Today is the day - the bulls hit back!!!

I believe that we may have found a bottom at 1,120 for the KLCI, or at least a temporary bottom. Over in the US, the DJI, SP500 and Nasdaq all appear to have found a bottom. In Europe, yesterday's looks a tad like a capitulation. With all these factors, going for the bulls, today could be the day the bulls hit back!! KLCI would like see a stronger rebound today. With the Futures markets in a deep discount, we could see a sharp rally to 'cover'. Investors may want to look at stocks with high beta - MRCB, Bursa comes to mind. I prefer the former as it has always been a 'trading' stock. Keep a good lookout!

Are things getting overly bearish?

Yes I believe so. Fundamentally we are now trading near crisis levels. Should it be a screaming buy now? Yes, politically we are now in unchartered territory but opportunities like this don't come very often. Below is an article from the Singapore Business Times.


Business Times - 08 Jul 2008
Uncertain times in Malaysia

IF Malaysia's stock exchange were regarded a barometer of its economy, the country is headed for a mighty storm. Since January, the benchmark Composite Index of the Kuala Lumpur stock exchange has dropped around 22 per cent, one of the worst performances in the Asia-Pacific region. Much of the steepest falls came after March 8, a watershed date in the country's history when the ruling National Front coalition registered its worst-ever electoral showing.

Sadly, things appear to have taken a turn for the worse since then. Prime Minister Abdullah Ahmad Badawi has been attacked relentlessly by his predecessor Mahathir Mohamad who blames him for the Front's poor showing. In turn, Dr Mahathir himself is being attacked by a High Court judge for attempting to influence trial outcomes when he was in power.
And as if all this were not enough, a 23-year-old male aide claims that he was forcibly sodomised by the 61-year-old former deputy premier and de facto opposition leader Anwar Ibrahim, echoing an allegation made against Mr Anwar a decade ago for which he was tried and eventually absolved.

Adding to the tension are allegations that Najib Razak, the current Deputy Prime Minister, was involved with a Mongolian model whose murder is the subject of an on-going trial. Worse, the man who released his statutory declaration with the allegations, retracted them the next day and has since vanished with his family, raising more questions about this case.
Meanwhile, Mr Anwar has lodged a police report alleging corruption against the country's top police officer and its Attorney-General. The reports are being investigated by the country's Anti-Corruption Agency.

Then there are questions about the integrity of High Court appointments following the inquiry and report on the so-called Lingam tapes. Clearly then, Malaysia is in a political mess. Yet, despite the gloom in the stock market, the broader economy is doing relatively well: it remains a net oil exporter and is a leading producer of commodities from palm oil and rubber to gold and pepper, all of which are fetching high global prices. Exports remain buoyant, the country has a strong net reserve position and domestic demand remains surprisingly resilient.
But, make no mistake, continued political uncertainty will take an economic toll; investors will stay on the sidelines till the dust settles.

Mr Anwar claims that he has enough support within Umno, the dominant partner in the ruling coalition, to engineer a collapse of the government.
But this only adds to the uncertainty. Economic management is getting little attention. Left to drift, the situation will eventually erode Malaysia's economic, as well as social, foundations - a dangerous development.


Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved

Is the KLCI index hitting a low?

Is the index hitting a low? It appears to be building a base above the 1,188 support level. I think we should see a low this week, probably marginally lower then the 1,188 level - maybe 1,180 or so. Being a contrarian is akin to taking on high risks - so, investors who cannot or unwilling to take on such high risks ought to wait a while before getting. And for those who choose to get in, keep your stops tight - very tight.

Because there are too many stocks to buy and you don't know which is better, you might want to learn a bit more about trading futures. Trading the KLCI index futures (which is listed on Bursa) can offer certain oppotunities which stocks cannot offer - such as Leverage and shorting, where it is allowed in futures trading. Nevertheless, it is a double edge sword. You can make as much as the market gives you but you could also lose all in a blink of an eye.

Things are looking bearish here in Malaysia but...

Everything are starting to look bearish right now. Even our Bank Negara's governor - Tan Sri Zeti Akhtar Aziz says that BNM may revise their GDP forecast for 2008 of 5-6%. She says that "Right now there is also a risk that we may have a slower growth and this is being experienced in the global economy, including the region." The general feel is definitely cautious with a slight twist of bearishness right now. I think that this is common within a Wave 4 correction or a Wave 5(ii) correction. I believe that we are in a Wave 5(ii) and once this is over, the KLCI could rally strongly to all time highs by the final quarter of this year. Stay tuned!

Everything is looking bearish but...

Right now, everything is looking bearish... globally, everyone is facing high inflation. In the US, unemployment just rose and the word stagflation has begun spreading. However, it is still too early to confirm that the US is indeed in stagflation. Regionally, everyhting is also looking bleak. China's monetary tightening could squeeze the tight market even more. Coming back to our shores, Malaysia is now facing high political risk and 'possibly' high inflation. Everything and I mean Everything!!! are pointing to more bearishness ahead.

But wait, if everyone is hyper bearish, should we be contrarians and trade the other direction? There are still the element of risk if one should trade against the trend. Nevertheless, the returns do outweigh the risks, in my opinion. I believe that the KLCI index will find support around the 1,200-1,213 levels. The Hang Seng Index to find support around the 22,000-22,400 level. STI to find support at 2,945-3,006. Shanghai should hold around the 3,000 level, or slightly below. I still believe that the bull will be back sooner rather than later.. Will update again when the regional indices start to move upwards again.

Steel counters looking overbought...

Steel counters on the KLSE are looking overbought and a temporary pullback is likely... Yesterday we saw a large surge in all steel stocks including the smaller ones like leader steel. Trading volume was also up suggesting that the uptrend has just started. However, do not be fooled. There is a good chance that yesterday was a buying climax - at least for the time being. There is no doubt that there is an uptrend but TRY NOT to jump in at this current lofty levels. Wait for a pullback maybe a better choice, in my opinion. Just my 2 cents. Trade cautiously.

Kinsteel - could ease to RN1.37-1.45. Lion Ind - could ease to RM2.30-2.50.

Also note that, steel prices could be on its final leg of its long term uptrend. Be forewarned that steel prices, as a matter of fact, all metal prices could peak sometime in 08/early09.

KLCI short term Wave count

I believe that the KLCI is currently its Final Wave 5 rally towards the end of the year. The current count is that the index is in its Wave i of its final Wave 5. Where is the index within this Wave i? Here is a chart to show where the KLCI is right now and how I see it going in the coming week. We could see a rally back up to about 1,314-1,320 for Wave v in Wave 3. This count would be incorrect if the KLCI falls back to below 1,256 levels - the high of wave 3, i. (Source for the chart above: Bloomberg)

Losers with a capital L

Here are some of the biggest trading losses ever reported in the media.

1. Nick Leeson and the downfall of Barings Bank. Leeson lost an estimated $1.4bn.
2. John Rusnak and the Yen. Rusnak lost an estimated $691m.
3. Yasuo Hamanaka aka Mr Copper. Hamanaka was a trader at Sumitomo Corp, losing S$2.6bn in copper trades
4. Jerome Kerviel and Societe Generale. He lost more than $7bn speculating in European futures.

Just like in the previous note, Losers begets losers, these so called 'superstars' were doing very well before disaster struck. When these traders started losing, they went out to look for ways to magnifying their bets and try to win back the losses. Apparently, luck has deserted them when they needed it the most.

My 2 cents - It was not that luck has deserted them. It was that they took on too much risk. To seek expectional returns one has to take on equally exceptional risks. There is no magic trick. Investors ought to play great defense and not great offense, i.e. one should manage risks and the returns will take care of themselves.

Losers beget losers

Have any of you ever gone thru a period where you as a trader/investor have to take losses after losses. First, you take a trade and you find out that you made a mistake. So, the trade reaches your stop loss point and you cut your losses. You feel - unsatisfactory to say the least. You want to regain it as fast as possible. You then trade larger amounts/lots/contracts. In the end, you end up losing more. Is it down to luck? is it because you followed your broker's recommendation? NO!! It is all down to being disciplined and poor money management. You cannot blame anyone else but yourself.

I have just gone thru such a period. Losing is such a bad feeling but I guess everyone have to go thru such a period before one can learn (if one ever learns). Well, I have to just take it in stride as Bob Prechter says. Here's a part taken from Elliot Wave International's website - It's all about "Fives and Threes"

Here's how Bob Prechter, Elliott Wave International's founder and CEO, put it in his classic 1986 report, "What a Trader Really Needs to Be Successful":
"...my observation, after eleven years in the business, is that the biggest obstacle to successful speculation is the failure merely even to recognize and accept the simple fact that losses are part of the game, and that they must be accommodated. The perfect trading system does not exist. Expecting, or even hoping for, perfection is a guarantee of failure."

Trading is tough (very tough if u are a beginner), and don’t let anyone tell you otherwise. Don’t let them tell you all you need is a correct forecast, either. That is maybe 20% of your success, but you only realize that after you've traded for a while.

A tad more upside likely

A tad more upside is likely for both the KLCI and STI. The KLCI could break the 1,300 mark again soon before reaching a peak around the 1,314-1,320 levels around early March. On the other hand, STI could continue to climb to about 3,265-3,330. I believe that the regional and global markets have found a bottom back in Mar. This rally (wave 1) would likely end around the second week of May. Wave 2 correction could take about a month. Then we could finally see the strong and bullish Wave 3 around June/July. Investors ought to look to buy stocks when this pullback occurs. This could be the last chance saloon before the BEAR sets in. So, traders and investors alike, ought to ride this final leg. This is going to be a wild ride and everyone is going to be SUPER BULLISH!!! So, when the time comes (i.e. newspapers and magazines says that the BULL is back, BEWARE!!!) - that could be the end of this final leg :)

Stay tuned!!! Good luck trading!

Interesting article on Bloomberg

Leading Economic Indicators in U.S. Rose in March (Update2)
2008-04-17 10:42 (New York)

By Courtney Schlisserman
April 17 (Bloomberg) -- The index of leading U.S. economic indicators rose in March for the first time in six months as cash poured into the banking system and the Federal Reserve
lowered the benchmark interest rate.
The Conference Board's gauge increased 0.1 percent, as forecast, after falling 0.3 percent in February, the New York- based private research group said today. The measure points to
the direction of the economy over the next three to six months.
The improvement is a tentative signal that the economy, after deteriorating in the first six months of 2008, may not weaken further in the second half of the year. The report
indicates the Fed's rate reductions and efforts to ease the credit crisis may help mitigate the damage from the slump in subprime lending.
``We are flat to negative in the first half and we expect some of these elements of policy to kick in the second half and start to see some improvement,'' said Peter Kretzmer, a senior
economist at Bank of America Corp. in New York. ``But the uncertainties surrounding that forecast are certainly increasing.''
A report from the Philadelphia Fed, issued at the same time, showed manufacturing unexpectedly contracted at a faster pace in that region as measures of new orders and shipments dropped.

Economists Forecast
Economists forecast the leading index would rise 0.1 percent, after a previously reported 0.3 percent decline in February, according to the median of 55 projections in a Bloomberg News survey. Estimates ranged from a decline of 0.3 percent to a 0.4 percent gain.
The increase in last month's index brings the decline for the last six months to a 3.3 percent annual pace. A drop of 4.5 percent or more over six months usually correlates with a recession, according to economists at the Conference Board.
``While latest data do not support the assertion that we are in a recession, growth remains weak, a situation that may continue,'' Ken Goldstein, a Conference Board economist, said in
a statement.
Five of the 10 indicators in today's report contributed to the gain in the index, led by a jump in the money supply. Slower supplier deliveries, which indicate an increase in orders, and a
steeper yield curve were also positive.

Credit Markets
As credit markets seized up, the Fed on March 16 gave all primary dealers in U.S. government bonds the same access to loans formerly reserved only for banks. The central bank now auctions as much as $100 billion in funds a month, making it easier to liquidate some hard-to-sell assets. The yield curve, or the differential between the Fed's benchmark rate and the yield on the Treasury's 10-year note, also widened last month. The central bank dropped its target rate by three-quarters of a point to 2.25 percent on March 18, leading to a steeper curve.
The yield differential turned positive for the first time in February after 19 months of negative readings that subtracted from the leading index. The Fed has cut its benchmark rate by 3 percentage points since September, with two-thirds of reduction coming in the first three months of this year.
A report earlier this week indicated factory sales are improving this month, in contrast to today's Philadelphia report. The Fed Bank of New York said April 15 that its shipments index rose to 17.5, from minus 5.2 in March.

Recession Forecasts
The economy probably is in a recession, according to James O'Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut. Economists surveyed by Bloomberg News earlier this month projected growth in the first half of the year will come to a halt. A majority of those polled forecast the U.S. is, or will soon be, in a recession.
The Fed yesterday said economic growth slowed in nine of 12 districts since February, hurt by ``anemic'' real estate markets and a slowdown in consumer spending, according to its regional
business survey known as the Beige Book. Earlier today, the Labor Department said more Americans filed first-time jobless claims last week and the total number receiving benefits rose to the highest level in almost four years, a sign the labor market continues to weaken. The number of initial applications rose 17,000 to 372,000.
Claims were the biggest drag on the leading economic indicators index last month. They averaged 375,900 in March and subtracted 0.25 percentage point from today's gauge.
Negative Influences Other components that subtracted from the leading measure included decline in consumer expectations, stocks and building permits.
J.C. Penney Co. Chief Executive Myron Ullman said yesterday that the company will moderate its growth plans in the next year to cope with a ``consumer environment that's very hard to predict.''
The Conference Board's coincident index, which looks at real incomes, employment, industrial production and business sales, rose 0.1 percent in March. The gauge declined in two of the prior four months. The measures are among those tracked by the National Bureau of Economic Research in determining whether a recession has begun.

US Dollar on its final leg downwards

US Dollar (USD) has hit its all time low last night against the Euro. So, expect more downside for the USD in the near term. However, over the longer term, I believe that the USD is on its final 5th wave down. The 5th wave is the terminal wave for its rally/decline. After this wave is done, I see the USD rebounding strongly.

How would this affect the equities? I believe that the stronger USD would help lift the US market out of its doldrum, even if it is only for a 2-6month period. And if Wall St climbs, regional markets around Asia would also follow suit. I see positive signs for the global equities market in the short 2-6month period.

Critical week

This is a critical week for global indices... I believe that we may have seen the bottom for most global indices in March. All of the indices have rallied from the March lows. Right now, the bulls are fighting to regain the upper hand. Most indices are fighting to regain the 100-day SMA and 200-day SMAs. Breaching these levels usually means that it is bullish or bearish in the medium term. Breaking above these levels would signal that the medium term uptrend has resumed while breaking below these levels would signal more downside in the medium term. Right now, all are on the verge of breaching 'above' and hence it could be very positive. However, looking at the short term momentum - the breach is unlike to happen just yet.. global indices may pullback a tad before it can rally past these difficult resistances. So, be prepared for a pullback.

Asia to decouple from US this week?

Over in the US, the markets appear that they may still undergo more consolidation while the Asian counterparts seem to have bottomed out and ready to rally.

I believe that the Shanghai market has just bottomed last Friday and has the potential to lead the Asian market higher. Hang Seng would likely be the co-leader. I still like Singapore but Malaysia could lag a little due to its uncertain political cloud. Also, I believe that the plantation sectors has peaked. So, the upside for these stocks would underperformed against the rest of the other sectors. 30% of the KLCI is now made up of plantation counters, and this would likely keep a lid on the upside for the KLCI. Nevertheless, Malaysia could continue on its rally to close the gap at 1263-1283. With a little bit of luck, it could possibly hit 1,296 as well this week.

STI could continue to head to 3,150 before rising to test the 3,268 level again. Banks and property are the sectors that I like. I also like the S-shares traded on the SGX. C&G Industrial, and China XLX are a couple that I like although China XLX has moved up quite a bit.

Stock Exchanges in demand?

Yeay!! All markets seem to have reversed their downtrend... STI, KLCI, Dow, S&P. Hang Seng is about to breakout of its downtrend channel.. So, watch for it either today or tomorrow.. STI could reach as high 3,300 but the immediate target is 3,150. KLCI could reach 1,250 first but it could reach as high as 1,304 next.

Since most of the countries' markets are starting to pick up again, it may wise to look at the listed stock exchanges.. I like Bursa Malaysia and Singapore Stock Exchange as well as the Hong Kong Stock Exchange. I believe all three are strong buys now as all have hit their strong support levels. For those who prefer to take on a bit more risk, one may want to look at their call warrants.. Even so, always make sure you know the exercise price of the warrant.

Singapore Banks to fly!!!

I believe Singapore Banks will fly today!!! DBS, OCBC and UOB could rally hard from here. They make up of about 31% of the STI. With the STI breakout yesterday, the index could be heading towards the 3,150, followed by 3,268 level. So, there banks would likely lead the way. DBS and UOB have a long term target (6-12months) of S$25. OCBC is about S$10.50. For more adventurous investors, one might want to take a look at the call warrants which has lower exercise price.

For Malaysian who want exposure to the Spore Banks, only DBS has a call warrant listed on Bursa. It is quite attractive too as its exercise price is only at S$18.20.

When times are the most bearish....

Globally, there is talk that the whole global financial market is on the verge of collapse... Depression (which is worse than ressession) is being mentioned all over the the papers, magazines and tabloids... the world is as if it is going to come to an end...

hmm, i smell the bulls are ready to kick back strongly soon... When times are the most bearish, it is time to BUY!!!! We may have seen the worse in this past couple of weeks... especially in the Malaysia where the index saw the largest 1-day fall in a decade...

Technically, global indices may have corrected abt 38% of the large Wave 3. The a-b-c correction on the S&P500, Hang Seng, Malaysia, STI... it is time to go into the market now!! there may be volatility ahead in the next few weeks, but i believe that the trend is about to change!!!!

Malaysia - i like stocks that have been bashed down with good fundamentals - Kencana, Gamuda (for trading), Tenaga.

Spore - i like the banks, and property counters like Capitaland, Banyan Tree, Tat Hong and their call warrants... just becareful with the call warrants on its expiry and exercise price.

Tides are turning again

As you know, I have been saying that there is another leg upwards ages ago... this up leg has yet to take place and it should have taken place by now... I am now revising the call without this up-leg.

Dow - the up leg appears to have been stopped by its 50-day SMA. There is still a small chance that it could reach 12,900. Nevertheless, I expect more downside from here or from 12,900. This bounce is likely over... if you are waiting to buy, best to wait a while longer... maybe up to end of April...

STI - 3,268 appears less likely... get ready for the fall towards the 2,746 level again

KLCI - a break of the Jan low of 1,340... it could fall further to 1,280-1,289 next.

Best to stay away if you want to buy the market... If you are willing to short the market, there are opportunities.. Pls note that - Shorting is not allowed in certain markets. Shorting is also dangerous and should only do so if the available excess cash.

Outlook for the Dow and the rest

DOW is currently fininshing its b-wave triangle. It should continue to rally for the c-wave correction soon. I am looking at the 12,900 levels for this c-wave.

STI - Similar point of view. 3,268 is the level that I have for the STI c-wave.

KLCI - Should continue to ease to about 1,275-1,285 before rebounding to retest 1,420-1,432.

Sunway Holdings (4308) - Trading opportunity

In a StarBiz report today, Sunway Holdings was awarded the sub-contract works by MEB Construction Sdn Bhd to construct and complete the privatisation of the South Klang Valley Expressway for RM264m. Construction would take 19 months plus an additional two months for testing and commissioning.

Technically, the stock posted a hammer candle yesterday. It hit a low of RM1.12 before closing marginally higher at RM1.23. On the longer term chart, the stock also tested its breakout support level. This may be a good level to get for both the short and long term.

Investment strategy (for illustration purposes only): - Buy 10 lots of Sunway or its warrant-B (should be able to buy more warrants - for leverage). Cut loss point for Sunway, is RM1.11. The ST upside target is RM1.40-1.45. LT target points to RM1.70-1.78, its 100-day SMA. When the stock reached the ST target, take profits on 5 lots and raise the stop loss point to breakeven point of RM1.26-1.27. Hold the rest until the next target or is stopped out at the higher stop loss point, whichever comes first.

No change in outlook

I still think there is one more leg up for Dow, STI and KLCI. This rebound should last till about end of the month before another round of selling takes place.

Do not be too 'gung ho' in buying the rising markets now. Things have not change in the longer term. However there are a few stock that are worth looking at right now.

In Singapore, I believe that there is room on the upside for property counters such as Allgreen, City, Singapore Land, and Capitaland. There are divergences on its MACD which could see these stocks rally a decent 5-10% from here.

In Malaysia, the plantation counters remain in the spotlight. Property counters in Malaysia may also rebound together with regional property players.

Happy Chinese New Year!!

Happy New Year!! Gong Xi Fa Cai!!! Gong Xi, Gong Xi!!!

Here is to wishing everyone a Happy and Prosperous New Year!!! Hopefully, the year of the rat is going to be as good as 2007. Happy Trading everyone!!

Regards,
Shooting Star

C-Wave up

US markets posted a biggest weekly gain in 5 years last week. Banks, builders and retailers helped lead gains. The Dow is expected to climb to test the12,900-13,100 level. It is a bit difficult to see right now if that level would break. I still believe that there is somemore downside to come from those levels. Best, I believe that it would be to take profits or cut losses around those levels.

STI could rebound this week to 3,268 followed by 3,325.

KLCI to rise to test 1,417-1,420 followed by 1,435. SapuraCrest or its warrant looks interesting today. It could run as it has a very high beta to the market. The stop loss for SapuraCrest is RM1.45. The upside target is RM1.90. So, it is a tradable option for this short run. :)

C-Wave up is on the way

US is now testing its August low (resistance) at 12,515 level. A break appears likely, which could send the index towards the 12,900-13,100 level next. Would the FED cut rates by another 50bps tonight? If they don't, then we can forget the 12,900-13,100 level as sellers would likely pile in..

STI - facing some difficulties... today would likely be another mixed day... still, i expect it to retest the 3,268 level soon. If not, then the index could ease to retest the 2,775-2,850 level again.

KLCI - lacking momentum too... this rebound needs to kick up higher from here - otherwise, it could be heading back to 1,340 or lower.

All in all, the global markets still hanging by a thin thread... the Bernanke's thread.. if he does not cut rates (then bye bye!!??!!).

Rebound to continue today

US markets is now doing its C-wave of this rebound rally. I expect both the STI and KLCI to follow suit this morning. STI could retest the breakdown level of 3,268 soon followed by 3,325 while KLCI to retest 1,417-1,420 first before testing 1,435.

For short term traders and intraday traders, this is a good time to get in but for longer term investors, it would be better to wait for longer until the market finds its footing.

The bear and the bull

We saw a bear and a bull market all in one week. Wow!! I know some traders which made money on both side - they ought to be put on a pedestal!! hahhaaha... They are really good.. anyway, this week - rebound should continue...

US markets - DOW could consolidate for another day or two before resuming its uptrend toward the 12,900-13,100. Thereafter, i believe that there could still be more downside from there. Should Dow beat the 13,100 resistance, then I may have to change my view. Otherwise, it should still be in consolidation, probably trying to find its bottom, the 4-year trough that almost everyone is looking for.

STI-should track the US markets for now... similarly, fall early week then continue on its rise towards the 3,268-3,325 level. Beating the 3,325 level would likely end this correction. Keep a lookout.

KLCI - It needs to build a base before it can rally again... Again, it needs to beat the 1,435 support-turned-resistance before it can run again... Be vigilant....

Rebound likely to continue

US markets are likely going into a rebound phase before another leg downwards. For the Dow, the upside should be capped at 13,100. If it goes above, then there is a good chance that 11,600+ was the bottom. Keep a close watch here.

STI rebounded from its 2,775 long term support. It could bounce to about 3,100-3,200 before falling again. 2,775 needs to hold in the longer term.

KLCI saw come support at 1,340. It could eventually fall to 1,287-1,300 after this rebound. 1,400-1,410 is likely the top of this bounce.

Strategy - Sell on strength.

Bye Bye Birdie!!

KLCI continue to outperform regional market due to its defensive qualities. Nevertheless, it fell below its trend line supportof 1435, suggesting that it could ease to 1,377 its 38% Fibo and also its 100-day SMA. A minor bounce could take place then (probably Thursday)... till then, as the title says bye bye birdie!!

STI is expected to continue to plunge towards the 2,775 long term uptrend channel support. In the short term, a rebound could take place - probably sometime this week. Could be Wednesday or Thursday. Stay tuned.

Looking for a rebound

Regional market rebounded slightly yesterday. KLCI also rebounded from its strong support 1,435. However, with Dow falling another 300-plus pts, we could see a lower opening on the
KLCI. 1,435 - i think will be tested again today. A break below suggest that more selling could take place. But I believe that the level can hold because the US markets are very oversold and is due for a rebound - either tonight or Monday - which could last at a least a week. Longer term, the trend is down for the US - with Dow looking at 11,380-11,600.

STI - rebounded off 3,000 yesterday. Similarly, STI could start the day lower due to the US markets. But I believe that it could rebound later in the day or Monday. A rebound is also likely for STI as its indicators are oversold. Nevertheless, it is not a buying opportunity but a selling one.

Sell on strength is the strategy to employ on all markets.

KLCI support at 1,435

KLCI current support is at 1,435, its trend line from 1,141 to now. A break below would signal that more downside is likely. The next support is at its 100-day SMA or 1,371. The 38.2% Fibonacci retracement is also nearby - at 1,377. Keep an eye on 1,435.

STI is now at its support. Could rebound today from here or from its 3,000 psychological support. Near term - could rebound but the longer term outlook is still bearish. It fell below its long term support and could now head to 2,760-2,880. Its 38% Fibo is at 2,814.

KLCI's failure to hold 1490

It looks like KLCI could not 'de-couple' from the global market meltdown for long. This morning the KLCI fell 30+pts in line with the fall in regional markets. KLCI opened at 1,490 and continue to fall, breaching support after support. 1,470 support the index for a short while but sellers continued to pile in. It would likely be better to cut losses now for the selling pressure appears very strong.

KLCI to continue on higher

KLCI should continue to climb higher today on the back of a rebound in the US last night. After yesterday's minor pullback, I expect KLCI to reach 1,544 this week. Yesterday's stock picks still holds - could start to run today. Keep an eye on all.

STI - fell below support. Do not look good in the near term. Should be able to find support around 2,970-3,180. Capitaland and Wing Tai have broken below their support, suggesting more downside from here. However, Banyan Tree is still ok. So, only SingTel is looking bullish right now. Not much punting stocks to look at currently. Better stay away.

Dow could see lower after this current rebound. If the Head & Shoulder is correct, then Dow could be heading towards 11,500-11,650. At 12,100, there is a long term trend line support. Either way, the strong support is a quite a long way down. Expect more weakness in the coming days. The outlook could improve towards the end of the month.

KLCI to rally after minor pullback, STI to try to hold support

KLCI is expected to rally again after a short pullback today. The pullback is due to Friday's weakness on the Dow. Use this as an opportunity to get in. Plantation counters would likely lead the charge again today. Could reach 1,544 this week, where the next (projected) resistance is. I also like property counters like YNH Property (3158) and Mah Sing (8583). Scomi Eng and Scomi Marine could move sharply today or tomorrow. Construction counter Muhibbah is also going to be a star as it should hit new all time highs soon.

As for the STI, I think it going to track the US more closely. Well, at least, it is still holding within its consolidation triangle. Aggresive investors could continue to accumulate now while risk adverse investors may want to wait a while (for the index to stabilise) before getting in. The index could fall to 2,970-3,170 should the 3,268-3,275 support give way. I still like property counters in Spore - Capitaland, Banyan Tree, Wing Tai all seem to be holding within their respective triangles. However, similar to the STI, a break below its support, suggest that it is time to bail.

Dow - H&S pattern?

Dow fell below the critical 12,700-12,800 level a couple of days ago. It appears that the Head & Shoulder pattern is taking precedence. This is a very bearish signal. If the Dow do not close above the 12,900 level tonight, we could be seeing 11,500 in the coming weeks for the Dow.

Regionally, the indices are doing really well, holding above their respective support despite the sharp fall in the US (which has recovered slightly). STI continue to hold above the 3,300 level. This is also a critical level for the STI.

KLCI continue to reach new highs but I believe that a short pullback could take place beginning late today. This pullback could last until Monday (the earliest) or Tuesday. Once this pullback ends, I expect the index to continue on its rise to about 1,546. Longer term, I see the index reaching the 1,601 level.

Critical time

Why is this a critical time? Well, it is critical that Dow stays above the 12,750-12,800 level. If it rebounds from here, there is a good chance that the final rally for the bulls is on the cards. However, should this level give way, then, it is TATA to the bulls for at least another 6months. I believe that this is a good level to get in, as the stop loss point is close by. Comparing it to the potential of 'returns' then you will see why this is a good level to get in.

STI needs to hold above the 3,300 level (which I think it will). LT players should accumulate around these levels as I foresee that the STI could retest its 3,906 high again sometime soon.

KLCI is at its all time high now. Follow through buying is expected to lift the index towards the 1,490, 1.618x Fibonacci extension target. Continue to buy on weakness. With construction and plantation counters already moved, property could be next. The 2nd Board is also looking good. Start looking for a pick up in volume in lower liners. They could be the next short term 'star'.

RM at new highs

In Bernama's report today - the Ringgit (RM) surged to RM3.28 against the US dollar, a new 10-year high, on strong commercial demand, particularly from foreign funds.

My 2 cents - Does this mean that a RALLY in the stock market is going to start soon? I believe so. Get ready for the ride of your life :)

Accumulate slowly

I believe that this is about a good time to accumulate good stock as any. If my wave count is correct, then the US's and Europe's 4th-wave correction is about to end. Asia is likely already in the lead, with its 5th wave already on its way.

US could correct a bit more but this is about time to get in for the big and final rally of this bull run. Still, for this count to be 'correct', it has to stay above the 12,760-12,800 level in the upcoming trading days. A break above the 13,450 level would confirm that the 5th wave is on its way.

STI - is now in the buying range of 3,300-3,400, marginally.. If it drops further today, then the market is enabling investors to get in at a lower level. Construction counters Tat Hong and HL Asia are 2 stocks that I like. The smaller construction counters such as Yongnam and Lian Beng also are looking ripe to move. Property counters would follow suit.

KLCI - is now in the buying range of 1,420-1,440. Similarly, large construction counters such as Gamuda, WCT and IJM have already moved. Oil and Gas counters could move soon too as investors would like hop on the 'idea' that crude oil is close to US$100 per barrel. Plantation counters would also continue to gain further despite it outpacing the rest in Dec. Today, steel companies such as Ann Joo, Kinsteel, Masteel would likely rally again after yesterday's short pause.

Ranhill (5030) and RUBHD (5050)

In the Business Times today, Ranhill and its unit Ranhill Utilities (RUB) said they would always seek proposals to improve shareholder value in response to queries by Bursa Malaysia. There were reports that Tan Sri Hamdan Mohamad, the group's president and CEO, is planning to take Ranhill and RUBHD private.

Technically, the stock broke out of its bullish wedge pattern. Could see further upside from here. Upside target (is roughly based on the bullish wedge) is around RM2.75-2.80.

US Markets tumbled

US stocks fell sharply on the 1st day of trading in the new year. This is Dow's worst start since 1983. The fall was led by banks and computer companies, after the announcement of the biggest decline in manufacturing numbers in 5 years. Intel fell the most in a year after Bank of America lowered its ratings. Caterpillar and IBM led the sharp fall in the Dow. Technically, Dow is likely doing the e-wave of its corrective Wave-4's triangle. However, should it fall below the 12,800 level, then the count is likely wrong. For now, the call remains. The Dow would likely rally into the 1Q after the e-wave ends.

STI is also stuck in a triangle since hitting a high in Oct. A drop to the 3,300-3,400 level is likely. Investors would likely do well buying quality stocks around these levels. I remain bullish on STI as I am bullish on Asia right now, at least for the 1H of 2008.

KLCI is likely to build a base around the 1,420-1,440 levels. Investors could choose to buy around these levels as the medium term uptrend is still intact. Continue to accumulate on weakness.

Oil touched $100, commodities rallies

Crude oil rose to $100 a barrel for the first time in New York as record global fuel consumption threatens to outpace production. The 3-figures oil prices appears to be here to stay. Commodities elsewhere also continue to rise. Gold soared to a new high of US$860.10 an ounce while wheat and soybeans rose more than 3%. This rally in commodities was largely caused by the weakening US Dollar against major currencies. As US Dollar falls, it enhances the appeal of raw materials as hedges against inflation.

On this side of the shore - would the Malaysian Govt increase fuel prices? In the Financial Daily today, PM Datuk Seri Abdullah Ahmad Badawi said that the government will have to increase gasoline prices "when the time is right"- two days after a pledge to cap tariffs at the pumps ended. Travelling would cost$ more $$. Food $tuff would likely see further hikes. Roti Canai would cost$ 15% more. The inflationary cycle goes on...and on... HOWEVER, there is one BIG problem to all of this though - the disposable income the stays the same. :(

Minor pullback

STI ended the year with a bullish bar but in the short term, it appears to be still stuck in a triangle since the Oct peak. On the other hand, KLCI ended the year with a indecisive bar but week-on-week, the index is still looking bullish in the short term. What can we expect for the new year?

Investors should accumulate on weakness towards the 3,400 levels for STI and 1,440. Both indices are getting ready for a bullish 2008!! Investors also should be ready!!! Buy on weakness!

Technically, for S'pore - look out for Hor Kew Corp and Chip Eng Seng.
For M'sia - look out for TA Enterprise and Leader Universal. Ranhill could also run further today.