Dow's outlook stays the same

After looking through the charts, I am still keeping to my call on Dow (see Weds 24 Oct note). We are currently in a wave 5 in a larger Wave C down. There is a possibility of a sharp fall on the Dow as one of my indicator is very bearish. How will it pan out? Wait and see :)

Once this fall is over, the bull should be back. This wave count would likely be wrong if the market continues to rally past its old high of 14,198. This would mean that the bull has already started and this down is a Wave 2 correction rather than Wave C. I feel that the former has a slight edge or a 55:45 ratio.

Will the Asian markets buck this downtrend? It is too early to say but I think it could. The KLCI has been lagging the regional market while the STI has yet to show any negative signs that a top is in. Both indices are still on a ST, MT and LT uptrend.

Today, more profit taking is expected. Nevertheless, the trend still has not change. Stay long but trade cautiously.

CI Holdings (2828) or its warrant (2828WA)

CI Holdings closed at its 4-year high today at RM1.12. This suggest that the stock's buying momentum is strong. I expect more upside from the stock tomorrow. Technically, the stock broke out of its reverse Head & Shoulder neckline resistance yesterday. The reverse H&S has a target of RM1.92. This is a long term target.

CIMB wrote about the stock today - called "Expect a Bubbly start." CIMB expects the stock to post a 67% rise in 1Q earnings year-on-year. If they do that, it would be their 5th consecutive quarterly profits after years of losses. This could be a turnaround story. CIMB has a BUY call with a target of RM1.42 based on a PE of 15x.

KLCI to rally further

KLCI is expected to rally further even after yesterday's gains. The positive close on Wall Street is also another 'positive'. There is a lot of upside potential in the small cappers or penny stocks. M3nergy is one of the stocks to look out for (see later note for more info). Again, I see MKLand (8893) or its warrant coming into play soon. There are signs of accumulation and it is a matter of time before the stock rallies. Also look at MPCorp and GPharos.

STI is also expected to continue to rise to retest its year high of 3,906. The Sesdaq could start to move soon... Look at lower liners like Alantac, Beng Kuang Marine and Health Management Int(HMI).

I may have to relook at the Dow's outlook and wave counts but I have yet to find the time.. Dow could be in Wave 4 corrective wave now. What I have written are only from very short term charts and hence the ST outlook.

Anyway, traders in KL and Spore should be in for a ST bullish time (ST- means a week or 2)
:) Happy trading!

New highs expected

Wall Street positive close last Friday is expected to lift both indices in today's trading. The STI should continue to rise to test its 3,906 high again soon. The KLCI, at its all time high of 1,398, is expected to continue to rise further as the momentum players continue to chase the index higher. KLCI could hit 1,410 soon today. The longer term target for the KLCI is 1,444-1,460. Construction, property and plantation stocks would shine. Lower liners would likely outperform its more mature peers this time round.

Both indices would likely be still affected by what happens on Wall St. Like what I mention last Wednesday, this rebound on the Dow is probably the sideways (or leg up) before 1 more leg downwards within a month or so. Then only the Bull market would likely kick in thereafter...

Dow rebounds but the view remains

Dow rebounded 109pts last night while the S&P500 added13pts to 13,676 and 1,520 respectively. The rebound is still within the range of my wave count. There is likely another leg down in a day or two - this is Wave 3. This is expected to be followed by a few (about 3-4) volatile days or sideways trading - this should form Wave 4. Followed by the last impulsive Wave 5 down to about the 50-62% correction level - 13,150-13,330. Then the Dow would continue to rally into 2008! This is the correction that I roughly expect to pan out. After this correction - the BULL returns!!! :))

STI should also roughly follow in the same lines. I am looking at 3,500-3,660 for the STI. It may be a wide range but I believe that these are good levels to get in - Heavy for the upcoming BULL run. 4,000 should not be a problem for the STI.

KLCI should break above the 1,392 after this correction. 1,392 is a ten year high - meaning that the bull trend is on its way. Correction should end in Oct or Nov. 100-day SMA should hold steady at 1,336. I am starting to 'hear' about a few stocks. I found these 3 stocks attractive, both technically and fundamentally (except for MKLAND) - CRESBLD, BAHVEST and MKLAND. Will write bout these soon.

I have put down the outlook for the next few weeks. I will not be able to update this blog in the next couple of days because I do not have access to the internet. :)

'Trade within your means' - SS

Mini rebound but more downside expected

Wall Street saw a minor recovery led by Apple and tech stocks. Dow closed 44pts higher after dropping 114pts in the morning. The consolidation for Dow is not over, I believe. This is just a minor correction after the previous day's sharp drop. There should be one more leg down based on the wave counts. This consolidation is expected to last until end of the month at least.

STI could rebound along with Wall Street's rebound. The index is expected to hold on to its 3,660 support today but similarly to Dow, I expect anther leg down. KLCI is also expected to rebound today probably to close the gap at 1,370. After that, another test of its 100-day SMA at 1,336.

Dow crashes on 20th Anniversary

Dow crashes on its 20th anniversary of Black Monday. Dow fell 2.6% of 366pts while the broader S&P500 fell almost 40pts. This reversal would likely be swift and maybe 'sharp'. Be prepared for more downside on Monday. On worse case scenario, (If this is wave 2) then it could fall another 1,400 pts back to the Aug low. On the best case scenario, the correction is over (Dow has fallen to its 38.2% Fibonacci retracement) but this is the least likely scenario. How far more, we may have to wait and see.. So refrain from buying just yet... the time will come to buy but not now!!

STI should continue to consolidate after breaking below its 3,780 support. 3500-3550 should be the next strong support. KLCI should also open 20pts lower as suggested by FKLI Futures.. KLCi support is at 1,335, its 100-day SMA. Refrain from buying now!!!

Black Monday - Oct 19, 1987

How can I forget such a date? It is what Wall Street called it exactly 20years ago. Hmm, I was probably still in school somewhere in the suburbs of KL. There are a lot of similarities here and in 1987.. Here is a summary what a famed Strategist wrote in Newsweek International July issue:-

1.1987 - markets has been rising for 5 years from an extended bear market (ended in 1982)
2007 - markets have also rose for 5-6year since dotcom bust
2.1987 - talk of trouble in the US savings and loan industry
2007 - Subprime-mortgage concerns
3.1987 - Speculative bubble in Japan
2007 - Speculative bubble in China??
4.1987 - surging oil prices - then to USD60 per barrel
2007 - surging oil price - now to USD100 per barrel??

Just be aware that - 'History tend to repeat itself'!!! Would Monday see a crash? I don't know but there is a good chance that a correction is coming - could start next Monday

Idaman (1112) - reprimanded by Bursa

Bursa Malaysia publicly reprimanded Idaman Unggul for breach of paragraph 9.16(1)(a) of Bursa Securities Listing Requirements ("LR"). Bursa Securities views the contravention seriously and cautions the company on its responsibility to maintain appropriate standards of corporate responsibility and accountability in order to achieve greater disclosure and transparency to its shareholders and the investing public. (Bursa Malaysia S/B).

oops... not a good news. Still, this stock is a lower to buy.. also see Idaman(1112) -new uptrend has begun. Keep in mind that stop loss must be adhered to... Remember, in these volatile days, it is better to keep risks at a minimum.

Sideways market

Wall Street was rather flat yesterday after Bank of America announced losses of $4bn from trading losses, defaults and loan writedowns. Tech shares kept the indices up. S&P500 was 1pt lower. The US markets would likely be sideways again tonight due to expiration of the options tonight.

STI is trading close to its support of 3,780-3,800. A break below would likely see a new consolidation period for the STI. Chinese S-shares would continue to be in the limelight today.

KLCI is also trading close to its support of 1,365-1,367. Local funds appears to be holding the index by nibbling on some of the key blue chips such as TM and Maybank. Tenaga is still under selling pressure. As predicted, construction stocks saw some profit taking yesterday after their recent strong run. A foreign broker also downgraded Gamuda to a Neutral yesterday. Penny stocks would again dominate - look out for PECD, MPCorp. Both ran already yesterday so be careful.

Personally, I remain a short term bear. I expect a pullback next week. Only after a pullback (depending on how far down - that I do not know yet!!), I would change my ST bearish view. If I am a long term player, I would be buying on the way down.

Idaman (1112) - disposal of insurance arm?

Idaman Unggul (1112) could announce soon (as early as this month) the disposal of its general insurance arm, Tahan Insurance Malaysia and the planned sale of its timber assets. The sale of the timber asset concession could be worth around RM300m, according to a source. (NST)

My 2 cents - could explain the recent surge in volume traded. Should this rumour be true than it would be beneficial to Idaman. Also, technically, the stock is on a new LT uptrend. See Idaman (1112) - new uptrend has begun.

Another down day ahead

Consolidation is expected to continue today in line with the fall on Wall Street. Dow lost another 72pts while S&P500 shed 10pts. For STI, we should be able to see more downside today after yesterday's breakdown from its double inside days. A fall below 3,780-3,800 would likely signal the start of a new ST consolidation. On the other hand, for KLCI, a fall below the 1,365-1,367 level would send the index into a ST pullback towards the 1,334 level. It maybe best to stand aside as the overall market is likely to be weak. Construction stocks which has been rallying for the past week could see some profit taking today. However, there maybe one or 2 penny stocks that would outperform.

Turnaround happening now?

At the point of writing (3.50pm Malaysia/Spore time), the market appears to be turning around. The dreaded reversal is taking place or at least close to happening. The 'trigger' for KLCI and STI are 1,365 and 3,780-3,800. A break below those level at 5.00pm today would likely confirm the ST downtrend has begun. As an investor, I would likely unload most if not all of my share holdings from now till 5.00pm. I would even go as far as 'shorting' if that was possible in the market (that is how bearish I am right now, short term at least).

So, ppl, Raya is over!! Get out now! :)

Be cautious this week

First of all, Selamat Hari Raya to all readers. :)

Ok now, back from the holidays, how would the markets perform? Dow last night fell 108pts on soaring oil prices and also more worries on the bad debt situation. "U.S. stocks fell the most in five weeks after Citigroup Inc. said defaults will plague the financial industry for the rest of the year" - (Bloomberg News). Consumer stocks are also starting to ease as some fund managers believe that the slowdown has just only started and has a way to go.

STI has had a double inside day which suggest indecision. The players do not know exactly where the market is heading. With overbought indicators, investors should move to a more risk-adverse stance on the market. Reduce some of your shareholdings would likely be the best option, I believe.

KLCI, closed yesterday due to the Raya Holidays, is expected to open flat. There might be some selling pressure on the Blues but penny stock would likely be actively traded. I think investors should start reducing some exposure to the market on rallies this week. If the market do not fall this week or next (i.e after neutralising the overbought indicators), investors could then get in again. Trade cautiously for now.

Profit taking on Wall Street

Last night Dow fell another 64pts to 14,015 while the S&P500 lost 8pts to 1,554 after Technology stocks fell. Tech stocks fell after JP Morgan issued a sell recommendation on Baidu.com, China's search engine. Google fell for the 1st time in 5 trading days while Apple lost the most in one month. Technically, Dow looks like it is about to turn downwards. Its MACD is also about to issue a ST sell signal. We may have to wait tonight to see if the sell signal takes place or not.

STI saw an inside day on the charts yesterday - which means that investors are undecided on the direction of the market. Nevertheless, with overbought RSI and Stocastics, I think a short term pullback is on the cards. Probably in the next week.

KLCI is at is 55-day high, which is bullish. However, the selling remains on the TMT. Indicators are still positive but also slightly overbought. The index may try to test the 1,392 level today but i foresee a lot of sellers would be waiting at those levels. Penny stocks saw a comeback yesterday afternoon with Mui Ind and BJ Corp leading the way. I continue to like penny stocks for now but I would continue to trade cautiously due to the overbought market.

It is time to be wary

Oww man... this is the second time that nothing came out...must be my office's internet :(

Dow turned down yesterday, closing 86pts lower. Regional markets should continue to ease a little. Yesterday, there is a bearish engulfing candle on the STI. It is a sign of a possible top for STI. It needs to close below the 3,800 to confirm the change in trend. Otherwise, it could continue to climb.

KLCI continues to climb higher but the big 3 of TMT is still under selling pressure. This could be fund managers are recomposing their portfolios, reducing the TMTs and adding counters like Sime, GHope (for Synergy Drive) and construction counters like Gamuda and IJM. Penny stocks would remain in the limelight but could be under a bit of selling pressure after strong gains lately.

Both the KLCI and STI are in overbought situations and may come under some selling pressure due to profit taking activities. Just be careful when trading as a pullback could take place soon (either this week or next). Besides, just keep in mind that Black Monday took place on October 17th 1987.

Dow at another record

Yesterday, US markets continue to climb into record levels for the second time this month which should be good for the regional markets. In yesterday's FED minutes, investors found comfort that the US economy is NOT heading for a recession. Dow closed 121pts higher to 14,164 while the broader S&P500 added 13pts to 1,565.

STI should hit new highs today with 3,945 the next target. KLCI will try to breach the 1,380 levels first then followed by 1,392 later. Penny stock would likely to be in the limelight. I have highlighted 2 stocks today which saw a bullish breakout on their charts. They are Idaman (1112) and Metacorp (8389). Also keep an eye on MESDAQ counters like YTLE (which also moved yesterday), AIM, Opcom and BAHVEST (but no volume).

Happy Trading!!!

Idaman (1112) - New uptrend has begun

Idaman (1112) seems to have started its MT uptrend. It has to confirm by breaking out above the RM0.40-0.42 level. This stock could double :) . As long as the stock stays above the RM0.24 level, the uptrend should still be intact. So, first target is RM0.40-0.42.

Metacorp (8389) - Hop on!!

Metacorp (8389) rallied strongly in the afternoon session yesterday. It broke out of its 2-month consolidation triangle. I think it is a good time to jump in and join the bandwagon. Stop loss should be just below yesterday's low of RM0.52, maybe at RM0.51. First target is its year high of RM0.705. Should the stock continue to climb, i think it could even hit RM1.00 in the longer run.

Lower liners continue to shine today but...

Dow closed marginally lower but the Nasdaq continue to climb to 5-year highs. Regional markets saw a lot of volatility yesterday. Some profit taking activities coupled with bargain hunting send the HSI swinging wildly yesterday similar to the past 2 trading days. In Msia, the penny stocks continued to be actively traded. In Spore, more penny stocks are starting to see action after a few weeks in the doldrums.

Note of caution: The markets are now overbought. Investors ought to be wary of pullbacks. I believe that there could be a pullback sometime this week. The KLCI is already pulling back while the STI is still flat.

Multi-Con Systems (Spore) - Bullish breakout!!!

Multi-Con Systems also staged a bullish breakout yesterday. Trading volume was very good, suggesting that this breakout is genuine. There is still room on the upside here. Next target should be S$0.32-0.355. Downside risk - put a stop below the breakout level at S$0.24, maybe at S$0.23. Long term outlook looks good too. Something to hold for the longer term if investors choose to do so.

KUB Malaysia (6874) - Also a breakout

KUB also broke out of its triangle yesterday similar to KHSB. The technical readings are roughly the same. So it could rally from here as well. Upside target RM1.10. Stop at RM0.90. The risk/reward is not so good here compared to KHSB but still something to look at.

Kumpulan Hartanah Selangor (6246)

Kumpulan Hartanah Selangor (KHSB) looks like a breakout yesterday. Yesterday there was also a bullish engulfing candle as well. Its indicators looks bullish, suggesting that it could run from here. Resistance is pegged at RM1.20 levels. A break above this resistance would send the stock towards its year high of RM1.32. Stop loss should be put at RM0.94. Those who are willing to risk a bit more - should then put their stops at RM0.86 instead.

Just to note - the market looks a bit toppish. It could turnaround next week.

Penny stocks to shine

Dow was relatively flat yesterday. There were not much action over that side of the Pacific. Regional market should rebound today although i do not think that the rebound would be strong. Nevertheless, I see the smaller counters moving up higher playing catch-up. Look out for penny stocks in Malaysia and Spore.

Silver Bird (7136) - Fight on!!

The fight for control over Silver Bird (7136) continues with Tan Sri Vincent Tan adding more than double his stake. He now owns 14.4% compared to 6.2% last week. What is so attractive in Silver is still unknown to the public (me included). I believe that the MD Dato' Jackson Tan has just found an ally in the battle against Lembaga Tabung Haji. So, whoever wins the battle would likely offer an GO for the stock. There should be more upside for the stock from here. CIMB just upgraded the target price to RM1.00 from RM0.75, based on 2x P/BV.

A change in trend?

Well, it is still too early to tell but the signs are there. Dow ended the day down 79pts while S&P500 was 7pts lower. Tech shares led the fall with Intel and Advanced Micro Devices at the top of the list. Energy stocks also saw some losses. There are market talk about the recent rise on Wall Street were caused by short covering and not actual demand rising. So once short covering has ended, would the market still have the fuel to move on higher? I am begining to doubt my change of heart last week where I changed my bearish view to a bullish one. Things are not what they appear to be. The US markets could still be the Wave-B, which is sometimes referred to as a bull trap or bear trap. Well, in this case, a bull trap.

Both KLCI and STI corrected in the afternoon in line with what happened in Hong Kong. KLCI ended marginally higher for the day but STI ended 39pts lower, about 70pts from its intra-day high. Hong Kong's HSI, saw a swing of 1,600 pts intra-day. The way it ended the day suggest that this could be a buying climax. Is this the end of the Asian bull run? Yes and no. I think this would likely be the top for the next 2 months but for the longer term, the bull run is still very much intact. For now, I would suggest investors to stay cautious and do not take unnecessary risks!

Yes, Surewin, i think your friends are a smart bunch of investors. Just be cautious and keep to your cut loss points.

Dow off high

Most stocks in the US continued to rise despite the Dow closing 40pts lower. 7 stocks rose for every 5 stocks that declined. Financial shares climbed to its highest since July. There's a lot of optimism that the worst is over for the subprime debacle. However, I believe there is still need to be cautious here as the rally to new highs were on low or lower volume (compared to its July highs). The worst is not over yet.

STI opened higher yesterday but ended the day at its day's low. Is this a sign of tiredness? This, I cannot confirm as yet. I believe it is mere profit taking after the strong rally in the past week. Still I see a minor resistance at 3,850.

KLCI is heading towards the 1,392 high again. It could face some resistance here at 1,368 level. A pullback could take place today. Yesterday volume was encouraging but could it be a buying climax? Again, it is still too early to say. Just be vigilant when trading the markets at these volatile times.

AIRB (8516) - takover target?

The stock has risen a tad in the last 3 trading days before yesterday's slight pullback. The stock rose from RM1.00 to its current price of RM1.34. a 34% rise. There is a market rumour that the stock is being bought a by widely known Malaysian businessman, whose businesses include power, port, plantation, property and padi (rice). And do you know what is targeted takeover price? It is thought to be around the RM3.40 mark. That is a whopping 250% higher than the current price. I am a little skeptical bout the target but technically, it still looks good. I would not discount a run to the RM1.50-1.60 level in the coming days.

Malaysian Merchant Marine (7040)

In my humble opining, this stock has potential to rally hard in the coming days. The technical setup is looking good. . A breakout above RM0.57 would likely send the stock higher towards the RM0.67 level next. A test of its year high at RM0.795 cannot be discounted. At RM0.795, represents a 41% upside. Cut loss at RM0.47.

Dow at record high

Dow rallied strongly last night after investors speculated that the worse could be over for banks and other companies hurt by subprime mortgage losses. Dow added 192pts or 1.4% to a record high of 14,087.55 while S&P500 advanced 20pts or 1.3% to 1,547.04. There is a slight divergence between the broad market and the 30-stock Dow. Also, there is a negative divergence growing (since late last week) in the advance/decline ratio. A risk nevertheless..

STI continued to rally yesterday, reaching new all-time highs. Earlier, I was pretty bearish on the STI. Now that it is now about 2% high than its previous high of 3,688, I think the bull is back again at least for now. The broader market is slowly catching up but still lags behind. Also another negative divergence here. STI should continue on its rally today. Property counters would likely continue to lead. After China allowed more funds to flow out of China and into chinese stocks listed in SGX (S-Shares), stock with 'China' in it would likely see further upside from here. China Petrotech, China Sun Bio-chem, Beauty China, China XLX are some of the few that look good on the charts.

Similarly, for the KLCI I was rather bearish. Now that the index is above the 100-day SMA as well as above its 76% Fibo level, I believe that I could be wrong. I now do not see the KLCI falling back to the 1,141 level. If there is a turnaround in the coming weeks, it would likely be only a pullback (less than 10%) rather than a flat out correction (more than 10%). KLCI still lags the regional markets. Can we catch up? With Dow surging to new highs, there is a good chance that KLCI could follow suit.