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.