KLCI Rebounded @ 20110413_1230pm - Follow up

My prediction was not correct! KLCI has surged added + another 7 points. Look at the LONG candle in the white box. Beyond my prediction, Axiata and CIMB has emerged as saviour. further PChem has also traded above the resistant level of RM7.25. Look like the short term bullish trend will continue tomorrow morning.

Next question, how to improve my observation or prediction of market? if you observe the chart on the regional market, Malaysian market was closed from 1230 to 1430 local time but other regional markets are trading as indicated in the box. During this period all regional market has surged to new high which i believe is the catalyst for the Malaysian Market to surge higher when it started trading at 1430. Looking back at the KLCI chart, the KLCI move up only in the first hour of trading. Something that i missed! Hence, the learning point here is we could deploy a arbitrage strategy here in the second half trading session at KLCI. Great!

KLCI Rebounded @ 20110413_1230pm

Listed above are two 30-minute chart of KLCI and PChem. KLCI has rebounded since the opening bell after last two days of fall. Obviously KLCI's rebound foundation was grounded by the third largest counter by market cap (RM57B) ie PChem. KLCI has added +1.17 points while Pchem has contributed +2.3 points to KLCI.

As the 1230pm, PChem has reached its potential for the day?? PChem will be fighting with a window resistance created on a gap down on 20110412_0930. This is critical, window resistance rarely being broken for the first attempt. Assuming the these event does not happen after lunch, who is the next saviour to further advancement of KLCI? Lets examine the list above:

AMMB + 0.7
Tenaga + 0.5

AMMB is not a market mover without RM20B market cap
Tenaga is reasonably big RM33B, but it is not in a bullish mode.

So what is the conclusion? KLCI should be at the following mode
1. retreat from here (highly likely) or
2. maintain (likely) or
3. advance (not likely - unless a new saviour appear but who?)

Sarawak Election 2011

The Sarawak Election 2011' Poll day will be on 16 April 2011 ie this Saturday. whats the big deal, you may ask! Well it is a big deal for Malaysian Political climate. Malaysian Long-time ruling party Barisan Nasional (BN) has almost lost its simple >50% majority. Where the opposition front (Pakatan Rakyat) has convincingly denied the 2/3 majority of BN which it control for more than 2 decade under the Mahathirism era.

The next question is what is there to do with Sarawak Election? well, the sudden death to cause BN to still won a simple majority was that there were full support from Sarawak people on BN.

Well the wind of change will be blown up again! BN may not be that lucky this time! i like what Dali said in this blog that in the mind of Sarawakian "you peninsular people do it without telling me first, this time i will do it before you!" Hah! remember it may sound a little bit of kids stuff, mind u, looking at the progress in Sarawak for the last 30 years, it wont be surprise that more 70 to 80 % of population (well i dont have any support, just my guess) is still not that well politically educated. On the flip side, BN may continue to win big as Sarawakian especially those from rural area are not that difficult to buy! that explain how Taib could hold on to the political grip for the such a long period of 30 years ok!

Hopefully the wind of change in middle east in Egypt, Libya and others countries could be blown to the State of Hornbill.

Maybank Xinhua08.com

Read in the FT today, Maybank has teamed up with China Xin Hua news agency to set up a news web site. The website will display Malaysian economic news in Mandarin! what a tremendous change in terms of use of Mandarin in Malaysia.

Money and wealth can really do wonders. Imagine that the Malaysian Chinese NGO has been fighting for decades on their rights to promote and use of Mandarin has been always obstructed by various parties. However, when it is promoted by the biggest bank in Malaysia of course with concurrence of Najib, everything seems to be ok.

According to the news, Malaysia has been selected as one of the 11 QDII (Qualified Domestic Institution Investors) allowing Chinese nationals to invest abroad.

So where is Perkasa, isn't it you are suppose to oppose to this idea.

Well, a mega trend on new lingua franca in world is materialising. for the last two century, English was used as the world language. and for the last 50 years, the whole word is learning Japanese as everybody wish to do business with Japan. Now, its Mandarin's turn. Wonder when will Tamil be used as the world language! Interesting isn't!

The Knee-Jerk Effect

Wow, most of the ASIAN market dropped more than 2% (including Malaysia which is rare by our standard due to low foreign shareholding compare to other regional market) yesterday. The fear factor is fast and furious! The foreign funds usually will sell first ie take profit whenever there is little disruption to their financial modeling.

Yesterday selling was mainly due to the fear that the central banks of other Asian Countries (OAC) will follow China foot step to tighten economic policy which will eventually slow down the aggregate demand. So the million dollar question now is will OAC follow suit? or rather do OAC need to slow down its economy?

Just look at two parameters, GDP growth and Headline inflation. GDP growth tell you whether your country is doing better than before or vice versa. Assuming GDP growth positive, inflation indicates whether the economy has over-speed as a result of fiscal stimuli and easy monetary policies implemented in the past two years. Over loosening of economic policy will give rise to over aggregate demand of goods and services underpinned by low cost of funding.

Overall, the stimulus packages last two years were successful in pulling the region out of recession. with most of the OAC registered positive high teens GDP growth in Q1 2010 due to low base in Q12009. The positive growth has eventually slow down to single digit on declining trend in subsequent quarters in 2010. Further, most of the analyst in town is projecting moderate growth in OAC for 2011. Hence, i really do not see any demand pull inflation is going to be significant.

Comparing with China, it is totally difference story. China continue to register positive GDP growth during Global Financial Crisis in since 2008. Its insatiable appetite for natural resources due to increase in aggregate demand of good and service for local market has been pushing inflation into new high every quarter, hence China official is concerned about the economy is over-speeding. China actions on tightening is policy i thinks is justifiable. but not OAC.

So, any pull back in OAC market will be a good time to enter?

Diverging Trend

Since the last posting in 14 December 2010, Dow has marched ahead added 800 points (7%). Dow has defying strongly against a double top in making when an shooting star appeared on 7 Dec 2010. now what is the market telling us? QE2 is effective? Market is confidence is building up? well i m not convinced.

From Shanghai and Hang Seng perspective, decoupling theory is in played. These markets have moved up a little since Dec 14 and now back to original state as opposed to Dow has advanced 7%. China has been tightening its economic policy with economy overheating in mind. Headline inflation is point up. It is interesting to see that Shanghai completing its symmetrical triangle soon, probably signaling no further tightening in near further future.

Take a closer look at BDI which measure the international shipment activities has just bottom recently. Any significant recovery in BDI may provide an indication that China economy will pick-up again.

I am sure the Big Picture remain unchanged that the global growth will be from Asia in coming years. China being the economic locomotive in Asia, any positive movement in Shanghai, will spill over to other ASEAN economy. So put on your seat belt, sit tight as Shanghai is setting to take off.

Dark Cloud is Gone?

The Dow is portraying an interesting picture now! The resistance at 11450 level was broken thanks to the supercharge fuel added on 1 Dec and 2 Dec. Look at the Marubozu candles and volume on these two days. it is sufficient to pull the market out of its gravity zone. so whats next? The Year End holiday season and Christmas holiday are just around the corner. Expect retreating in volume in coming weeks. Window dressing activities will also heat-up during this period. Hence, the upward trajectory in Dow should be discounted. Still, risk seems to be lesser now as the shooting star fear on 7 Dec is conquered by the advancement these couple of days.

Now lets examine Shanghai market. The down trend resistance at 2900 level was also broken thanks to super charged fuel on last two days. Look at the confident marubozus and volume on 10 Dec and 13 Dec. Volume raised by easily 30% from the previous week. This signifies the window dressing activities. Hence, any upward movement should be discounted. Nevertheless, the movement should be monitored as it poses great opportunity upward continuation trend after the temporary correction since early November. The correction, I would believe was part of the profit taking activity by investment communities to realise paper gain wherever possible for distribution and lock in performance. These activities subsided toward end of Nov 2010 with volume retreating.
However, the sky in Hong Kong is still gloomy. the formation of H&S is still in the making. Although the profit taking is subsided as index stabilised with volume retreating, fresh buying is still pending unlike US and China Market shown above.

Conclusion, out of 3 markets we have 2 positives and 1 negative, i would suggest nibbling activities should commence now.

DJI forming Double Top

Dear Readers,

How was your trades over the week? have you taken profit? if not you better do so!

Following from last week analysis of DJI and SSE, i concluded that the risk was not at the acceptable level due to anticipation of major hurdles in coming weeks. Now lets take a look at the chart after one week.

Yesterday (7Dec2010) a "beautiful" shorting star was formed in DJI at 11450 level ie at the previous high on 5nov2010. This is the prelude of a Double Top is in the making. So, if you are short term trader be extra cautious!


Ok lets take a look at SSE. SSE is not going anywhere! Have been moving side-way for a month with volume retreating. Obviously, SSE is awaiting for orders and directive from the market. The phenomenon of i wait for you and you wait for me will persist until clear direction is apparent. Usual year end holiday season is just around the corner. Do not expect any impressive ending of equity market.

I would say high chance of DJI & SSE lackluster in coming weeks before the year 2010 ended.



Huh, look at KLCI this morning, chalking up impressively, +11 points. i have a feeling kindly of like, some pro are pushing up the market to distribute to you. ok! well you could continue to blame why such thing happen in our market. Probably this is against your believe that market is efficient as all information should be reflected in the market. But i think generally, this phenomenon is common in all "small market" in emerging country. Small market is easily "move" by some "big" hand, which hinder the efficient market hypothesis. Imaging this, KLCI market cap at the moment is around RM1 Trillion (=RM1,000 Billion). Just EPF alone its fund size stand at Rm300 billion. If you take into consideration Khazanah, PNB, Tabung Haji and so on what is so difficult to maneuver the market. furthermore they all listen to one boss ie PM.

So be cautious of the invisible hand.

Cheers Happy Trading.

Update on Mr Market's Health

Shanghai has been in 1 and half year bear market! It has broken above the upper down trend line convincingly in mid Oct 2010. However not able to hold it and slip below the trend line again.

Hang Seng seems to be more interesting. After the break above the upper down trend line in mid Sept 2010, it has marched ahead thanks the US QE2 of US600 Billion. Currently support level was formed at 22900 level. But watch out, a H&S formation is in the making. So for short to mid term (up to 3 months) traders beware, the market does offer opportunities at the moment but risk not at acceptable level yet.

Cheers Happy Trading.

Has the market correction completed?

Hi, i m back again.

Market seems to be a bit bullish today, DJI closed with +250 points (+2.3%), marvelous! Is this the sign of completion of market correction due to resurgence news of sovereign debt issue in the PIGS countries in Europe and potential war in Korea. To answer the question, let ask the Mr Market

The DJI weekly chart shown a double top formation at 11250 level which is a hindrance to bullish advancement of DJI. Taking closer look at DJI daily chart shows that DJI is retesting the 11250 level yesterday. Do you think this resistance level will be taken out? My guess is not yet.

11250 level is critical now. Any retracement from this level market will turn in short term bearish again. ie lower high from the previous high achieved on 5 Nov 11440. Hence it is too early to enter the market now. We shall wait for the Mr Market to rebuild his confidence and strengths to cross the 11250 hurdle first. Then we have a more interesting play to look up for.

Following from the analysis above, let take look at local market.

10.35am KLCI + 13.76 points (+0.93%) not to bad, impressive rebound. The play should be cautious based the analysis above. No doubt that a lot of second tier blue chips have corrected to an attractive level. But the play short be quick and window of opportunity may disappear fast should DJI make a U turn tonight. Whether this will happen, you should ask yourself whether there is any favourable events up coming, otherwise, the DJI rebound was merely smoke in the mirror.

Cheers Happy Trading.