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.