On a break!

I am going on a break for a couple of weeks. I will try to leave a rough outlook of the markets ahead.

Dow - approx 13,600-13,750 critical resistance level. Chances are, it would likely ease after reaching that level. It could fall back to test 13,000 or lower. This is due to the Dow Theory Sell signal.

STI - could rally straight from here. We could see a decoupling from the US in 2008. But (to be on the conservative side), I would take a same view for now. Meaning that STI could retrace a bit after hitting 3,650-3,700. Only after the retracement is over, then it should rally all the way into 2008.

KLCI - take a similar view. Bullish on the longer term. Pullback after hitting 1,405-1,410. Then it should rally hard into new highs of 1,490-1,560 next into 1Q 2008.

Asean strategy - Buy into dips. Look out for the lower liners coz they are going to be the star this time round!! Remember 1993-1994. :)

Here we go!!!

There was a slight doubt about the BULL when the Dow fell below its 12,845 level and suggested a Dow Theory Sell signal. However, it has rebounded sharp for the past couple of days. Wall St posted the biggest two-day rally in five years, led by financial shares, after Federal
Reserve Vice Chairman Donald Kohn buttressed expectations for another interest rate cut. The Dow rallied 331pts while S&P500 added 40pts. European shares also rallied the most in 4 1/2 years.

Two days ago, I posted that there could be a possible bottom for the STI. And I believe that this rally on Wall St could kick start the new rally in stocks over in Spore. Investors looking for fundamental stock ought to look at the property and construction sector. Stocks like Tat Hong for construction and Hobee, Capitaland, and Wing Tai for property. Sesdaq counters also look attractive now. Alantac is interesting now.

Malaysian stocks to look at - the foreign Call warrants look very attractive. HSI-C1, SInopec-Cs, and CNOOC-C1.. These are looking attractive even though they expire soon. The underlying shares listed in HK looks very interesting too. Hence, any movement in the underlying would probably lead to higher price here in the Call Warrants.

Currrent levels are good levels to get in - trading wise. Buy now..

Selling to end?

The S&P500 could be doing a 3-3-5 flat Corrective Wave 4. I think the selling would likely end soon. Yesterday's fall could be close to the end and the only risk to this count is that volume is not sufficient. In other words, there is no selling climax yesterday. Nevertheless, I am stick to my view that the US market could bottom out soon. Give it a couple or more days. Dow could find support around 12,600 while S&P holding above its LT uptrend support. A break below would likely signal the start of a weaker trend in the short term.

Could STI downfall coming to an end? There is a strong possibility that the low is around the corner. Whenever the RSI fell below its 30 pts mark or in the oversold region, the STI usually found a ST bottom. Could this round be the same? I believe so coz it is also holding above its 62% Fibo levels of 3,322. Maintain buy on weakness.

For KLCI, there is no change in view. It should track regional markets accordingly. Strong support is at 1,340 while resistance is at RM1,365.

Waiting for a turnaround signal

Wall St rebounded on Friday but on relatively low volume. Pls do not read too much into the bounce. I am still waiting for any signs of a turnaround in the US markets. That should lift global markets. (In the immediate term) There could be a possible positive rebound on the US Dollar which could in turn be positive for the US stocks. Again, the Dow looks like a huge sideways formation trading between 12,500 and 14,100. Look for a turnaround the support levels of 12,800-12,845 and 12,500-12,600.

STI held its 62% Fibo level - 3,322 last week. A positive sign. Its RSI is also lingering in the oversold region. On the past 2 occasions, whenever the RSI fell below the 30pts mark, the index actually bottomed out. Could this be a bottom here? I think so. Again, this is only a risk analysis. Buying and selling will depend on your own risk tolerance. I believe that HG Metal looks interesting on the charts. It is now trading at S$0.49. Put a stop at S$0.42.

KLCI could find a bottom with the 100-day SMA (1,340) supporting the index. This level should keep the index afloat for now. Keep a look out on the call warrants. HSI-C1, C2, C3 looks interesting. CNOOC-C1 is also on the rise. Sinopec-C1 is another to look out for. Any rise in the index would see these call warrants rally hard.

To find its feet

Wall St was closed last night on Thanksgiving. Happy Thanksgiving!! Usually, Thanksgiving week, is bullish for equities but definitely not this year. Dow is now below its 12,845 level suggesting that the Dow Theory Sell signal is in. Just becareful. I still believe that a tradable rally is coming but it will probably a rebound in a bigger picture now that the Dow Theory Sell signal is in play.

STI should also find its bottom soon. The 61.8% fibo did not hold either. Possibly giving up all its gains since Aug if the index do not find its feet soon. The low then was 2,962, which is close to its 3,000 psychological support.

KLCI is also looking weak. It is holding just above its 100-day SMA at 1,340. More weakness to follow should this level give way. A wait and see approach is best for now.

The BULL is not dead yet, probably just delayed now that the Dow Theory Sell Signal is in play.

The bull to take a back seat?

The S&P500 gave up all its gains this year after last night's fall. Concerns of losses from mortgage defaults have spread throughout the economy sent stocks on Wall St plunging. American Express fell to its 14 month low after Morgan Stanley recommended investors to sell the stock. The Dow is now below its critical level of 12,840, which could mean the delay in the arrival of the BULL. The Dow Theory Sell signal seems to be in place. The last time it occured in 1999, the Dow fell about 30% from its high. It means that it has a long way to go - down. Nevertheless, if Dow recovers to regain the 12840 this week, then we might avoid this bearish scenario. Keeping the fingers crossed.

STI and KLCI would likely see further selling today on the back of Wall St's plunge. KLCI to find support at 1,340 (100day SMA). If the index stays above the this support, then the Bull upcoming run is still intact. For STI, the 3,322 support needs to hold in order for the BULL to continue in the next couple of weeks. The next support is at 3,180 followed by 3,000. With Dow in such a precarious position, it may be better to cut some losses first before getting in again sometime in the near future. Otherwise, investors could hold on until the end of the week to see if both the supports hold.

Has the bull started?

Well, it is still too early to confirm right now. Dow is still hanging just above the critical 12,845.87 level. I have used the 12,840 level as a last ditch support. Last night, the Wall St rebounded. Dow is now back above the 13,000 level. Nasdaq is likely to have 1 more leg down before it can turnaround. Nevertheless, 2008 is going to be another exceptional year.

For Asian markets, the money would likely flow out of US and into Asian markets be it property or equity. HSI and Shanghai is expected to be the leaders this time round. I have heard stories that HSI could even hit a high of 40,000. That did not surprised me at all as I think it is very much possible. So, get ready for the bull.

STI is also looking bullish in the long run. Though the short term mechanics are starting to show. Yesterday's bullish long white candle is supportive. The rebound from its 61.8% of 3,322 is a very good sign. Continue to accumulate on weakness. I like Broadway Industrial and Midsouth Holdings. Both stocks are looking good fundamentally and technically.

KLCI also fell to its next support at 1,360-1,365 after falling below the 1,380 level. Accmulate between these levels. I see smaller construction companies starting to move. Crest Builder is one, trading a 5x PE. It also broke out of its consolidation pattern. Salcon is also a single digit PE and a breakout could take place soon. According to Bloomberg, analyst has target prices for Salcon at RM1.70-1.80. Faber is also moving.

This week's outlook

According to Bloomberg news, U.S. stocks posted their first weekly gain this month after investors speculated that the worst of Wall Street's mortgage losses have been disclosed and Wal-Mart Stores Inc. boosted its earnings forecast. The S&P 500 added 0.4% this week to 1,458.74. The Dow Jones Industrial Average rose 1% to 13,176.79, and the Nasdaq Composite Index gained 0.4% to 2,637.24.

Homebuilders and banks may face further declines this week. Economists expect reports to show U.S. housing starts fell to a 14-year low in October, signaling the real-estate slump will
continue to weigh on growth. Is this going to be the final leg down before the BULL arrives? Maybe. It all depends on Dow's performance this week. Can it hold its support at 12,840-12,878?

STI is back down to its 50% Fibo support at 3,434. Its 62% Fibo is at 3,322. The strategy for the Spore market is to nibble between these levels. Longer term, I am looking at 4,022 at least.

KLCI should find support around the 1,366-1,380. Similarly, the strategy is to pick up good stocks between these levels. Longer term, I am looking at 1,490.

Magnum (3735) - Privatisation - True or False?

Both Multi-Purpose Holdings (MPHB) and Magnum Corporation (Magnum) replied (in Bursa Malaysia website) that both companies - "constantly review options to increase shareholder value. In pursuit of this objective, MPHB and Magnum will continue to evaluate all opportunities which may be available." - when queried by Bursa over a media report on expectations of Magnum being taken private by MPHB. They also added that an appropriate announcement will be made should there be any definitive corporate development.

Airasia - News 2

In the Star today, AirAsia said the popular period of travel was January and March while the top-selling destinations including Kota Kinabalu, Kuching, Langkawi, Shenzen, Bali and Bangkok.
AirAsia offered 400,000 specially-priced tickets and has successfully led to a surge in bookings. AirAsia-X tickets to the Gold Coast in Australia are also being snapped up. The travel period was fixed from Jan 8 to April 30, but tickets must be booked before Nov 25.

Time for a holiday? Yes, it is good to take a break from the markets once in a while. Come back recharged and I believe is the way to go!! :)

Enjoy your Holidays!!

To test critical level

Wall Street falls for the 2nd day in a row last night after the sharp rebound on Tuesday night. Dow lost another 121pts while the Nasdaq lost 26pts. This 'should' be the final leg down for the Dow. This final leg could send the Dow lower towards the 12,900 level again or slightly lower. Only a break (and close) below 12,840 would signal a (rare) Dow Theory Sell signal which last happened in 1999. If the level is not breached, then there is a very good chance that this downtrend is over. And the bull run should start then, which could rally all the way into 2008. So, be prepared and keep a sharp eye on the 12,840.

STI should continue to find support above the 3,434 level, which is the 50% Fibonacci retracement level, followed by 3,322, its 62% Fibo level. Investors should start to buy between those levels.

For the KLCI, the index continued to find support above the 1,380 level. Yesterday's inside day suggest indecision among investors. However, I believe that the uptrend rally is bout to take place, possibly next week. Investors should start buying whenever the index eases towards the 1,370-1,380 level.

Just keep an eye on the Dow. If Dow breaks the critical level, then my count could be wrong. If Dow holds steady, then I believe that the low is in and a rally could take place next. Having said all that, even if the Dow breaks the critical level, I still believe that the BIG Bull would come, probably delayed by a couple to 6 months. :) So, let'e hope it doesn't.

Same quote:- Do not miss this BULL RUN!!! It is going to be BIG!! Very BIG!!! :)

Dow retraces

Dow fell 76pts after surging 319pts the previous day. Hence a minor correction is not unexpected. Nevertheless, I think there will be a small pullback from here to complete this downtrend, may be another fall to 12,900-13,000 region (or thereabouts). Investors should get ready for the upcoming Bull run. I do not know what is the catalyst for this upcoming bull run, but I believe it is still going to happen. We are in a Major Bull Cycle which is 'expected' to end in 2008/2009. So, there is still room on the upside.

STI should still find support at 3,434-3,500 levels. Investors should buy on dips. Similarly for the KLCI, the 1,370-1,380 would likely be a good level to get in. Do note that Synergy Drive is expected to be listed sometime in Nov (can't quite remember when - could be next week). It will be the largest capitalised stock on Bursa Malaysia. I believe this would likely give the Malaysian market the kick it needs to move on higher above the 1,400 level.

Lower to buy!!

Magnum (3735) - to be sold or privatised?

There is a rumour running in the market that Magnum (3735) is about to be taken private or likely be sold by its parent MPHB (3859) at a selling price of RM3.80. Magnum and MPHB ran up yesterday and is expected to continue to run today. Magnum also recently announced that the company wants to raise RM800mil cash to provide the group and its subsidiaries with additional funds to finance their working capital and for acquisitions.

Based on technical, MPHB looks the better bet. On a fundamental basis, MPHB would also be the likely winner as 'the sale' could boost the coffers of MPHB. MPHB could potentially return the excess cash to shareholders via a special dividend :). Since both analysis 'appears' to favour MPHB, it could be better to look into MPHB. For those who prefer to leverage, pls look into MPHB-WB.

Wall Street rebounds

The US markets rebounded sharply as expected. US stocks climbed the most in 2 months
after Wal-Mart Stores Inc.'s profit beat analysts' estimates and Goldman Sachs Group Inc. said it doesn't plan any significant writedowns on mortgage-related assets. Tech stocks like Apple also surged. Apple led the Nasdaq Composite Index to its biggest gain in four years after China Mobile Ltd. said it's in talks to sell the iPhone in China. Dow surged 319pts while Nasdaq 90.

STI touched its 50% fibonacci retracement at 3,434 yesterday and rebounded. This could be the low for STI. A new rally to new highs is likely to take place very soon.

KLCI support at 1,380 appears to be strong. Bulls seem to be buying strongly whenever the stock fell below the support.

I think these are good levels to get into S'pore and M'sia stocks. Even for the conservative investors. Do not miss this BULL run! It comes only once in a blue moon (well 13-14years to be exact). Happy trading!

Mah Sing (8583) - a new investor?

A consortium of Middle East, a Malaysian blue-chip institutional and individual investors are eyeing a strategic stake in Mah Sing Group, according to Business Times' sources. Partnering with the current major shareholders and management of Mah Sing will likely be the vehicle of choice for the investors' Southeast Asian expansion plans. The deal would likely be different to which Middle East investors recently bought into Putrajaya Perdana and Loh & Loh Corp. With this tie-up of the consortium of investors in Mah Sing (if it comes through), the company's ability to grow further locally, regionally and in the Middle East is set to be very good.

My 2 cents - it should be very positive for Mah Sing if this is true. They could even have a bigger share of the IDR if the potential investors turned out to be the same ones as the ones who plans to invest a big chunk in IDR. Even without that, the group's business has been very good in the past couple of years. It is rumoured that they are close to securing enblock sales of its properties, both commercial and residential.

Dow reaching target

Wall St continued to fall yesterday led by oil and metal producers. Worries that economic growth could slow due to rising oil and commodities prices. Tech stocks such as Google posted the worst 4-day slide in its history. E*Trade tumbled 59% after the company said that its earnings fell short of forecast. Citigroup went as far as saying that the company could go bankrupt. Apple also lost 7%.

Now with Dow close to the 12,900 level, there could be a potential minor rebound in the coming days. Nevertheless, selling pressure is still present in both Dow and Nasdaq. Now, we may have to wait and see if the market eases lower to retest the Aug low. If Dow breaches the Aug low, we could have a Dow Theory Sell signal, which is very rare.

STI's gap support held well. Yesterday's hammer candle is bullish but it needs further confirmation. Maintain a wait and see for the light pocketed investors while deep pocket investors should start to nibble. Gap support 3,470-3,520. Resistance at 3,600 followed by 3,660-3,688.

KLCI is also holding above its last week's support of 1,380. A break (and close) below the support would signal the start of an immediate term downtrend. Note: the longer term outlook is still very bullish. Aggressive investors should start to buy now just above the 1,380 support. Conservative ones should wait a while longer.

Wall St plunges further!

As I mentioned before, the US markets has not bottom and the final wave of selling was ready to kick in. It appears to be happening now. Where is the bottom? I am looking at12,900 levels for the Dow. However, should the index fall below the Aug lows, then we have a Dow Theory Sell signal. So be careful.. For now, stand aside. Wait for clearer signs before jumping in. The bulls should have sharpened their blades by now and just waiting for the right moment.

ST- more downside expected. Could be sharp but is expected to be short. Target 12,900 for now.
LT- Big bull is coming after this consolidation - no matter how sharp it is..

STI could find support at the gap of 3,460-3,520. LT uptrend is still intact.
KLCI to find support at 1,380 again. Looks the strongest among its regional peers.

Nevertheless, buyers in both markets ought to wait. Only investors with deep pockets can start to nibble and average lower should the market continue to fall. Be prepared for the next bull run!! It is going to be a good one but it would likely be the last. The next bull could take place 14yrs down.

"You've been warned!!" :)

Sellers to the fore!!

Wall Street continued on its downward pullback as expected :). This time it was the Nasdaq that fell sharply after outperforming the Dow and S&P in the past month or so. Nasdaq took another day of pummeling after Cisco fell 9.5% due to the fall in demand for its products from its top25 customers. The late nibbling in banking and financial stocks lifted the Dow from its lows. Dow ended 33pts lower while S&P500 was down 0.85pts. Nasdaq lost 1.9%.

STI should continue to ease due to its weakness in Wednesday's closing. The 3,660 support is unlikely to hold out today. The next support is at 3,550 thereabouts.

For the KLCI, Wednesday's strong close is baffling to me. Based on the charts alone, the uptrend is still very much intact. However, I believe weakness in the regional markets will keep a lid on its rise. I think there could be a correction or at least a pullback in line with its regional peers. I am looking to see if the 1,380 support breaks this time round. Upside resistance is at 1,440.

Airasia - News

In the Edge Financial Daily, Malaysia and Singapore are expected to sign a bilateral agreement by end November that will allow AirAsia and Tiger Airways to fly twice daily each between Kuala Lumpur and Singapore, said Malaysia’s Transport Minister.

Good for consumers and Airasia. Bad for MAS or SIA? Not really, coz it is only 2 flights a day - hence minimal impact. But it is a start. Oil prices should also keep a lid on the share price of MAS and SIA as well as Airasia.

Minor rebound to resume

Dow rebounded 117pts to 13,660 while S&P500 added 18 to 1,520. Dow appears to have formed a head & shoulder formation with a neckline at 13,450. A break below this level would definitely increace the chance of the index hitting the targeted 12,900 level.

STI and KLCI shld rebound further today. STI could test 3,700-3,722 level while KLCI could test 1,394-1,400 again. Nevertheless, investors ought to stay vigilant when trading in these volatile markets. Again the plantation and the smaller cappers would do well today.

A little reprieve

Dow recovered last night to end the day at 13,543, down 52pts while the broader S&P500 shed 7pts to 1,502. The Dow fell sharply throughout the day after Citigroup Inc. said it will report as much as $11 billion in additional writedowns. Financial stocks such as securities firms also dropped. Dow 'should' continue to ease to around 12,900 or at least that is what I expect.

STI held the 3,660 support yesterday but KLCI fell below the 1,388 support. However, the Hang Seng is expected to fall further in the coming days. Since HSI has been the leader in the current rise, a fall in HSI would likely affect both market here. It may try to rebound today after 3 days of selldowns. So, both the KLCI and STI could rebound today. Do note that the sellers appears to hv the edge in the short term. I expect more selling to take place in the coming days.

PJ Bumi (7163) - New investor

CIMB wrote based on the news in the Edge Weekly - A Saudi Arabian investor is making an entry into Second Boarder, PJ Bumi, in an exercise that will see the departure of its founder Tan Sri Ahmad Johan. According to sources, the Saudi Arabian company is buying into PJ Bumi to tap its waste and waste-water engineerging expertise, which it hopes to take back to the Middle East.

Technically, the stock is expected to rally further after breaking out of its LT sideways trend last Friday. Leave a stop at RM0.53 and the 6-month target is RM0.92 based on the height of its LT trading band.

Volatile markets ahead

Expect more volatility in the markets this week. Dow lost 97pts on Friday morning before recovering to close up 27pts. The Dow should continue to ease in the coming days this week. I am looking at about 12,900 for the Dow. The usual suspect - financial stocks would likely send the Dow lower as I expect more bad news related to the subprime thingy. The odds a market crash (i.e. a fall of about 10% or more) has increased. So, be careful.

Both the KLCI and STI would likely trade sideways for now until a breakout on either side. However, the onus in on the downside this week. KLCI is expected to trade within 1,388-1,425 while STI to trade between 3,660-3,850. Be careful when trading this week.

Wall St tumbles

Wall St fell sharply after banks fell the most in 5 years. The subprime worries has hit again. The Dow lost 362pts while the S&P500 gave up a hefty 40pts. The fall yesterday erased about $369 billion of market value from the benchmark for the American equities. We should continue to see more downside from here. Having said that, I do not expect a straight line drop but I think it would likely be very volatile. It could swing up another 150pts in between the fall again. (Well, I hope you guys get what I mean). I would likely be a yo-yo market with the larger picture trend is down. 12,900-13,000 could be the target for this downtrend.

KLCI yesterday closed near the low, which for the immediate time frame is bearish. So did the STI. Both could hv actually formed a rounded top but it needs confirmation. KLCI should ease to retest the 1,392 after failing to breach the 1,425 resistance. STI could head back to retest the strong support at 3,660-3,688. The upside resistance for STI is at 3,850.