Health is better than wealth

Early to bed and early to rise
Make a man healthy, wealthy and wise.

I normally wake up early; about 6 a.m. After I have wakened up, I ask myself, “What is the most important? And my answer is, “good health”. Immediately then, I start doing my morning exercises which include a round of Tai Chi.

Tai Chi is an ancient art of self defense. In the olden days, only the kings and their families are allowed to practise it. Nowadays it is very common. Everywhere in the world, people are practising it. Try it. It is good for you.

Health is better than wealth. If you have it, don’t abuse it. If you don’t have it, you must get it.

What's wrong with LKT?

What’s wrong with LKT? Since its high of 4.18 on Oct 27, the stock has been trending down. Yesterday it closed at 2.91 with 16,500 lots traded. This volume is above moderately high. It has just breached its support at 2.98.

The chart looks extremely bearish. If it doesn’t find its next support at around 2.75, it’s time to worry indeed.

It pays to own the right ticket

A man went on board a bus and asked for first-class ticket which cost more. After awhile, he found that everything was the same whether he bought first, second or third class. He was beginning to feel stupid and remorseful when the bus approached a steep slope. As the bus was going up the slope, it suddenly halted. It was unable to move up any further.

Then he heard the bus conductor said, “Second class, please leave your seats and come down. Third class, please come down and help to push the bus. First class, please stay in your seats.” Only then did he realize that he was smart after all.

The moral of the story: Its pays to own the right stock even though the benefits may not be apparent initially.

Essay Competition

I wish to inform my readers that I have won the FIRST prize in an essay competition sponsored by the Securities Commission of Bursa Malaysia. The prize money is RM2000 which I have received. I shall post the winning essay for your reading pleasure when I get permission from the Securities Commission.

Please wait for it. Thanks.

Love equals long term; sex equals short term.

I read in the book,” How the Average Investor Can Use Technical Analysis for Stock Profits” by James Dine, that:

Men sought sex (short term) and found love (long term). Women sought love and found sex. He said that men and women played the market differently. Is this true? If you have any comment, please post it.

Be an Active Investor

I like to have the best of two worlds when I invest. By combining fundamental and technical analysis, I can identify good stocks to buy as well the best time to buy them. That’s the only way I know of to have an edge over other non-professional investors or traders. Others may use inside knowledge or unscrupulous trading tactics to make money.

Information is money. Always be hungry for information. The more you read, the more you know and the more money you’ll make. Readers are leaders.

When you find a better stock to buy, switch. Take the weakest stock out of your portfolio and sell it. Put your money into the better stock. In this way you will be a active investor as well as a successful one.

Never get married to your stocks. Don’t switch your spouse but switch your stocks, and switch them often.

Good luck.

Nextnation

There was a glimmer of interest in Nextnation when the stock open at 63c and moved to 67c without looking back. As a result, a white marubuzu candle has appeared. The volume traded is still low at 6868 lots traded. Is this a flash in the pan?

The company has just announced that its subsidiary company Nextnation Prisma has joined hands with the Human Resource Development Foundation of Indonesia to launch 'Bursa Kerja Indonesia'.
To read more, click here.

Ornastel

The black cloud is followed by a black doji. This is bearish.
Likely to move sideways to downwards in the immediate term.
I have exited my position. You have to decide for yourself.

Writer disclaims all liability for his comments. You buy and sell at your own risk

The stock market at the top

The stock market at the top is a hive of activity
Making money is everyone’s ability
Price rises are spectacular, steady and daily
Today’s high becomes tomorrows low, normally

Everyone is talking about stock and shares
No one is losing and nobody fears the bears
Laughter and giggles are in the air
Perpetual prosperity is what people talk and share

All around, people are boasting about their gains
Not knowing when to get out, they may soon cry in pain
At the most optimistic time, the reversal suddenly comes
The turn of the tide is only aware to some

Amidst the rumblings of thunder and lighting comes the land landslide
Prices gone up have started their downslide
Astute traders immediately make their exit at what is given
The naïve hold on hoping to get out even

Sadly, their hopes soon turn into a nightmare
Trapped and unable to get out of their snare
Their monies are now gone for want of a few dollars more
Hopefully, they are now not as stupid as before.

Ornastel

Ornastel performed to expection in the morning. It went up to a high of 1.46 before trending down to 1.35 probably due to profit taking. It closed at 1.37 for a loss of 4c. Volume shrank to 19,129 lots. A dark cloud has appeared. This is a bearish sign. Is the stock pulling back to move forward? Nobody knows.

The KLCI did well today. With some 1.7405 billion shares traded, it put on 13.92 points to close at 1183.04. The intraday high was 1186 and the low was 1171.94. The were 416 winners and 490 losers.
Now we have 9 white candles in a row. As long as the candles coming in continue to be white, you have nothing to worry.

Cheers!

There is a saying in Wall Street

There is a saying in Wall Street that if it walks like a duck, quacks like a duck, and has feathers, then probably it is a duck.

On my daily chart of the KLCI I see eight white candles going up in a staircase-like pattern. All the candles have higher highs and lower lows. Volume has been increasing with the uptrend. In point and figure charting, this pattern is called a “diatonic uptrend” which signifies extraordinary steady buying. You may expect more upside.

Writer disclaims all liability for his comments.

Ornastel

Ornastel put on 7c to close at 1.41 with 37,345 lots traded which is above moderate. The intraday day high was 1.42 and the low was 1.35.

A rising window appeared (the high of the previous candle is below the low of the current candle). In the last 10 candles, there are 3 rising windows. This implies that the current candle is even more bullish and that the present uptrend should continue.

Writer disclaims all liability for his comments.

The market is always right

When you buy and the market drops, the market is right and you are wrong.When you sell and the market goes up, you are wrong and the market is right again.

So whichever way you look at it, the market is always right. That’s why you have to follow the market. If the market is trending up, don’t make the mistake of telling it that it is too high. When the game has turned into one of emotion and not of logic, it will continue to be too high and going higher with the trend.

Likewise, when the market is trending down in spite of good result and good news, don’t argue, sell your shares and get out.

Market Commentary

The KLCI closed high at 1157.85 with some 1.4077 billion shares traded.

There were 586 ups and 316 downs. The bulls were in control from the opening bell.
The uptrend is likely to continue.

Onastel closed at 1.34 with a marubuzo white candle. Volume traded at 31,891 lots is above average. This is a bullish sign.

Writer disclaims all liability for his comments.

Value Trap

When a stock has fallen from a high price to a very low price, some people think that the stock is a value buy. This is actually a value trap. The stock is likely to go lower. Be careful not to walk into this trap.

Market Commentary ( KLCI @ 1147.76 Vol 13,819 )

On the daily chart, the last candle looks something between a long-legged dogi and a spinning top. This can mean that the prices are losing momentum and the bulls may have a hard time moving forward in the immediate future.

On the weekly candlestick chart, a rising window appeared (the top of the previous shadow is below the bottom of the current shadow). This implies that the bullish trend is likely to continue.

A Decalogue of Canons

Thomas Jefferson:

A Decalogue of Canons for observation in practical life:
1. Never put off until tomorrow what you can do today.
2. Never trouble another for what you can do yourself.
3. Never spend your money before you have it.
4. Never buy what you do not want, because it is cheap; it will be dear to you.
5. Pride costs us more than hunger, thirst, and cold.
6. We never repent of having eaten too little.
7. Nothing is troublesome that we do willingly.
8. How much pain have cost us the evils which never have happened.
9. Take things always by their smooth handle.
10. When angry, count ten, before you speak; if very angry, an hundred.
(letter to Thomas Jefferson Smith, 1825)

The Controlling Interest is Important

The controlling or major shareholder has the greatest influence over the success or failure of a company. It’s best to associate yourself with only the good. You should avoid the bad and the ugly. After all, you don’t need many counters to make you rich.

It is not easy to know who is who. Read and read; the more you read, the more you know.

Look at defunct companies and companies that are about to go under. That should tell you a great deal.

I like small-cap stocks with good earnings per share, sustainable earnings and good earnings growth, which have strong majority shareholders. Some of these companies are:

VADS / Telekom
RUBHD / Ranhill
Onastel / China Steel of Taiwan
YTL Cement / YTL
Batu Kawan / KLK (Batu Kawan actually controls KLK)
IOI Property / IOI Corp
Landmark / Genting
Hexagon / Robert Kuok
DIGI / Telenor Asia

There are many more in the market. Seek and you shall find. Readers, who have identified, please add to the list. Thanks.

The above comment should not be construed as a solicitation to buy or sell. You buy or sell at your own risk

Water- the Blue Gold of the 21st century

According to Chris Mayer of Capital & Crisis, a market analysis service for independent investors, water will be the blue gold of the 21^st century.

The importance of water needs no introduction. Without water, we can’t survive.

According to Chris, 40% of the rivers and 70% of the lakes in China are polluted. He adds that 310 out of 699 largest cities in China have no wastewater treatment facilities and that most of the 17,000 smaller cities have no water treatment at all. Water-related diseases have surfaced and become more common. Beijing realizes this, and will probably take remedial actions.

Water treatment & water-related companies are the ones to immensely benefit once the world comes to realize that it is imperative to keep our water clean.

In Malaysia, our rivers are not so bad, but polluted as well. If we can privatize our roads, why not privatize our rivers? Make them clean and make them the natural habitats of fish and other water animals. Here and there, develop fishing haven for people to go fishing. Put in small boats for rent and use. I am sure we can do these and transform our rivers into tourists’ attractions. Once the country is beautified, tourism will be enhanced and the gains will be enormous.

Which are the water-related companies we have here? Ask your remiser, if he doesn’t know, switch to a more knowledgeable one.

Love Malaysia. Make it safe. Make it clean.

You need a strategy that’s all your own

The basic investing principles have been more or less the same over the years. But for each of us, we need a different strategy. That’s because every one of us is unique. Your lifestyle, financial standing, education, family background, temperament and risk-tolerance are in a class of your own.

Having 10 million ringgit to invest is entirely different from having only 100,000 ringgit
Therefore, it is essential that we understand ourselves first before we start our investment.
We need to know our own strength and our own weakness.

You are unique. Your plan must suit you. Never do something without a plan.

Plan not to fail and fail not to plan.

Short & Distort

Short & Distort (S&D) is the inverse of Pump & Dump. Unscrupulous traders will short a stock as soon as they detect that a downtrend has begun. They will then start a smear campaign against the company. This will distort the supply and demand situation and create a false market.

Bursa has just introduced short selling. This is definitely good for Bursa. It may not be good for your bank account. If you are new to short selling, learn the trick of the game before you get involved.

Easy money is not easily made.
Only when you are smart can you ride the wave
Good things come to those who wait
But don’t wait and wait until it’s too late.

Who’s the next tycoon to follow?

Some are born great; others achieve greatness, and there are others that fortune just favors. Everything they touch turn to gold.

Look at uncle Lim’s baby, Gentling International. From the day, it was awarded the Singapore Sentosa casino license, the stock has gone from strength to strength. From about 40c, less than a month ago, the stock closed at 1.09 (Singapore dollars). A friend of mine was very lucky. He had bought some 100,000 shares at 50 odd cents as the stock trended up.

He told me that he would be adding more to his portfolio. The super baby should become a super boy in the near future, he quipped. Here in Malaysia, as soon as uncle Lim bought a sizable stake in Landmark, the stock shot up from 1.84 to 2.42 in 9 trading days.

Look at Robert Kuok; his Hexagon and Transmile have similar success stories. Now I am on the look out for the next tycoon to follow. Please let me know when you spot one.

Thanks.

Nextnation

Nextnation was up early today. It went to a high of 71c before the bears took over. Maybe the bulls had used too much energy yesterday and so were unable to continue pushing forward. Hopefully after a rest of one or two days, they will be able to perform better.

I have invested a sizeable stake in the company for the long pull. I have always preferred to invest rather than to speculate. For those who wish to trade, the stop-loss is at 60c. That means if the stock drops to 60c, you should immediately sell and cut your losses.

Most traders lose money. If you try to be the exception, you will need to be extremely lucky.

Please be reminded that you are 100% responsible for your own action. You buy or sell at your own risk, absolutely.

Best of Luck.

Onastel

Onastel convincingly broke out of its trading range with high volume of 33,119 lots.

It open at 1.12 and went up to a high of 1.23 before it closing at 1.22. The range of the candle signifies more upside. It is shouting “I am going higher.”

Value-wise, Its NTA is 1.64 and the earnings per share for the 3^rd Q are 8.43c. It has the advantage of having China Steel of Taiwan as the controlling interest.

Don’t miss the boat!

As usual, this blog disclaims all liability for your perusal of its commentary or opinion.

Nextnation

Nextnation has a big white candle today. This is a bullish sign. The stock was in a downtrend from a high of 78c on Nov 17, 06 to a low of 61.5c in Jan 11, 07.

The stock open at 64c and went up to a high of 69.5c Volume traded was 31,254 lots. This is above moderate. The stock is likely to go higher.

This blog disclaims all liability for your perusal of its commentary.

The darkest hour is the beginning of dawn

The market always turns around when it is most negative. The best time to buy is at the end of a bear market. Here, the risk is low and the reward is high. Entries at this time will be safe, and if you pick the right stocks and adopt the buy & hold strategy, your returns will be enormous.

The end of a bear market is usually marked by heavy volume accompanied by a steep drop. This is known as a panic sale. Fear will be in everybody’s face and everyone will be scrambling for the exit door. Gloom and despair are seen everywhere. Overly pessimism will cause the market to be oversold.

After the panic sale, the market may suddenly burst back to life and shoot up. An example of this happened in the financial crisis in 1997/1998. If I am not mistaken, it was on September 1, 1998 when Malaysia commenced capital control. On that fateful day, the KLCI plummeted some 100 points to 261.33. But it bounced back more that 100 points the following day. Such was the velocity of the market then.

Those who survived the onslaught and had the guts to buy, had invested wisely. I am glad to say, “I am one of the survivals”.

Buy in fear! Do you have the guts?

Think ahead Beat the banks

Banks are now allowed to invest up to 25% of their paid-up capital in other listed or unlisted companies. Before, they are only allowed up to 5% in selected blue chips. This means that there will be very much more money in the market to buy shares.

Blue chips have become very blue (expensive). Will the banks start buying blue chips now or will they push them down before they buy. Do they have the muscles to do that?

What kind of stocks will they be looking into? Baby blue chips, dividend counters, or mesdaq counters? If you can figure that out correctly, the money is there for the picking.

Put on your thinking cap. Beat the banks. If you have a good idea, please comment.

The Importance of Investing

Benjamin Graham, the father of value investing, taught Warren Buffett that “Investment is most intelligent when it is most businesslike”. Buffett acted on this philosophy and today he is the second richest man in the world. You too can become rich by following this wisdom.

“Investment is most intelligent when it is most businesslike”. Commit this to your memory; it will do you a world of good.

It is extremely important to know the difference between “to invest” and “to trade”. While the former is the road to riches, the latter is the way to ruin...

To invest in the stock market means to exchange your money for equities that promise safety of principal and a good dividend yield, after careful investigation. To trade is more akin to gambling. It goes after the price instead of the value. Buying and selling in short period of time (usually within a month), traders hope to make quick gains by riding with the trend. Many have failed and many more will find that trading does not pay in the long run.

The stock market is a marathon, not a sprint event. Safety of principal is your first priority. If you cannot cut losses quickly, follow the rules of Warren Buffet. His number one rule is: Never lose money. And his number two rule is: Always remember rule number one.

If you do not want to lose money, you must make absolutely sure that every buy of yours is a value buy. That means buying sound, solid and well-managed companies, after through research, at rock-bottom prices at all times.

Think intelligently and buy wisely. You need to be smart from the start.

Good luck and all the best.

Market Commentary

Aided by foreign buying and a better regional market, the KLCI rebounded to close at 1,119.33 after a high of 1,120.96 and a low of 1,108.44. Volume improved to 11,655,618 lots. There were 744 ups and 182 downs.

The KLCI is moving within a tight range of 1,121.41 & 1,103.26. It is difficult to predict whether the upper limit will be breached come next week. Only time will tell.

Introduction to Candlesticks

Candlestick charting is the Japanese version of bar charting. The Japanese used the technique to trade in rice in the 17^th century. Candlestick charts and bar charts give you the same information but presented in different graphic forms. Each stick or bar gives you four information, i.e., the opening price; the closing price; the high price; and the low price. The volume is shown at the bottom.

A white candlestick is one that closes higher than the opening price. A black candlestick is the other way round, i.e., the closing price is lower than the opening price. A white candlestick is bullish. a black candlestick is bearish. Thus, in chart reading, the closing price is important.

Candlesticks have many fanciful names. To name a few there are: marubozu, spinning top, dogi, hammer, hanging man, dragon fly and grave-stone doji . Each name suggests a different kind of candle and carries with it a different value.

By looking at a daily candle, we can know whether the bull or the bear is in control or whether they are about evenly matched on that day only. This one day information is of little use. So we have to look at the previous candles to get more information. By looking at the past actions, we try to predict what is likely to happen going forward.

A doctor will listen at your heartbeats, take your blood pressure, and give you and overall examination to evaluate your overall health. But to give you an operation, he has to do many other things as well, like a blood test, x-ray, etc.

Likewise, in the stock market, if you want to buy or sell, by looking at a few candles is not enough to enable you to make a good decision. Hence, you have to look at the patterns formed by the individual candles. These patterns are many and varied. Each has its own meaning and interpretation.

It is beyond the scope of this commentary to explain the meaning of each pattern as this will probably go into more than a hundred page. If you are keen to learn, get yourself a good book and study it like studying for a degree. It is not easy to become proficient in chart reading. Once you are good at it, your return can be enormous.

At Metastock, we have the monthly charts, weekly charts and daily charts. Normally, I like to look at the weekly chart to get an overall view of the stock and then to look at the daily chart for the details. If we can include a half-hourly chart into it, it will be very useful as we can get the breakdown figures as well. Any genius out there?

Market Commentary

Interest dropped a little today as evidenced by the lower volume of 8,080,977 lots traded. The KLCI lost 7.13 points to close at 1,106.06. Its high and low was 1,117.69 and 1,103.37 respectfully.
There were 384 winners and 455 losers. The immediate trend is bearish.

Don’t buy somebody’s problem

A company with high gearing and no earnings and still in the red is somebody’s problem. Don’t make the mistake of making that problem yours.

One big advantage a retailer has is that he can pick and choose. If somebody ask you to join him in a business venture, you will have many questions to ask, such as: what is the business about; how profitable is it; who is managing it; who are its competitors, what are its concern; what are its prospective earnings and so on and so forth.

When you buy a stock, did you ask yourself all these questions or did you buy just on a tip? Amateurs, especially beginners are mostly consensus-takers. They will go around asking people what to buy. They will then buy what the majority agrees is a good buy. These people are going to lose get their pockets cut off, for soon they will find their money gone and that the majority is usually wrong.

The best advice I can give you is to do your own research. If you don’t have the time or the interest, better put your money in trust and not your trust in money.

Happy investing.

Market Commentary

The bears were in the driver’s seat today driving the KLCI to a low of 1,107.02 from a high of 1,119.74 with 10,008,830 lots traded. It retreated 5.77 points to close at 1,113.19.

There were 250 ups and 633 downs. Compared to the fall of other Asian stock markets today, our performance was not too bad. The immediate outlook is neutral to negative.

The entitlement date of I-Power’s bonus issue of 3 for 2 is 29.1.07 and its ex-date is 25.1.07.

Pump and Dump (Ramping)

A wily manipulator looks for a stock to play. A penny stock, ignored by the general public, with a small free float and no institutional following is a good candidate.

Firstly, he will acquire most, if not all, of the free floats of the stock. Then he will play up the stock by buying and selling his own shares using several different names. He will spread rumors by posting in all the forums available to him that the stock has landed or about to land big big contracts which will make it a super stock. He will say that the stock will be in great demand and will definitely be “goreng” up to RM2 when it is being traded at 20c.

Because he has cornered all the free floats, he can easily push up the price and create a false market for the stock. When the stock is boiling with demands, mug punters and especially beginners rush in to buy and buy. The unscrupulous manipulator then slowly and quietly unloads his holdings. After he has done that, the stock soon drops. Everyone scrambles for the exit. The price drops very fast and before long it goes back to where it comes from.

The above tactic is an illegal offence, and may land the manipulator in jail if caught. But that is a different story.

Market Commentary

I had expected the market to drift lower but the KLCI rebounded 5.9 points to close at 1,118.96 with some 10,561 lots traded. The high of the day was 1,121.60 and the low was 1,113.99.

The upside resistance is quite strong. Unless the volume improve substantially, it will be difficult to push through this resistance.

VADS did well and put on another 30c to close at 6.95 after a high of 7.05. Relatively, the volume traded at 2,091 lots was high. The share is poised to go higher.

I-Power improved 13c to close at 1.23 with moderate turnover of 53,150 lots. A marubozu white candle occurred. This is a bullish sigh. More on the upside is expected.

Toyochem, a normally quiet counter, is moving up nicely. There is value in this counter. Keep it in view.

As usual, the writer disclaims all liability for your perusal of his comments.

Good Luck.

Happiness shared is happiness doubled

My Dear Readers,

Happiness shared is happiness doubled
Knowledge shared is knowledge enhanced

My vision is to see this blog as a friendly, knowledgeable, useful, helpful, and educational avenue for all to use and benefit. I call upon my readers to join me towards this aim. If you have any knowledge, wisdom or anything useful which you wish to share with others please post them on this blog.

Your are responsible for you own message. No derogatory or disrespectful remarks, insults, sarcasm or personal attacks are allowed. Please show courtesy & tolerance when posting.

Differences of opinion are welcome. Conflicting views should not be deemed as criticism. Each is entitled to his or her opinion. Kindly ask your friends to join in. All are welcome to make this a happy and prosperous community.

Thank you in anticipation.
Regards,

Ben Gan.

Beware of false breakouts (bull traps)

With broker firms making available chart services, more and more people have come to know about charts. To have some knowledge about charts is easy. To be proficient in chart interpretation is indeed extremely difficult.

Professionals know that a great majority of people now depend on charts to time their purchases and sales. So they will do what is necessary for their own benefits.

Let’s say a professional trader has a big block of shares to unload and the market is in equilibrium (buying and selling in balance). How can he unload his shares without disturbing the price? The only way to do it is to sell into strength. So he waits for the stock to test it resistance in a high level. With some well-timed purchases, he pushes the share price above its resistance. This causes a false breakout. Conditional buy orders are triggered. People become excited and join in the buying creating great demands for the stock. The professional then releases his holdings. Other professionals short the market and soon the stock is back to square one.

Buying on breakouts was profitable in the early days. Now you have to be very careful indeed. You must be witty to survive.

Good luck.

Market Commentary

The KLCI retreated 7.38 points to close at 1,113.02 with 8,760,189 lots traded. There were 343 ups, 518 downs and 262 unchanged. The high and low was 1,119 & 1,110.38 respectively. The immediate trend is likely to drift lower.

VADS put up a good performance today putting on 30c to close at 6.65 with 439 lots traded. More on the upside is on the card.

Shares can move up and down. You buy or sell at your own risk absolutely.

MNRB Holdings Bhd

MNRB Holdings Berhad (MNRB)

MNRB’s wholly own subsidiary company Malaysian Reinsurance Berhad has obtained excellent ratings from A M Best and Fitch Ratings some time ago. This will go a long way to promote significant growth for the company locally and abroad.

MNRB has 30 years of success in the country. It is one of the best dividend counters in Bursa Malaysia. Recently it paid an interim dividend of 15c tax free. I expect the final dividend to be not less than 25c tax free.

Chart-wise, its weekly bar chart shows a steady uptrend since 2003. Last Friday it closed at 4.32. It was well supported at the 4.20 level. The stock is a value buy at this price.

To learn more about the company, click here.

Writer disclaims all liability for your persual of this comments or advice.

Twenty golden rules from Traders Wheel

1. Forget the news, remember the chart. You're not smart enough to know how news will affect price. The chart already knows the news is coming. 2. Buy the first pullback from a new high. Sell the first pullback from a new low. There's always a crowd that missed the first boat. 3. Buy at support, sell at resistance. Everyone sees the same thing and they're all just waiting to jump in the pool. 4. Short rallies not selloffs. When markets drop, shorts finally turn a profit and get ready to cover. 5. Don't buy up into a major moving average or sell down into one. See #3. 6. Don't chase momentum if you can't find the exit. Assume the market will reverse the minute you get in. If it's a long way to the door, you're in big trouble. 7. Exhaustion gaps get filled. Breakaway and continuation gaps don't. The old traders' wisdom is a lie. Trade in the direction of gap support whenever you can. 8. Trends test the point of last support/resistance. Enter here even if it hurts. 9. Trade with the TICK not against it. Don't be a hero. Go with the money flow. 10. If you have to look, it isn't there. Forget your college degree and trust your instincts. 11. Sell the second high, buy the second low. After sharp pullbacks, the first test of any high or low always runs into resistance. Look for the break on the third or fourth try. 12. The trend is your friend in the last hour. As volume cranks up at 3:00pm don't expect anyone to change the channel. 13. Avoid the open. They see YOU coming sucker 14. 1-2-3-Drop-Up. Look for downtrends to reverse after a top, two lower highs and a double bottom. 15. Bulls live above the 200 day, bears live below. Sellers eat up rallies below this key moving average line and buyers to come to the rescue above it. 16. Price has memory. What did price do the last time it hit a certain level? Chances are it will do it again. 17. Big volume kills moves. Climax blow-offs take both buyers and sellers out of the market and lead to sideways action. 18. Trends never turn on a dime. Reversals build slowly. The first sharp dip always finds buyers and the first sharp rise always finds sellers. 19. Bottoms take longer to form than tops. Fear acts more quickly than greed and causes stocks to drop from their own weight. 20. Beat the crowd in and out the door. You have to take their money before they take yours, period

Change with the circumstance

Technical analysis is an inexact science. Here we are talking about probability and not certainty. No one can read charts correctly all the time. If you can, you hold the keys to unlimited wealth.

When you see black clouds, you bet that it is going to rain. When it doesn’t and the sky clears up, will you continue to bet that it will rain? Common sense tells you to bet against it now.

In the stock market if you know when to switch from being bullish to bearish or vice versa, you will be miles ahead of others. To survive, you must change with the circumstance. In an uptrend, buy on dips. In a downtrend, sell on rallies.

Good luck.

Supply Vs Demand

In an uptrend, all along the way, demand is greater than supply. As long as the demand is greater than the supply, the uptrend will continue.

When people are optimistic, they become overly optimistic and they will overbuy. That’s why we have overbought situations. When the market is overbought, it does not mean that it will immediately fall. It may continue to be overbought for a long time.

When demand slows down and supply increases. The uptrend will be halted. As the supply becomes more and more and demand less and less, the trend turns down.

Those who are smart will sense the situation and start to unload their holdings. Profiting takings follow suit and soon supply greatly exceeds demands. Fear takes over; the situation becomes worse. The speed of the downtrend gathers momentum. The uptrend may lose up to 90% of the gain.

You may alter the rivers and the mountains but not human nature. That’s why those who do not study history are bound to repeat it.

Understand the movements of the market, and you will become a better trader or investor.

Good Luck.

Market Commentary

The bulls and the bears fought evenly for most part of the day with the bears having a slight edge. It was only in the last five minutes that the bulls displayed their resilience and emerged as the winner with a 2.22 points advantage.

The market closed at 1,120.40 with 10,513.105 lots traded. This volume was slightly above average. The trading range was still narrow but had improved with its low at 1,114.54. There were 421 ups, 417 downs and 314 unchanged.

The market is taking a breather and appears to be overbought.

Ranhill and RUBHD have denied about the privatization of RUBHD. This probably pulled down the price of RUBHD. Their denials may turn out to be a blessing in disguise.

It closed at 2.91. Its fundamentals remain intact.

Have a happy weekend.

Short-term gain is long-term pain

Short-term gain is long-term pain
Short-term pain is long-term gain

Pain is very useful. No pain, no gain; so goes the saying. Pain flags us that something is wrong. When we are physically or mentally hurt we feel the pain. Physical pain and mental pain are quite different from each other. The latter is much more difficult to heal than the former. Anyone with a broken romance will feel the mental pain.

When you take a small profit, you feel elated. As the stock which you sold goes up and up, your short-term gain becomes a long-term pain. On the contrary, if you cut your losses quickly, and the share price comes down and down, your short-term pain becomes your long-term gain.

A trend in motion is likely to continue in the same direction. This is important. You will do well to commit it to memory. Let your profits run. Never kill the golden goose when you have one. People say, “don’t be greedy”. What’s the use of making pennies? You’ll never grow rich making pennies. Think big and plan big and someday you will be rich.

Money for value you must insist. Invest wisely.

Good luck and all the best.

KLCI

The KLCI closed at 1,118.18 up only 1.09. Volume improved slightly to 11,408 lots compared to yesterday’s 9,750 lots.

In spite of the higher volume, the price has only a narrow range. The high and low was 1,119.16 and 1,114.41 respectively.

This is an indication that the market is overbought. It will find difficulty going higher and is likely to trend down in the immediate term.

Price movements are very hard to predict. You buy and sell at your own risk. The writer disclaims all liability for your perusal of his comments.

Tides, waves & ripples

Share prices are comparable to the movements of the sea. In the sea, we have the tides, the waves and the ripples. In stocks, we have the primary trend, the secondary trend and the minor intraday trend.

A long- term investor is not concerned with the intraday movements. But a trader is different. He tries to benefit from the minor moves. Intraday trends, like the ripples of the sea, are extremely unreliable and hard to follow. As a general rule of thumb, weekly charts are more reliable than daily charts and daily charts are more reliable than hourly charts.

With modern technology, we are now able to have half- hourly charts or even quarter-hourly charts. These charts are created to encourage more speculation activities and business for the broker firms. How many have made money using these charts? I think for every successful man, there may well be over a hundred failures.

No matter how good a system is, if you can’t win from it, quit using it. I have yet to come across someone who can consistently make money out of trading. If you think you can, think again.

Good luck.

Gap to narrow soon

Our stock market is now abuzz with positive expectancy. The increasing demand for our oil palm has push prices up. The strengthen ringgit and foreign funds inflow have generated great demand for our blue chip counters. Bank Niagara’s move to allow banks to invest more in equities will also increase the demand for shares. The KLCI at 1117 is only a short distance from its all time high of 1332.

Although the primary trend of the KLCI has been trending up since June 2001, many people are still in the red as regards to their activities in shares. These are the people who have confused the value of a share with its price. A low-price share stock may actually be very costly while a high-price stock may actually be very cheap. Know what is what before you buy.

Our second and third liners have not moved yet. The big gap between them and the blue chips is likely to be narrowed in the near future. I believe my prediction will turn out to be correct.

Good luck

KLCI (+20.85) at 1117 Vol 9750

Blue chips and plantation stocks were in good demand. The KLCI put on 20.85 points to close at 1117 with above average turnover. The previous high of 1,110 on Dec 11 was breached today. This is a bullish and auspicious sign. Some funds from Thailand seem to be coming to us. The immediate future looks good.

The second liners have not moved yet. It’s time to look at them now.

Good luck.

Genting International Ltd

This is a subsidiary company of Genting and the darling of the stock market presently. Everyone is now talking about this counter. In the last few trading days, the stock shot up from 48c to 84.5 for a gain of 76%! The speed of the uptrend is incredible and too fast for comfort. People are now mesmerized by” the greater fool concept”. It does not matter how high I buy as I can always find a bigger fool than I to take over.

Once an uptrend starts, it can go up and up. But it can also reverse direction when you least expect it. If you wish to join the fun and ride the wave, don’t forget to use your stop-loss and a trailing stop-loss.

Be not the last to buy and the last to sell.

A fool’s paradise is only good for the time you keep on dreaming. Now is not the time to throw caution to the wind.

Best of luck.

Writer disclaims all liability for your perusal of his comments or advice.

VMY2007

The positive momentum of 2006 is expected to cross over to 2007. With the concerted efforts of the government solidly behind the economy, the stock market is expected to be robust and bullish. In support of this expectation, the following factors have been taken into consideration:

1. The 9^th Malaysia Plan
2. The tourism dollar
3. High oil palm prices
4. Strength of the ringgit
5. Maintenance of interest rate
6. Good prospective corporate earnings
7. Impending election.

The Malaysian ringgit will probably remain strong and improving. This will encourage the inflow of foreign money. As for tourism, much is needed to improve security. I hope the authority concern will look into this seriously making Malaysia a safe, attractive and desirous destination for foreigners, and for its people, a prosperous and happy nation.

God willing, VMY2007 will be a bullish year for the Malaysian stock market. America, Hong Kong, Singapore and Indonesia have all surpassed their previous high levels. We are odds on to follow suit.

Three cheers for a prosperous VMY2007!

Happy New Year.