the bank. At least for the portfolio, there is nothing there but cash!

Both indices are now sitting at the top of a rollercoaster ride and the fall is coming. The fall is going to be quick and swift. KLCI - a fall could see it retest the 1,141 low followed by 1,100 while STI could even test a low of 2,700-2,760. Unload now and stand aside.

Wall Street falls on glut of unsold homes

Wall Street fell after a report showed the glut of unsold homes rose to a 16-year high for July. Dow fell 57pts while S&P 500 lost 13pts. Financial stocks continued to be the hit as analysts in the US continued to downgrade the banking stocks. It is feared that the mortgage defaults may hurt the earnings of the banks.

With most of the banks in both Spore and Malaysia coming clean on their 'involvement' in the US mortgage market, at least investors here can breathe a sigh of relief. Nevertheless, this 'plague' has yet to hit the Asian shores, and I believe that it may hit it sooner or later. It would likely have some kind of an impact but I do not know what yet. Will keep a keen eye on any signs.

For the indices today, we see minor consolidation on both the STI and KLCI. STI would likely trade between 3,350-3,440 while KLCI to trade between 1,268-1,285.

A bit more upside

Currently 2007 and Oct 1987 - Black Monday
Source: Bloomberg

With Wall Street's follow through rebound last Friday, we expect regional markets to see more upside today. However, I expect both the KLCI and STI's upside to be capped. KLCI's 61.8% Fibonacci at 1,297 is expected to keep a lid on any rise. I see sellers waiting to pounce around those levels. As for STI, I believe that the 3,404 or its 62% Fibonacci level should cap gains.

Looking ahead, I still see a sharp correction ahead. This correction could even be worse than the previous one we just endured. Remember Oct 1987? See the resemblance? The Dow is 'currently' on its rebound just before Black Monday! If the Dow trades in a similar pattern as Oct 1987, then this rebound could end in about 2 trading days!! History to repeat itself here 20 years later in 2007? Only time will tell...

Limited room on the upside

Wall Street was flat last night. Dow closed unchanged while the Nasdaq fell 11pts. Dow and the S&P 500 is trading close to its 50% Fibo retracement. A kick up to the 62% (1,484) for the S&P is not impossible but the upside is about 1.5%. Hence the limited upside compared to the risk of a reversal. It is time to be cautious again as we wait for the c-wave to kick in. Be prepared for another fall soon.

The KLCI and STI is not expected to buck the global trend. Similarly, for the KLCI, I am expecting today to be a generally dull day. Well, I see little upside for the index. A test of 1297 (62% Fibo) is also likely, but I expect more of a sideways trend between 1,272 and 1,288. I would be getting out of the stocks (at today's closing price) that I bought for the portfolio yesterday.

For STI, it was a touch and go for the index. It surpassed its 62% Fibo yesterday but reversed right after to close below it. Expect more of a sideways trend as well for the STI today. Range is likely between 3,340 and 3,410. Taking out both the stocks that I bought for the portfolio yesterday.

Time to shop

I believe that today could be a good day to get in. With Wall Street being flat, it looks like the Wave counts point to an a-b-c corrective wave. On my count, Wall Street is on its b-wave up before a major c-wave down. It is similar for the STI and KLCI.

What am I going to buy today? Hmm.. For Malaysia, I am going to add Timedotcom (5031) at RM0.98 and KUB (6874) at RM0.85 to the portfolio. Add 20,000 shares for each. Gonna a stop for Timedotcom at RM0.90 and RM0.80 for KUB.

For Singapore, I am going to add 5,000 shares of Hong Leong Asia at S$2.94 and 8,000 shares of Ho Bee Investments at S$1.82. Putting a stop at S$2.80 for HL Asia and S$1.75 for Ho Bee.

A slight pullback

I am expecting a slight pullback in both the STI and KLCI today after yesterday's steep rebound. Nevertheless, I think the rebound still has legs and could last up to the next 5-10 days.

Looking further, I believe that there is still room on the downside. The indices still needs to consolidate to rebuild lost momentum. So, be wary in September!!

Fed cuts rates!

FED cut rates last Friday and it caused a rebound on the US markets. Asian markets should mimic the price movement of the US markets today.

Asian markets posted a hammer candle last Friday, which suggest that the indices could rebound today. KLCI is expected to rebound to 1,234-1,267 while STI is expected to rebound to 3,280-3,400.

Is it time to buy? Yes, but only for the short term. Look for stocks that has been badly bashed down. Err, which stock hasn't? :) I am looking at MRCB (1651) and Land & General (L&G).
In Spore, I think the property counters could rebound. I like Armstrong and Beyonics.

For the portfolio, I am not going to do anything as I think we may have missed this rebound.
For those intending to buy, it is best to keep it short as the rebound is expected to be short term in nature. The rebound could last for 2-3 weeks max. So get in fast and get out even faster!!!

More downside to come

Working in these 'gloomy' days are still as exciting as it was during the 'brighter/bullish' days. It would be an act of god for anyone to predict where the bottom is going to be. I can give you a number today and the next minute the indices is already testing/hitting that number. KLCI = 1,200, that's where we are now. STI = 3,100, that's where we are too... so what now?

Working on a longer term chart, I find that my ex-boss' view could be right. Are we heading towards the 1,100 levels for the KLCI? Are we heading to 2,750-2,800 levels for STI? At the rate the markets are falling, everything could end in a month's time. :)

Time to buy again? Yes, but not today.

It is feeling like a crash, doesn't it?

Wall Street continues to be plagued by the concern of the worsening subprime market. S&P gave back all of its gains for the year while Dow is about to give it all back. Need I say more here?

While I was chatting with my ex-boss yesterday, he painted me a gloomy picture for the weeks ahead. His outlook for the STI and KLCI is a lot lower than what I thought it would be. And the worse think was I think he could be right. He is looking at STI falling to about 2,750 while KLCI falling to about 1,070-1,130. Later, I managed to run through some of my charts. The targets that he gave is indeed very 'possible'. Right now, I would continue to hold on to my targets at 3,100 for STI and 1,200 for KLCI.

So, people stay away from the market!!!

Wave 3 - to feel like a crash

Wall Street's slump continued as last night Dow lost another 207pts. Dow has fallen about 7% from its peak. Dow should continue to ease to the H&S target of 12,400 first but wave 3 could take it down to even 12,000. So be prepared for more downside.

STI and KLCI has also fallen about 10% or 7% respectively from their peaks. The downtrend is expected to continue. KLCI = 1,200 and STI = 3,100. So, maintain sell on strength.

Transmile - News

In the Starbiz today - there was a big block of Transmile shares that changed hands at RM12.90 each in an off-market married deal last Friday. It appears to have been an internal transaction conducted by its major shareholder, Pos Malaysia. The deal involved Pos Malaysia & Services Holdings Bhd (PSH) transferring its shares to Pos Malaysia Bhd (PMB) as part of the group's restructuring that involves a capital repayment and transfer of PSH's listing status to PMB.

My 2 cents - those who chased the stock yesterday could be 'p*$$*#g' in their pants now. There could be some profit taking today, and it may even fall back to where it started. My take, stay away from the stock for now. After the 'fraud' debacle, it would take ages to regain investors/funds' trust in management.

Minor rebound to continue today

STI and KLCI would likely continue on their rebound as Wall Street was flat last night. Stocks (with Fundamentals) that have been beaten down could see a stronger rebound. Nevertheless, the longer term trend is still down. Sell on rebounds is still the best trading option in my opinion. Well, there is a better 'general' option = take a holiday :).

Wave 2 - a Sideways

Wall Street rebounded strongly at the close after opening more than 1.5% lower. That may have been the temporary bottom for the US markets. Now I am looking a flat Wave 2. With wave 3 to kick in later, it is still best to sell on rebound. STI and KLCI should be able to rebound as well as both markets are holding above their strong support. STI needs to hold above the 3,300 support while KLCI needs to hold above the 1,285 levels. Maintain sell on strength strategy for now.

Kaboom!!!

Buyers had been warned repeatedly!!! Stay with the bears for now or take a holiday! Dow fell a whopping 387pts. Europe fell about 2% each. Needless to say, the Asian market will tumble today as well. This drop is only the beginning of a very deep fall in global markets. The fear is spreading and the selling is expected to accelerate this time round.

Just remember that fear is a much stronger emotion than greed. So markets tend to fall a lot faster compared to when it is climbing. It is just like rock climbing - it is a hard and difficult climb upwards to the peak but the time taken on the way down, it is almost always be a lot shorter.

KLCI & STI - bubbye for now!! If the 1,285 gives way, the KLCI would likely head back to 1,197 (its 38% Fibo). The 200-day SMA at 1,225 may offer little support. STI should see 3,100 (its 38% Fibo) next should 3,300 gives way!

Dow is now close to its 62% Fibo

Wall Street continued to rebound after FED left rates unchanged. However, I believe that this rebound is about to come to an end very soon. For Dow, it has rebounded closed its 62% Fibo at 13,678. There is also a possibility that Dow could surpass the 62% to the 76% at 13,807. Hence, I expect the Dow to rebound to between 13,678 and 13,807 before it turns down again. Buyers beware!!!

As for the KLCI, the rebound could stop close to 1,327 level, its 38% Fibo. It may be still best for investors to stay out to the market a for a bit. If investors want to do 'something', it is still best to SELL into strength. DO NOT BUY at this moment. It is time for a vacation.

STI is slightly better. It could rebound to 50% which is at 3,481 or where the support turned resistance is. Still best to sell into strength.

Wall Street rebounded

Wall Street rebounded strongly last night. Without a shadow of a doubt, the markets in Asia would rebound as well. Nevertheless, investors ought to take caution when chasing the market upwards as this would likely be a REBOUND only. This is a market for traders and not for investors. Investors should continue to unload their shares as the market rebounds.

KLCI - it failed to test the 1,275-1,285 support yesterday. With Wall Street rebounding, the KLCI should also tag along for the ride. I see resistance around the 1,325-1,334 level.

STI - Tested its 3,300-3,330 support yesterday. Should rebound from its support today. Most of its stock are currently trading just above their 200-day SMAs. The selling would start again as soon as the buyers are exhausted. It is also best to sell on strength here.

Bears are in charge

Wall Street crashed again last Friday. Dow and S&P rebounded to the 38% Fibo mark before the bears hit the sell button again. It looks like there is no respite there just yet.

As for KLCI and STI, expect more downside for today and tomorrow. I see strong support for KLCI at 1275-1285. There is a chance that it may even fall to 1,200 (38% Fibo) but we may have to see if the 1,275 support holds or not.

For STI, the strong support is now at 3,300-3,330. Should it head back to its 38% Fibo, then it could fall to 3,100.

Refrain from buying just yet. Funds with deep pocket could start nibbling but for retailers it maybe best to stay away for now. Take a holiday and come back in a few weeks :)

Airasia - News

In the Business Times, AirAsia will soon start refunding passengers for delayed flights. The airline hopes to implement this within the next two months. AirAsia also requested for low-cost terminals to be set up in Kuching and Penang. On top of that, Airasia also hopes to be able to start a second flight to Shenzen by October given the overwhelming demand.

My 2 cents - They should have started the 'refund' since they begun operations. The delays has been one of the main, if not the main 'nuisance' to its customers. This move should improve their credibility among its customers and potential customers. With half of Visit Malaysia 2007 (VM2007) already passed us by, their business has been brisk. This should be a good year for Airasia this year and next. A lot of brokers has been 'selling' Airasia as a buy these days. And I think there is still room on the upside for its share price. I definitely do not expect it to shoot up straight away in these market conditions but well, it should in the next 12 months or so.

East Coast Corridor - News

In the Business Times today, the govt announced that the East Coast Corridor's master plan is expected to be announced by year end. The plan will cover Kelantan, Terengganu and Pahang. Some stocks that will benefit - MTD Cap, MTD Infra and EPIC comes to mind.

Does this mean that election would be next year? haha... just my 2 cents

Markets would try to rebound again

Again, the markets around Asia would try to rebound, tagging along with the rebound on the Dow overnight. Like yesterday, I think the the Dow has rebounded about 38% Fibo and a another leg down would ensue soon. KLCI would retest 1,350 while STI would retest the 3,480. The markets are heading towards more consolidation over the next few weeks at least. There will be tonnes of opportunities once the market stabilises. There is no need to rush in to buy right now.

Get ready for more volatility

Yesterday we saw the regional markets take a beating as the bears charge in. There is a good chance that it may not be the end just yet. Today we may see a rebound due to Dow's positive upturn last night. Dow would likely rebound to 13,450-13,550 range before easing again. KLCI could retest the 1,350 levels again while STI could retest the 3,480-3,500 level again.

As for the portfolios, I am not doing anything right now until the market settles. For now, keep cash :)

Gap closed

The STI has closed its gap and has a very good chance that it would continue on its fall to retest the 3,480 support. The KLCI almost closed the gap (it only reached 1,374 yesterday while the gap resistance was at 1,376). With indicators still looking bearish, it is sufficient to say that it would likely ease back to retest the 1,350 support. Adding to the bearish tone is the fall on Wall Street. Stocks that has risen quite a bit in the past couple of days should see profit taking. Investors ought to take profits and stay out of the market for now.