Japanese Candlestick How Good

A Successful History

"Knowing the history of the formations inevitably imparts confidence in the Japanese Candlestick technique. Japanese rice traders developed the system over a 400-year period. Logic dictates that a system that has persevered that long must have credible features. The history of the rice traders that developed the signals reinforces that assumption. With its 400 years of development, the Candlestick methodology got its major refinement in the mid-1700s.

Kosaku Kato (1716—1803) was born in the city of Sakata (now Tamagata Prefecture) during the Tokugawa Period (Eighth Shogunate). Adopted by the Honma family, he became known as Sokuta Honma. His successful interpretation of the candlestick formations made him the most feared and respected rice trader in Japan, and the wealth he produced for his family became legendary."

Success is a ladder that cannot be climbed with your hands in your pockets. Japanese Proverb

Among the few TA books I have read, the best is: Profitable Candlestick Trading by Stephen W.Bigalow. This book is sure to change your mentality about TA. I strongly recommend it.

Stemlife

The First Wealth is Health (R.W.Emerson)

StemLife has a proven track record of success in releasing stem cells for treatments, especially in young patients with leukaemia, thalassaemia and cerebral palsy, and adults with knee injuries, chronic wounds, heart disease and more.

StemLife is a FULLY LICENSED cord blood and peripheral blood stem cell banking facility, under the PHFS Act 1998, Ministry of Health Malaysia.

More than 40,000 clients have already stored their stem cells with StemLife, what are you waiting for? Store today!

Stemlife has announced that it has fallen out of favor to acquire Tonik Asia Group because it cannot come to terms with the vendor on certain matters after a due diligence is carried out. The bonus issue of 1 for 2 is on track. It will be interesting to watch how investors react to the news.

For more information about Stemlife, click here: http://www.stemlife.com/malaysia/stem_cell/index.html

Fat Cats are harmful to companies

There are many kinds of animals in the stock market. We have the bulls, bears, stags, ostriches, pigs and fat cats. Among them, the fat cats are the most harmful to a company.

Literally speaking, a fat cat is a cat that eats too much and sleeps too much. The result is that it has become very fat. In stock market jargons, a fat cat is a different thing.

Investopedia defines a fat cat as:

Definition of 'Fat Cat'

A slang word used to describe executives who earn what many believe to be unreasonably high salaries and bonuses. These top executives also receive generous pensions and retirement packages, consisting of extra compensation not available to other company employees.

Investopedia explains 'Fat Cat'

This term conjures up the image of cats that consume more than an appropriate amount of food and become grossly overweight. 

Publicly-traded companies are required to disclose the amount of compensation that their top five executives receive. As a result, companies have been under a lot of scrutiny for excessive executive compensation, especially in the face of floundering revenues.

A real-life example of a fat cat would be former Disney CEO, Michael Eisner. For a period of five years in the late 1990s, Eisner received over $737 million in compensation, despite the fact that the company's five-year net income shrank an average of 3.1% each year.

Charts Can Be Misleading

Charts were initially designed to monitor the big boys long before you and I know about charts. Nowadays, charts are available to anyone who knows how to use a computer. 

Apple, Google, Microsoft and SamSung have all contributed to change our lifestyles. What was once used to check the big boys are now used by the big boys to trick and trap us. It is for this very reason that charts have false breakouts, both up and down. 

Many people after having read a book or two about charts thought they know how to read charts. They start using them to time their trades. For a while they may find them to be useful. But as they go deeper and deeper into charts, they find that charts are really not so easy to understand. 

One thing you need to know is that the big boys are very strong financially and much smarter than us. They are so strong that they are able to manipulate the charts, the news and one or two quarterly reports as well. So you have to be very careful with what you see or read. What appears to be bullish may actually be a Pump and Dump situation. That's why we have bull traps and bear traps.

Of course, not all charts are manipulated. So you have to use your own judgement when you make an assessment. Every chart has a personality of its own. This is because the people behind it, are different.

Remember, the big boys know what you are looking at. 

If you like the above article, please tweet and link it to Facebook. Thanks.

PW Root is moving in the range of between RM1.08 and 0.975. The pattern appears to be one of distribution. I understand that FGV, a major shareholder of the stock has been selling PW Root for some time. It has not sold everything. So obviously it does not want the stock to go down.

The formation of the last two candles is called a Harami.  If this formation appears at the bottom of a chart that has a long downtrend, it's a bullish sign. But it is now at the top although it is at the bottom of a range. I think the stock can only be considered to be bullish after 1.08 is beached. If the price breaks down to below 95 sen, the stock has turned bearish. 

When a major shareholders sells, institutions may be buying, hence you see the large turnover. In such a scenario, whether the stock breaks up or down depends on who is the stronger and how keen other buyers are. Buyers will rush in to buy when the quarterly report is better than expected. This is true the other way round.

PW Root is about to announce its 2nd quarterly report, the latest being the end of this month. Watch out for this report. It will determine the direction of the trend. In the meantime, should you buy or sell?

It's your money, you make the decision.

Feng Sui Matters

When you invest in properties, be they lands, condos or landed properties, the first thing you should look at is the Feng Sui of the place.

The most important thing to man is fresh air and water. Man can live without food for 3 weeks. They can't live without water for 3 days and they can't live without air for 3 minutes. Therefore air is your first priority.

A place without fresh air can never be an ideal place to stay. To have fresh air, you must have greens all around you. Dumpsites and factories which produce offensive smell and pollutants must not be nearby. 

When we talk of water we think of rivers. Thus rivers and mountain streams are part and parcel of good Feng Sui. Once you have identified a place that has good Feng Sui, you have to look at many other things as well. The designs of the buildings must be in accord with the Feng Sui. The atmosphere of the place must be calm and serene and yet lively with birds flying about. The feel-good feelings must be there.

There is a residential project in Bentong that has all the basic principles of good Feng Sui. This site has a school nearby. It is only about 2 km from the town. Constructions of the buildings are presently underway. I understand that there are not too many units left after the commencement of booking.

Click here to have a good look. It may serve your purpose well. 

Remember: Opportunity neglected seldom returns.

YONG Privatisation $6.60

YONG, a China-based company and listed at Nasdaq has received an offer from its chairman to privatize the company at US$6.60 a share. The stock is presently traded at around the $5.50 level. 

Here is an opportunity to make a 20% profit within a short period of maybe 3 months. In my opinion, this is low risk and high reward.

Many China-based companies are going private because of their low market value.

If you are interested in these companies, click here: http://seekingalpha.com/article/925621-6-china-stocks-going-private-since-september-2012

There was interest in PW Root as indicated by the fairly large volume shown in the chart. Unfortunately, the tock moved down. This is not a good sign.

At the close, there were  24,819 lots traded. Support is likely to come in at 95 sen. If that level is decisively breached, the stock is likely to trend lower.

The quarterly report for the period ended Aug 31, 2012 may be announced today or tomorrow. The corresponding period for last year was announced on Oct 25,  2012.

As usual, you trade at your own risk.

Why you will not win as a small trader

I understand that at OSK, the minimum commission for a trade is RM40 if you go through your remisier. If you do it online yourself, the minimum commission is RM12.

Assuming that you are a small trader and you do not know how to trade online. That means that every trade you do, you have to go through your remiser. 

Suppose Tom bought a stock for RM6000 and made a 15% profit. That means he made RM900. From this trade, he a has to pay commission, stamp duty and clearing fees. Both ways, the amount works out to be: roughly RM40 + 40 + s/duty 13 and clearing fees 4.80. The total is 97.80. And don't forget that if his fund is financed by the bank, he has to paid interest which has to be factored in as well but is not included here. 

Thus his profit of RM900 shrinks to RM802.20. 

Now let's see what happens if he loses RM900. Plus the expenses stated above, his loss of RM900 inflates to RM997.80.

To sum it up ( for this case),  if Tom wins, he wins RM802.20 and if he loses, he loses RM997.80. From this calculation, you can see that the odds are heavily against him.

What is the odd against you when you play roulette, soccer betting, and 4D?

If you really want to bet, find out what is what before you wagger or very soon your cash will just say: Bye bye!

Never overestimate your own ability to survive in the gambling world.

FBM KLCI from 1997

The 13th GE........??? (Must be held latest by June 27, 2013 according to Wikipedia)

The 12th GE: Mar 28, 2008; The 11th GE: Mar 21, 2004; The 10th GE: Nov 29, 1999

The 09th GE: Apr 25, 1995; The 08th GE Oct 21, 1990. The 7th, 6th, & 5th, find out yourself.

The chart shown above dates back to 1997. The primary trend of the chart has been on the uptrend since 1997. This is a trend in motion and is likely to continue in the same direction. How the market will behave just before and after the 13th GE is anybody's guess. If you know TA, the above chart may be of some use to you. Please remember that TA is an art, not a science.

The only certainty in the stock market is uncertainty.

Good luck, and may God bless your every trade.

CBIP one to note

CBIP has been trending up. It is likely to continue trending higher.

For a comprehensive study of CBIP, click here: http://journeytowealth88.blogspot.com/2012/09/cb-industrial-product-holdings-bhd.html

What is Value Trap?

It's all right to walk into a trap provided you know the way out.

Definition of 'Value Trap'

A stock that appears to be cheap because the stock has been trading at low multiples of earnings, cash flow or book value for an extended time period. Stock traps attract investors who are looking for a bargain because these stocks are inexpensive. The trap springs when investors buy into the company at low prices and the stock never improves. Trading that occurs at low multiples of earnings, cash flow or book value for long periods of time might indicate that the company or the entire sector is in trouble, and that stock prices may not move higher.

Investopedia explains 'Value Trap'

Companies, and even sectors, can be doomed, because of situations such as the inability to survive competition, the inability to generate substantial and consistent profits, the lack of new products or earnings growth, or ineffective management. Often, a value trap appears to be such a good deal that investors become confused when the stock fails to perform. As with any investment decision, thorough research and evaluation is recommended before investing in any company that appears cheap when reviewing its relevant performance metrics.

Read more: http://www.investopedia.com/terms/v/valuetrap.asp#ixzz29i1z2OP5

Public Bank shows the way

For companies whose FYE 31.12.12, the 3Qtr result announcement has commenced.

As usual PBB is the first off the mark. It has reported an EPS of 28.08 sen. This is a shade better than its 3Q11 result of 25.66 sen earnings per share.

 Now that the earnings report season has kicked into gear, the market should be more active from now.

Selected Quotes

Love all, trust a few, do wrong to none. 

William Shakespeare 

By three methods we may learn wisdom: First, by reflection, which is noblest; Second, by imitation, which is easiest; and third by experience, which is the bitterest. 

Confucius

A successful person is one who can lay a firm foundation with the bricks that others throw at him or her.  Confucius

“Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.”    Warren Buffett

"Know what you own, and know why you own it." - Peter Lynch

Do your homework before making a decision. And once you've made a decision, make sure to re-evaluate your portfolio on a timely basis. A wise holding today may not be a wise holding in the future.

Adventa moving into healthcare

Adventa has proposed a special dividend of RM1.30 and capital repayment of 40 sen per share.

 After these one-off payments, the NTA of the stock is lowered to 82 sen per share. The company will then no longer be in the glove business. It is moving into healthcare. 

At the present traded price of RM1.86 per share, the stock looks a bargain to me.