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.