Is this a turning point?

Is this a turning point? This questions is tremendously difficult hard to be answered. Volatility had increased and the money remain in the market is those brave money, which are intended to be make or die. The high spikes in MESDAQ and KLCI are indeed relieving, but it is not inspiring. The volume in KLCI remains relatively constant while the MESDAQ (although accompanied by positive price to volume action) is on a clear weak downtrend (due to previous insane and unpredictable charting formation). Obviously, differ and divergences of opinions in the market are huge, and the small players are arguing with each others. The big boys and foreign funds are found no where. The Thailand bite and bark at them, and yet, why are they not shifting their fund to Malaysia? (Obviously, foreigners still remember how they are bitten by Dr M)

While many friends are seems worried, anxious and uncertain, I wish to confirm with them that the bull is not yet died. It is only half dead. As a risk taker, I suggest invest partial of the capital in the market, as the Bull seems to have strong support by Najib and Malaysia government. Besides, GLC are getting more and more efficient, CNY effect are moving near, and many of the penny chips are almost at the year end low. We can never be certain anyway, if our decision today will result in a huge gain, but it is a risk worth taking. Thus, I suggest entering some penny stocks which their prices have already been pulled to the strong support, is definitely a risk worth taking.

Speculation Dilemma

Logically, i wanted to put some brave money to the market;
Emotionally, i am frightened by the strong down force.

If the fundamental is strong, Thailand effect will cause minimal impact to our country.

In fact, the problem is instead an opportunities, for the country leader to convince the outsiders on Malaysia support on a free market.

Opportunities are around the corner...
The brave one will found it very soon.

馬股小股災
綜指大跌1.9%

泰國中央銀行實施資金管制，杯弓蛇影的基金經理紛紛從區域股市撤退，亞洲股匯市慘遭池魚之殃；馬股更因此出現小股災，寫下7個月單日最大跌幅。早盤開高的綜合指數走勢直轉急下，原是外資最愛的藍籌股變成湯手熱芋，午盤因龐大賣盤跌深至1049.88點，閉市時掛1060.36點，劇跌21.24點或1.96%。全場下跌股遠超上升股，下跌股782只，上升股卻只有區區132只，另216只平盤。總成交量8億9339萬股，成交總值13億8981萬令吉。馬股所有指數皆收黑，二板指數挫1.91點或2.13%至87.57點，大馬富時全股指數則報6905.17點，暴跌142.42點或2.02%。分析員卻大派定心丸，表示泰國當局的措施屬個別事件，股市短期內雖出現震盪，但不會引發金融風暴。3大重量級藍籌股國家能源（TENAGA,5347）跌勢最慘重，下挫40仙至10令吉80仙；緊隨後頭的馬來亞銀行（MAYBANK,1155）收在11令吉50仙，掉30仙；馬電訊（TM,4863）跌勢較輕，微挫10仙至9令吉55仙，種植股巨頭IOI集團（IOICORP,1961）暴跌70仙至17令吉40仙。雲頂（GENTING,3182）和名勝世界（RESORTS,4715）也不敵賣壓，齊跌50仙至31令吉50仙和14令吉20仙。第3季取得亮麗業績的丹絨（TANJONG,2267）反而逆流而上，微揚20仙至13令吉60仙，成為表現最佳股項。 （retrieved from 星洲日報／財經‧2006/12/19）

Contrarian Strategy

Some useful contrarian strategy found. IN fact, I am thinking that these signals could be much more relevant than any existing technical signals found on the traditional TA books.

As it really need much time to compile a comprehensive list, here we got only 3 for your reference.

Contrarian #1: When the forum is hot, and become hotter, and become very hot, sell your entire share.

Contrarian #2: When unrelated people start to talk about stock, perform partial profit taking. I some how wonder, how the syndicate able to know so precisely that just at the moment so many small fishes join the game, they straight kill them all. In Malaysia, seems like the syndicate is very hungry and don’t really want to wait for more fishes to be trapped.

Contrarian #3: A newspaper buy is a buy signal. But if the buy recommended does not result in higher price in the market, sell instead.

Don’t be a contrarian for the sake of being a contrarian. When to be contrarian and when not to be is an art that need years of experience and concentration on the market.

~ Booffett ~

The Market at 18 December 2006

Market situation. After 2 months of continuous rise of KLCI, the huge correction happened last week. Many stocks (precisely, most of the stock) drop tremendously, where rough estimate, a total of 30% of the market capitalization was wiped out in the penny stocks sector. MESDAQ, Second Board and Technology lead the bear. After detail observation on the drop of price, it is clear that the drop in price is largely (if not completely) caused by the negative market sentiment. There are no any strong economic indicators that are showing the adverse condition in the country, instead, economics indicators are supporting a rise. While the fair value of these penny stock is still hardly judged, particularly in a Malaysian context, many stocks are dropping (approaching) to the low value of the year.

Recommendations. The outlook is very hard to predict as the volatility is high and the stocks fall faster than gravity speed resulted from retailer distribution. Fears surround the environment. Volume shrinks suddenly and no institutional support is spotted to continue the up-trend. To predict the price reversal will be equal to predict the timing of the institutional support on the KLCI. Brave traders can buy at the current price from the sudden drop and could reap huge rewards should the price reverse suddenly happen the next few days. However, risk exists. For me, I am timid, and only dare to stand aside to watch the drama.

Volatility is a curse

It is surprising why fundamental analysis are using standard deviation or dispersion related statistical term to measure the risk of a stock. In common sense, it does not bring any true meaning at all to individual investors. For institutional investors, it is some how argued that, measuring risk using standard deviation means that institutional investors want to have a smooth return on the entire portfolio. This sound a bit logical as institutional investors often like to stabilize the return with passive portfolio management technique and spent more of their time to market their investment product and convince the public why they should continuously earn a 1.5% management fees.

In fact, as an individual investor, risk should never be measure with standard deviation. Instead, risk could be more objectively measured with potential loss from enter to cut loss point.

While maintaining a balance point of view and trying my best to rationalize why the many investment community still keep learning traditional finance theory to measure risk using the dispersion concept, I found a reasons:

Whenever the market is topping and people are acting irrational, the price volatility is often great and thus produces a high risk scale from the measurement of standard deviation. (OMG, seems like not true also, people are using standard deviation from the entire historical data, not using a standard deviation with embedded moving average formulae)

Sadly, even the most convincing reason couldn’t convince me why we should use a standard deviation to measure risk. The concept of total portfolio to me is just a truly ignorance on which stock to pick in the investment process.

It is indeed a stupid question to consider about, to consider the strategy from those dreamers who never play stock before.

Nonetheless, I wish to end this with some useful idea. Volatility is indeed a curse. Surprisingly, none of the famous technical analysis books seem to touch on this topic. The argument is simple. High volatility tends to stop some investors out of the game. And sudden spike without support from inspiring fundamental changes in the company itself should be viewed as a golden opportunity to take profit. After all, ask yourself this question: “Are you willing to buy a stock when the price shoots up suddenly but it doesn’t has any changes in the fundamental value?” Unless mindless and blind TA hardcore (which jump into every breakout), nobody will go in. People will tend to wait for the price to drop back to the near the original level because they have strong anchor to the old pricing level. If so, who else will buy the stock with sudden spike? Who are going to push the price higher?

Moral of the story: Highly spike is god given, don’t be greedy and nail down the profit.

The Truth of the Market

Thought I am able to maintain a poise and balance emotion even disturbance set it, but some phone calls which are highly charged with emotion motivate me to write an article on the truth of the market. When people started to observe the market so closely, they tend to become over-excited or being scared out of the wits despite only small changes in the KLCI. Over-sensitive leads to over-reaction, and often, leads to wrong judgment.

Truth #1: There are three possible direction of the market, up, down or sideways.

Truth #2: Success is nothing to do with the market itself. Success is solely depends on how you play with the market. The market always moves up or down, but how you interpret it is another matter. Life is, 10% what happen to you and 90% how you react to it. This is so true with the market.

Truth #3: Emotion is inversely proportionate to your trading success. Once emotion set in, you become consistently inconsistent, and soon, being defeated systematically due to unsystematic error.

Truth #4: No body able to catch the tops, although our emotions keep telling us that we had done it before.

Truth #5: The only way to distribute is to distribute when the trend is up. When the trend changes are obvious to everyone else, you don’t stand any chance to do it.

Truth #6: In a bull market, stock is equal sex; in a bear market, stock is equal to shit.

Truth #7: Safety first, makes money later.

Truth #8: 暴利马上套；小损立刻斩。

Truth #9: Whatever heck, when you are uncertain, get out!

Truth #10: Diversification diverse your concentration, and ultimately, you “die” and “worse”.

Footnotes: Diversification is a strategy only for institutional funds, not for individual investors. Many academicians who never play stock themselves could be insisting that diversification is beneficial; never bother to talk with them, they are just dreaming in their own mathematical and statistical world.

Anticipated and yet Unpredicted

Overview of the KLCI? The sudden drop in KLCI, with roughly 15 points, is a sudden signal that caught many investors’ and speculators’ attentions. The correction is in fact anticipated, but the large drop in the value is indeed unpredicted. From one of the technical perspective, however, the huge drop in KLCI should be viewed as healthy correction activity, as its drop is only accompanied by relatively low volume. It could be argued that the low volume indicates profit taking by the small players when the momentum buying from the foreign fund ceased. From another perspective, however, could argue that this drop in price itself is indeed dangerous. Regardless of the magnitude of volume, drop is a drop, a reality that could be sufficient to invoke a negative feedback loop among the small fishes. If the large institutional funds have no intention to support the drop, the correction would be severe and devastating. The big blue chips will become chocolate chips while the penny will of course, remain penny if not forced to be delisted.

Description of the MESDAQ market. Many MESDAQ and rubbish and penny stocks that rise little only (as the KLCI make spectacular move) drop by hell today. Some had been observed being drop surpass the newly formed support line for the pass two weeks. To some degree, this is quite disappointing as my profit taking haven’t completed yet. Some how, this teach me again and again, do not bargain for penny, where I should sell off immediately but not hanging the price up there for victims to come and buy it. When the uncertainty seems to come, push the trap to the victim, but not waiting for the victims to come. Else, you gonna trap yourself in the trap itself.

Description of the environment. It is observed that unrelated people are now talking about stock. Many people are again; gather at the stock broking house again. The culture of drinking coffee and making money seems to come alive again. Grandfather, who cease to buy stock for such a long time (may be since 1997 or 2001), now buying Public Bank. Auntie and Uncle, who half year ago, come to ask for investment tips, are now giving my mother tips. Seems like they are so happy with their AMMB.

Action required. It has been argued among professionals and experience players that the rise could be continued until the CNY 2007. The sudden drop in price, however, is dangerous, but should never disturb our emotion. Market is simply unpredictable, and when it seems predictable, disasters are following behind. Decisions to sell or not, is hard to make. After all, all the stock I am holding is seems forming accumulation pattern, and is still at very low price level, and volatility has not set in to these stocks. None of the stock I am holding are experiencing highly spike in the near term. Gambling is always never easy when you trying to add intelligence into the process. After serious thought, I decided to hold on to these stocks despite the highly drop (which perceived as healthy correction by mass media) in KLCI. Today 12 December 2006, 11.45pm, I recorded down my reasons for holding as follow:

1. This is still the third wave of the game, considering it from a medium cycle of investing. Warrant play is just going to end but MESDAQ and penny stocks’ spiking for distribution has not yet done. Don’t those directors of these companies want to fried those pennies and sell to the uninformed?

2. I perceive the institutional will not stop the pushing so soon. They will return before CNY (Well, stupidity set in here as I trying to predict again). In short, I don’t believe that foreign investors are so good to pour money into Malaysia and let the value drop like hell. Analysis from the volume for distribution perspective, I doubt that they able to recover their cost of capital despite the RM3 billion turnover that day.

3. Once the trend started, it is highly possible that the trend will persist. The worst scenario for now is the invested capital trapped for a year due to the severe correction. Do I play on margin? Ah hahaha, never!

4. Asian currency is still undervalued and leaded by China, RMB repeg is highly probable and if that is true, RM repeg will soon follow.

5. Everybody want a rest, publicity of stock market is already set up, and correction is more likely than a disaster as the expectation of others’ expectation on CNY effect will serve as strong barrier for the stock market to move downwards.

The Correction in Mass Media

ChinaPress (12 December 2006)

外資縮減買盤 - 隆股進入盤整期

報導：陳玉燕

（吉隆坡12日訊）馬股綜合指數昨日衝破1100點關卡后，今日外資縮減買盤下，盤中出現盤整，分析員指出，隨市場出現套利，加上海外基金減少買進，綜指走勢料波動無常，惟整體局勢仍屬健康。綜指今早以1103.21點，上揚1.51點迎市，爾后揚升幅度逐漸擴大，惟漲潮未見持久，約在10時35分，綜指開始滑落后，下跌幅度加劇。休市時，綜指挂1091.04點，挫10.66點，成交量為6億4057萬3300股，其中10大下跌股多為藍籌股如英美煙草（BAT）、馬銀行（MAYBANK）及普騰控股（PROTON）。馬銀行證券（Mayban Securities）研究主管拉惹英德拉回應《中國報》提問時說，預測大盤將出現反覆無常的波動，未來數日料走低至1090點。

分批脫手: “過去數週因為海外基金大量買進，本地基金則分批脫手，並未大量拋售，使大盤走勢亮眼。” 他指出，從上週五及本週綜指走勢看來，海外基金已開縮小買盤，因此綜指將進入盤整期。不過，他表示，目前的盤整是健康的，過去幾天綜指揚幅大，相對盤整機率也會上揚。此外，達證券研究主管也指出，銀行與政聯企業股項因受合併揣測而高漲，市場在過去7週連續揚升，目前是出現盤整的時刻。

75%外資: 另一方面，大馬交易所（BURSA）總執行長拿督尤斯里近日在接受《星報》訪問時曾表示，目前馬股的揚勢，大部份由海外基金帶動。“依據我們的記錄，相信約75%買盤來自海外基金。” 他指出，大馬股市在去年幾乎持平，今年來揚升20%並非不尋常現象。“我不認為股市持續上揚會造成問題，未來欲持續吸引外國投資者的較高興致，本地企業須維持優秀表現。”閉市時，綜指報1088.42點，下跌13.28點，成交量挂12億3130萬9300股。

Business Times

KL shares end almost flat (December 12 2006)

SHARE prices on Bursa Malaysia ended almost flat yesterday on profit-taking with the Kuala Lumpur Composite Index (KLCI) bucking the trend on late selective buying in blue chips, a dealer said. At the close, the 100 quality-stock KLCI increased by 3.11 points, or 0.28 per cent, to 1,101.02 points. It opened 5.3 points higher at 1,103.89 in the morning. The KLCI touched an intra-day high of 1,110.12 points. "The market opened higher with sentiment spurred by positive signals about the US economy but profit-taking capped further gains," he said. The November payroll data released by the US Labour Department last Friday revealed that new jobs rose by 132,000, up from 79,000 in October but jobless rate rose to 4.5 per cent. The dealer said the market was expected to consolidate after the recent sharp rise with immediate support seen at 1,080-point level. Of the FTSE-BM Index series, the FBMEmas gained 2.18 points to 7,157.12 and the FBM30, which comprises the top 30 companies by full market capitalisation, jumped 22.9 points to 7,083.77. Decliners outnumbered advancers by 592 to 299, 246 counters were unchanged, 238 counters untraded and 25 others suspended. Volume fell to 1.081 billion shares worth RM2.035 billion from 1.21 billlion shares worth RM1.847 billion registered last Friday. Genting and its related counters attracted a lot of interest. Genting rose by RM2.75 to RM32.00 and Resorts World increased by RM1.00 to RM14.00. Genting-warrants were among the most active counters. It increased by 17.5 sen to RM1.15 and the Resorts-warrants perked 17 sen to RM1.16. Genting hit an intra-day high of RM35.75, up RM6.50. Meanwhile, the Kuala Lumpur Composite Index (KLCI) futures contracts on the Bursa Malaysia Derivatives ended higher, despite some profit-taking after the recent sharp gains, a dealer said. At close, December 2006 and January 2007 contract rose 9.0 points each to 1,103.5 and 1,101.0 respectively, March 2007 added 8.0 points to 1,098.0 and June 2007 went up 7.0 points to 1,094.5. Turnover stood at 7,682 lots, up from 6,834 registered last Friday and open positions stood at 29,993 contracts, also up from 29,462 contracts previously. - Bernama

The Edge Daily

Citigroup: M&As to continue KLCI's bullish run
By Ashwin Raman (12 December 2006)

The recent rally on Bursa Malaysia will continue as the rise in merger and acquisition (M&A) activities will attract more foreign investments, a senior Citigroup executive said. Its vice president for Asia-Pacific economic and market analysis, Sim Moh Siong, said the positive run of the Kuala Lumpur Composite Index (KLCI) recently was in response to major M&A activities in the market. In the last two months, there were several corporate deals including IJM Corporation Bhd's proposed acquisition of Road Builder (M) Holdings Bhd, and the mega merger exercise of Golden Hope Plantations Bhd, Kumpulan Guthrie Bhd and Sime Darby Bhd. Sim said there was potential for more M&As of a similar scale involving government-linked corporations (GLCs). Golden Hope, Kumpulan Guthrie and Sime Darby are subsidiaries of government-owned Permodalan Nasional Bhd. Speaking at a briefing on the country’s economic outlook in Kuala Lumpur on Dec 12, he said the ringgit’s recent gain was not a “flash in the pan” and increased foreign investment and M&A flows would strengthen the ringgit. Sim said the ringgit could strengthen further next year if China allowed the yuan to appreciate, and Citigroup was looking at RM3.50 against the US dollar in 12 months. He said there was a possibility Bank Negara Malaysia would increase interest rates moderately next year to accommodate the economy’s growth and control inflation. Citigroup has forecast Malaysia’s gross domestic product (GDP) to grow 6% this year and 5.7 next year. For 2008, the group has projected a 5.8% growth. “We are expecting modest interest rate hikes at 25 basis points in the middle of next year and another 25 basis points in the fourth quarter,” he said. On increasing foreign investment, Sim said the government would need to relax non-internationalisation of the ringgit policy and provide further cuts in corporate tax. “The threat of hot money is quite low and the system in the country can cope with capital outflows,” he said. Sim said the government would need to implement a goods and services tax first before another round of corporate tax reductions, adding that earlier reductions had regained investor confidence.

CANONE

Fundamental Analysis. Sales for 9 months ending 30/9/06 soared 30.1% to RM144.9 mln. Pretax profit rose 10.7% to RM12.69 mln. Net profit rose 11.6% to RM10.93 mln. Net earnings per share were 7.17 sen. The stock fair value should be 71.7 sen for a PE of 10 and 143.4 sen for a PE of 20.

Technical Analysis. A saucer base with very low volume for roughly 5 months form a strong and highly potential base for the stock. Recent trending up of the price since the announcement reflect potential institutional accumulation. Price-to-volume action is normal and positive.

Market Analysis. Current market condition of strong bull run in the KLCI, coupled with excellent publicity of the stock market from the mass media indicate very positive signs. In a bull market, relatively little probability for earning announcement as CANONE had will not attract attention form the investors.

Conclusion. Buy and wait for the overreaction from investors and speculators.

Great Profit Taking Point Detected

Genting Effect. After Genting won the bid in Singapore, it is expected CI will surpass 1100 on Monday. News, tips and opinions on the market are every where. Investors in forum and etc whom I met are motivated and emotionally charged with the great news. As Genting is a huge guy in the CI, its upward trend will be impacting the CI significantly, and thus, influences the emotion and publicity effect of the KLSE.

Monday effect. Although there are researches showing that Monday is normally a profit taking day for the retailers, but recent research is also showing that the rise or drop in Monday is highly related to the condition in Friday. Precisely, Green Friday produces Green Monday, and vice versa. The Friday before is a Friday with satisfactory performance, where many of the initial loss speculative stocks which are showing red in the morning are showing green in the end of the day. As such, it is predicted that tomorrow, will be a Green Monday as well.

Bullish Sentiment. During the weekend, it is obvious that stock market receive substantial publicity and analysts, those know-it-all cynics, are predicting this is a staring point of a great bull run. As we are not going to be newbie that are going to be contrarian just for the sake of contrarian; who want to be different and unique from the mass media recommendation, we long the CI. The bull is still young and in fact, it is highly possible the bull is just starting a month ago.

The trend is up. We do not wish to go against the trend; as such we go with the trend. It is very obvious that the price-to-volume reaction in the market recently is truly normal and encouraging, rising momentum is very strong and overbought is ended with another overbought. For this, we should keep holding stocks unless unusual market weakness is spotted.

The long term trend is highly possible an up; the things we should focus on is when is the correction coming. Anticipating correction is often an art, not a science. Many opinions are anticipating that the correction will be happening in March, after Chinese New Year.

While the long term trend is highly predictable, the short and medium term trend is hardly anticipated. However, as outlined above, an immediate up trend with spike, if happened tomorrow (which most probable stretched to Wednesday), investor overreaction, and a short term overbought will surely happen (how sure is sure? There is nothing sure in stock market, but the “sure” is used here for the sake of sure itself).

Then, the opportunity exist for all of us, it is time to take the profit (well, I recommend taking partial profit, particularly those stock which are having low publicity and negative earning) home and lock it. Only after the overreaction effect is being slowed down then only we reenter again and ride to success with the bull.

How the 1100 is being marketed? (2)

Pasaran saham dijangka terus meningkat

www.utusan.com.my

KUALA LUMPUR 7 Dis. – Menteri Kewangan Kedua, Tan Sri Nor Mohamed Yakcop berkata, momentum meningkat Bursa Malaysia dijangka berterusan dalam jangka terdekat berikutan minat memberangsangkan yang diperlihatkan oleh pelabur-pelabur asing. Beliau berkata, minat pelabur yang semakin meningkat ini adalah berlandaskan aliran ekonomi Malaysia yang mengukuh dalam beberapa bulan kebelakangan ini. “Keadaan di bursa begitu kukuh dan paras indeks telah mencapai tahap yang menggembirakan iaitu 1,100. “Pelabur luar berpendapat mereka dapat memperoleh keuntungan daripada pelaburan mereka di sini,” katanya selepas merasmikan Bengkel Bantuan Teknikal Inisiatif Pasaran Bon Asia (ABMI) di sini hari ini. Katanya, ini adalah satu tanda keyakinan pelabur-pelabur asing terhadap Malaysia. Dalam sesi petang Bursa Malaysia, Indeks Komposit (IK) ditutup 0.09 mata lebih rendah kepada 1,098.26. Semalam IK meningkat 9.39 mata kepada 1,098.35 mata dengan jumlah dagangan yang tinggi dalam sejarah berjumlah 2.19 bilion saham bernilai RM2.80 bilion. Menyentuh tentang kadar pertumbuhan ekonomi negara, Nor Mohamed berkata, selain daripada kemasukan modal pelabur-pelabur asing, keadaan ekonomi negara beberapa bulan ini kukuh dan momentum kekukuhan ini dijangka berterusan. “Mungkin kita boleh mencapai kadar yang melebihi 5.8 peratus kerana pertumbuhan ekonomi begitu kukuh dalam semua sektor terutamanya sektor pembuatan, perkhidmatan dan pertanian,” ujar beliau. Nor Mohamed berkata, sektor pembinaan yang mengalami kelembapan beberapa tahun kebelakangan ini, turut dijangka mencatatkan pertumbuhan yang positif pada tahun depan. “Saya yakin berasaskan kepada kemasukan pelaburan luar dan keyakinan pelabur tempatan dalam pasaran kita serta fundamental di bursa kita, momentum kekukuhan ekonomi kita akan kekal,” katanya. Beliau menambah kata, bahawa kekukuhan ini dijangka turut menyumbang kepada pertumbuhan Keluaran Dalam Negara Kasar (KDNK) tahun depan yang diramalkan mencapai pertumbuhan sebanyak enam peratus.

Is it a turning point?

The KLCI today come to a halt near 1100. The rise is fierce but the small cap and MESDAQ have not been able to catch up with the game. Many small caps are still at the low level. Initial sign of increasing volume serves as a reasonable "belief" for us to anticipate a rising in these stocks in the future. Increased volatility serve as a indication that some changes are going on in the market. As the PE of the blue chip is reaching 20, it is reasonable for us to expect some of the undervalued stocks could be adjusted to the same level as well. This adjustment, if realized, will be a huge gain for many of the undervalued small cap. The only question to be asked is how enthusiastic the crowd will be after attracted by the rising of CI?

Good signs spotted (currently):

1. Volume effect.
2. January effect.
3. Mass media advertising effect.
4. Rise of online trading.
5. Government initiatives in promoting a good (perceived) economic environment.
6. Financial freedom and planning culture among the new generation.
7. M&A in various sector.
8. Foreign investors participation (how they come out with this stat? confused!).
9. Some government policies to enhance the competitiveness of the M'sia industry (Often is a NATO, but why bother about it, as long as they talk, is good enough).
   

Bad signs spotted (currently):

1. Arguments on racial topics.
2. Middle east instability (perceived as minor effect).
3. Manipulated high spike on start of the day and end of the day.
4. Mass media are not advertising the stock market in the front page.
5. Lack of participation from the retailer.
6. Many remisiers are still catching and hitting mosquitoes in the office.
   

How the 1100 point is marketed in Mass Media?

技术调整·低线股表现佳 次波牛市涨潮在望 2006/12/07 18:12:14
●南洋商报

（吉隆坡7日讯）牛市已成形，第二波及第三波涨潮在望。尽管马股今天在综指上探1100点之后下调，但是，分析员认为，牛市已经成形，预料在调整及巩固步伐之后，可能会再度出现第二波和第三波的牛市涨潮。马股今天早盘调整，综指半天下跌0.98，报1097.37，跌0.98，半天成交量也萎缩至6亿7千万股。午盘开市后，马股仍然没有收复失地的走势。闭市时，综指跌0.09点，报1098.26点，成交量12亿1千909万7千400股。奥斯克证券行分析员陈建尧向《南洋商报》说：“当综指突破1021点时，牛市便已开始成形，因此，今天的调整是属于正常的现象。”他说：“这是属于新一波的牛市，这一波的牛市，主要是受到蓝筹股的推动。”他认为，目前的牛市仍处于初期阶段，他乐观看待股市近期的走势。续第一波后，马股可能会再度出现第二波和第三波的牛市。陈建尧指出，技术调整和低线股表现优良，将是推动接下来两波牛市的因素。马银行投资管理基金经理颜敏树说，由今年11月9日马股上扬到1007点至今，马股涨势已达致100点，意味着牛市早已在上个月9日成形。他指出，股市表现良好是因为有多项蓝筹股上扬，并在大约一个月的时间内，将股市推上100点。此外，令吉对美元的上升，促使许多外资涌入我国，进一步推动了马股。颜敏树认为，我国各领域的走势似乎也和美国市场相仿。他认为，服务领域的股项将会取得良好表现，包括电讯股、银行股、园丘股及在第九大马计划下获得支撑的建筑股。

Berita Harian

Tinjauan Pasaran: IK dijangka lepasi paras 1,100 mata

URUS niaga di Bursa Malaysia dijangka kekal tinggi hari ini berikutan sentimen urus niaga yang menggalakkan dirangsang pembabitan aktif pelabur asing. Sehubungan itu, Indeks Komposit (IK) Kuala Lumpur dijangka cuba melepasi paras tertinggi baru 1,100 dengan anggaran terdapat sokongan kukuh pelabur institusi terhadap saham terpilih. Paras berkenaan telah berjaya dilepasi buat seketika pada awal dagangan semalam, tetapi pengambilan untung menggagalkan ia untuk bertahan hingga akhir dagangan. Sentimen urus niaga dijangka kekal tinggi semalam dengan jangkaan pelabur asing akan terus memasuki pasaran. Pembabitan pelabur asing begitu ketara semalam, apabila jumlah urus niaga melepasi paras dua bilion buat pertama kali dalam sejarah Bursa Malaysia, katanya. Pada akhir dagangan di Bursa Malaysia, IK menokok 9.39 mata kepada 1,098.35. Jumlah dagangan naik kepada 2.19 bilion saham bernilai RM2.80 bilion daripada 1.685 bilion saham bernilai RM2.044 bilion kelmarin. Indeks Perindustrian pula naik 20.21 mata kepada 2,229.44, dan Indeks Mesdaq menambah 1.47 mata kepada 122.17. Indeks Papan kedua bagaimanapun jatuh 0.31 mata kepada 93.45. Antara saham aktif, Tenaga menokok 40 sen kepada RM11.40, Maybank menambah 10 sen kepada RM11.80 dan MISC naik lima sen kepada RM9.30.

KL shares mixed amid profit-taking

December 7 2006

SHARE prices on Bursa Malaysia closed mixed yesterday amid some profit-taking on lower liners, while the inflow of foreign funds, coupled with confidence in the economic growth prospects, lifted the blue chips sharply higher. The benchmark Kuala Lumpur Composite Index gained 9.39 points to 1,098.35 and the Industrial Index rose 20.21 points to 2,229.44. The Second Board Index fell 0.31 of a point to 93.45, while the Mesdaq Index advanced 1.47 points to 122.17. The FTSE-BM Index series saw the FBMEmas up by 31.34 points to 7,133.76 and the FBM30 added 57.66 points to 7,058.28. Losers outnumbered gainers by 533 to 388, while 266 counters were unchanged, 189 untraded and 26 suspended. Volume rose to 2.19 billion shares worth RM2.80 billion from 1.66 billion shares valued at RM2.04 billion on Tuesday. An analyst said the continued inflow of foreign funds, coupled with window-dressing exercise, boosted the blue chips. However, he said, following the strong upside recently, the market is expected to come under some profit-taking again today but flushed with liquidity, it should be able to absorb this. Among the volume leaders, Iris lost 3.5 sen to 38.5 sen and NasionCom fell 2.5 sen to 20 sen. However, Nova MSC gained 1 sen to 14 sen. Genting-CA advanced 25 sen to RM1.08 as investors continued to buy into call warrants in anticipation of further upside for its mother shares. Among the heavyweights, Tenaga climbed 40 sen to RM11.40, Maybank added 10 sen to RM11.80 and MISC went up 5 sen to RM9.30. Telekom gained 15 sen to RM9.90, British American Tobacco added RM1.00 to RM43.50 and Genting rose 50 sen to RM29.75. However, Nestle dropped 30 sen to RM24.30 and Lion Diversified shed 20 sen to RM6.00. On Bursa Malaysia Derivatatives, the Kuala Lumpur Composite Index futures contracts closed lower yesterday, also on profit-taking. December 2006 shed 3.0 points to 1,097.0 and January 2007 fell a point to 1,096.0. March lost a point to 1,093.5 and June settled 3.5 points lower at 1,087.0. Turnover increased to 13,266 lots from 8,517 lots yesterday and open positions rose to 27,772 contracts from 27,637 contracts. - Bernama

UTUSAN Online

IK cecah 1,100 mata tetapi gagal bertahan

KUALA LUMPUR 6 Dis. – Bursa Malaysia hari ini melonjak tinggi mencecah paras 1,100 mata tetapi gagal mempertahankan paras berkenaan dalam urusniaga yang menyaksikan jumlah dagangan yang terbesar. Indeks Komposit meningkat 9.39 mata kepada 1,098.35 mata dengan jumlah dagangan yang tinggi 2.19 bilion saham bernilai RM2.80 bilion. Ringgit ketika ditutup juga disebutharga tinggi berbanding dolar AS pada 3.5475/5525. Peningkatan harga-harga saham dalam sesi pagi gagal dipertahankan apabila berlaku kegiatan pengambilan untung kemudiannya yang menyebabkan IK merosot ketika ditutup. Naib Presiden TA Securities Bhd., A’reeff Khalid berkata, selain tumpuan kepada saham mewah, para pelabur khususnya pelabur asing juga membuat pembelian secara menyeluruh. “Secara umum terdapat keyakinan dalam pasaran yang menyebabkan ia mengalami peningkatan hari ini walaupun tiada petunjuk baru,” katanya kepada Utusan Malaysia hari ini. Katanya, selain kekukuhan mata wang serantau, kekukuhan asas ekonomi turut menjadi faktor kepada kenaikan pasaran saham sejak kebelakangan ini. Sementara itu, penganalisis tempatan lain yang enggan dinamakan berkata, kemunculan kegiatan pengambilan untung disebabkan oleh meningkatnya kebimbangan bahawa harga saham telahpun berada diparas yang terlalu tinggi. ‘‘Keadaan ini dijangka akan membawa kepada berlakunya pembetulan yang besar tidak lama lagi,’’ kata beliau. Seorang peniaga saham lain pula menambah, sentimen pasaran tempatan dijangka menyusut esok kerana pelabur-pelabur akan mencari petunjuk baru.

‘‘Sekira tiada petunjuk baru, pembetulan akan berlaku dan sekiranya ia berlaku persoalan yang timbul ialah adakah ia berlaku secara drastik atau perlahan,’’ kata beliau. Seorang penganalisis lain berkata, beliau menjangka aktiviti pengambilan untung mungkin berlaku esok berikutan peningkatan IK yang berterusan sejak kebelakangan ini.

Why 1100?

Why 1100 is important? Isn't it just another number? Well, it is just another number, but it is also a round number, a benchmarking number, a sign to enhance the herd psychology to get confident and yell that "this time is different!"

It is because it is a round number, people tend to take it as a benchmark. Mass media, will use this number to exaggerate the performance of stock market, to make their news more sellable. The crowd, however, once attracted to a new event, tend to involve in the event. Referring to my recent post, note that the crowd will not be able to explain their shift of attention. Mass media is very important, they will attract new investors (particularly those who are new to the market and those who have a hope or a desire-greed) to the market. Human mind is strange, once they are exposed to something, they tend to involve in the something.

Mass media, is just like another marketing agency, a strong advertising mechanism to invoke the public interest to buy stock (product). (Stock, of coz, is a product as well. Rarely, successful businessman wish to share their profit with the public. And of coz, why they need to do so in the first place? Stock market, is a great place for them to sell a so-called investment or equity ownership to the public.) As such, logically and psychologically, when you receive IKEA catalog, it is likely you are going to IKEA soon. If you are not going, other will go as well. And in stock market, the expectation that other will go will induce those who do not intend to go initially, to go to IKEA as well.

Why is the 1100 important? Because it is important by itself. Why the price rising in stock market is important, it is because the rise in price is the element that lay the foundation for the future rising of the price itself. It is just a feedback loop, a so-called naturally occurring Ponzi scheme by Robert Shiller. It is more important if the 1100 figure is shown in the newspapers headlines and induce word-of-mouth and feedback effect among the crowd.

It is the crowd that pay you a big profit in the market. Ultimately, what do you think... Is it (1) the 5% rise in EPS in the company itself or (2) the crowd that get frenzy and pay you a 50 PE for the stock that they wanna buy, which will make you gigantic fortune?

The 1100

Today, 6 December 2006, KLCI surpassed 1100 around 9.30, when i am still struggling to connect to the internet with streamyx. From personal experience, it seems that whenever i have difficulties to connect to the streamyx, some swift and hidden movement are going on in the market. In 11.00. the trading volume surpassed RM 1 billion. The market starting to be irrational, and a strong support at 1100 must be formed. Else, the market could collapse in all of a sudden. Today closing price for KLCI will be very essential for our decision making process.

Are small fishes swimming to the trap?

Trading is never easy; MESDAQ is now on the move. KLCI is approaching 1100; and volume is getting stronger and stronger. KLCI is very important, it serve as a confidence assurance vehicles to all the investors in the market. The game plan now is to observe clearly, if the index is able to consolidate and maintain at the high level. This is a critical point for attracting the small fish to join the party. Ultimately, why should the big fish join the party if none of the small fish is jumping into the pond? How the great profit or wealth transfer mechanism is going to be occurring when the market drop sharply before the strong hand able to attract the weaker players’ money into the market, exchange with them legally tins of bad sardine with bags of gold?

A positive sign will be seeing newbie and people not-related to the market to be start talking about the market; mass media are found highlighting these financial events and instill a so-called investment culture; and gradually lead to a naturally occurring Ponzi scheme. We know tigers are hungry; they have been starving for a long period of time. But is the herd of sheep is moving into the trap?

Dedicated to Wilson:

In the time of war, think peace; in the time of peace, prepare for war. Anticipate (with mind) a bull when it is a bear market; anticipate (with mind) a bear when it is a bull market.

In a time a peace, make sure you train strong army and excellent fighters; because war and peace is just always a cycle phenomenon, as how yin and yang; day and night, bull and bear and etc.

The index has risen tremendously and violently, we could observe waves and waves of speculation are moving from steel, property, plantation, banking and finance, warrant and now, MESDAQ. MESDAQ is interesting, because many funny and not truly business-driven ideas are funded there. When we are playing in MESDAQ, quite often, we are putting RM100 to buy a 10 cents coin, hoping it will be going up RM200. To be precisely, too often, we are offering 20 cents per share to buy a company with an EPS of -20 cents.

My experiences tell me that, when MESDAQ is starting to make a trending up, the end is not too far. We cannot tell exactly when the end will arrive, but we know, we must psychologically anticipate the critical turning point to be happening. We still have our capital in MESDAQ, we do not need to pull out all our capital, but the single most important thing for us to do now is, anticipating a turning point, a fast and fierce one. Anticipate, and when you feel doubt, just distribute to those “greeder” and “hoper” in the market. No body can tell when the turning point is, but one safe thing to do is, when you feel doubt, get out! In stock trading, ultimately, safety first, make money later. We know exactly, precisely and consciously that, our ultimate goal is to take profit home, accumulate the profit, but not to make a killing once we charge into the market. A sudden great profit is God-given, a consistent profit is self-given.

As how nations training up their army and develop their cutting-edge weapons, what we need to do now is to set up a Bond fund account and accumulate enough bullets for the next crash. We still invested in the market, but the profit taken out, partially at least, must be put into safer investment vehicles. I believe in charity, there will be a lot of people earning much money in the market while you are cutting down your percentage of capital invested in the market, but please let them take the profit away with them. Be mercy, we don’t need to earn all the available profit, instead, why not leave some for others?

Another critical point to be addressed is, never, never and never to expect any great bull run to happen. I see so many investors and speculators that believe that KLCI would have a bull run and reach 2000 in near term. The problem is: what is the basis for that to happen? I never try to predict a great bull run will never happen. But, having expecting to have a great bull run injects hope and emotion into your trade. When that happens, you are bounded to be defeated systematically by your unsystematic emotion.

Are all the Technicians Suckers?

This is a very interesting story (http://www.nanyang.com/index.php?ch=7&pg=12&ac=674340, retrieved at 3 December 2006). However, this story is only written for those technicians who are willing to read this with open-minded. This is important, as the arguments could challenge the deep core value of the technical analysts and evoke emotional instability or imbalance within themselves.

In 27 November 2006, a sudden spike with high volume leads INSBIO to the top 10 highest volume stock in the market. From the technical point of view, this is truly bullish, a high breakout with high volume, from a tight trading prices and successful breakout of prominent resistance line. At this moment, I am so confused, as the week before, I just scanned through the MESDAQ counters and found many correction or adjustment possible stock, but INSBIO is not in my list. How could I expect a stock with an inconsistent earning which most of the time, red in color, to adjust healthy? Well, it is ok; never mind, because I hold nothing in the stock. Subsequently, the stock follow with heavy volume, with correction-liked consolidation happen. Oh my god, now I suspect many day traders are noticing INSBIO and start to enter it, because, obviously, they saw a surpass of MA from their Metastock (perhaps Metastock version 20.0). With high confidence and clouded by emotions, with the spirit of brutal traders and ambitious to gain gigantic wealth which could be more than what both Bully Gates and Charity Buffett combined, these traders punch in INSBIO frantically! Oh, that is it, no mercy, INSBIO could be the next GPACKET and I am riding with it, is what they think. The volume continued, and after 5 days (1 week of trading activities), news come out in the paper. Those academicians who never touch stocks before read the news with jaws open widely, with their hand holding the Efficient Market Hypotheses (yeah, this is their bible in finance), and are found murmuring "Amen. Fama, dispel the spirit of evil from my heart, and bla, bla, bla..." (FYI, Fama is somehow equivalent to God in EMH, although recently he seems to turn his mind upside down and start venturing into behavioral finance, but that discussions are out of topic for this story).

Nevertheless, I am not trying to discourage these traders; mistakes happen, and occasionally they become the suckers for those people who wish to dump their stock intentionally (sad to say, 2 institutional dealers sitting side by side and shouting, "bid it up, I am catching it" is just too common), but their spirit is worth respecting. I myself don’t dare to do such things, and I personally think that they truly deserve the Medal of Honor. Without them, how the stock market can be so interesting?

Are technicians suckers (in this context, a bad-luck sucker)? I don’t really know, but I believe they are not always the suckers; they do make great profit too... It is just quite often, they become the volunteer suckers. Well, that is normal and expected, because they put everything into their mouth, be it banana or shit.


INS生物科技总执行长 叶绍全脱售9.66％股权 2006/12/03 12:36:37●南洋商报

（吉隆坡2日讯）INS生物科技（INSBio，0088，自动报价股）总执行长拿督叶绍全在上周通过公开市场脱售2千769万4千700股，或相等于该公司9.66％缴足资本的股权。
根据大马交易所的资料显示，他分别在11月27日脱售1千500万股、11月29日脱售300万股、11月30日脱售469万4千700股，以及在12月1日脱售500万股的股权。 他在完成上述脱售行动后，其持股权已被冲淡至1亿零850万3千400股或相等于37.85％的股权。 -->-->另一方面，奥斯克创投（OSKVI，0053，自动报价股）也在11月27日，通过公开市场脱售INS生物科技310万股的股权，以及通过同一家证券行场外易手2千万股的股权。 根据大马交易所的资料显示，叶绍全与奥斯克创投在11月27日当天共脱售了3千810万股INS生物科技股权，占该股项全日成交量的62.48％。 INS生物科技股项在11月27日价量齐升，全日总成交量达6千零98万2千500股，与前一个交易日的57万2千股成交量相比，取得显著增长，其股价也在当天上涨5.5仙至29.5仙的水平挂收。

Thank You, Market Technicians

It is very surprising today that after my initial search on stock investment blog, I found that there are so many technical analysis oriented trading blog out there is the web. People, particularly youngsters, remisiers and beginners are relying on technical signals such as MA, MACD, RSI and etc to predict stock prices. Even some of them who are nearly out of their mind are trying to apply Elliot wave theory and to capture profit in a particular stock. They don’t even care what is the true value of the stock is, and highly concentrated on technology and MESDAQ related stocks. No a single words on the stock fundamental, and signals are everywhere. Most of them are found employing a technical signal, by looking at the stocks previous level of predictability according to MA and etc, to select the stock that they are going to invest in. None of the technical analysis signal assumptions are outlined and being scrutinized seriously. The trend has changed, noise traders are increasing dramatically, and irrational trading decisions are everywhere. This is truly an encouraging fact, thanks to internet and networking technologies, these people are laying the foundation for our success in the next big move.

Mark to Market

KLCI has been rising non-stop and this has draw many people attentions to the market. Again, hand phone start ringing because people are calling to ask for tips. Occasionally, they give tips also. The upward strength of KLCI is indeed encouraging. However, the non-stop thrust-line of more than 65 degree is indeed an unhealthy sign. KLCI definitely need a rest, and a strong and firm consolidation between 1100 to 1200 must be formed to pull the crowd money into the market. So far, it is only some big blue chip that are rising that influence the movement of KLCI. A strong defence at 1100 level is needed to create an economic prosperity illusion among the public. Should the KLCI unable to sustain it strength, all of a sudden, negative feedback bubble could happen.

MTOUCHE -- auto cut loss triggered at 8%.
LITESPD -- a gain of 10-15%, but the expected high spike for profit taking never happen, this is indeed disappointing. However, we will need to wait with patience, as the LOLR is up for this stock.
FTEC -- This is the monkey that jump suddenly up and down. As on Friday, a gain of 5% is obtained. From previous experience, this gain is not a profit taking signal as a true highly spike for distribution for this stock is targeted at 0.56 or above.
SCICOM -- neutral (no winning, not losing). Hold.
SMRTECH -- neutral (no winning, not losing). Hold.