technical rebound expected

yesterday, Bursa Malaysia closed lower at 1264 on 28/1/2010. Based on 30 minute chart, it is hovering at 1261-1258 support. Resistance is at the 50% retracement of 1285, and the 61.8% at 1290. Stochastic indicator is showing a small hook-up, indicating a rebound.

RSI is still weak at 35. Today's range is between 1258 and 1268. Following the breach of the key 1286 support earlier, thesupport is lowered to the 1248 low of 30/11/09, with the immediate resistance at 1290

Reference:
from wiki, stochastics oscillator is a momentum indicator that uses support and resistance levels. It attempts to predict price turning points by comparing the closing price of a security to its price range.
The indicator is usually calculated as:

Dow is up a bit, how about bursa?

Dow up 41 a little bit. So i guess the market is not gonna continue to stay bearish. Yesterday upon buying in supermax, it slip another 2.5%. Let see how it goes. I shouldn't lament on that as nobody can spot the bottom precisely. Who knows bursa will even continue to slip or not today. Stock market has quite a lot of sentimental driven occassion

it is trading time, dude!

after a few days of heavy fall, US start to stop falling as fast. Asian markets still fall. But i decided to take a short term trading position with Supermax 7106. Buy in at RM5.06. It has since dropped RM1 + in 2 weeks. Business is still healthy and given long term wise should be still ok to have it. At current price, PE should be around 11.6 niah. It might still be a falling knife position but one never knows the exact bottom, i think at current the calculated risk is fair to go in.

market outlook and trading strategy

I attended two investment talks over the weekend. What are the expert's view on the market outlook? Compared to the investment talk that i attended last week, the experts i met this week are rather bullish.

One of them presented on the macro economic aspect, the top down approach, while another are strictly on technical. Let's see on the macro economic side of the story here

year 2009 is a recession, year 2010 is recovery year. This can be seen from the GDP growth. For US: 2008: 0.4%, 2009: -2.6% and 2010f: 1.7%. Europe is in a deeper recession: 2008:0.7%, 2009:-4.8%,2010f:0.1%. For US, there are three important barometer on this, which is the consumer confidence index, purchasing manager index & home sales index. All these register a growth last year. On the other hand, job loss is improving but stay at 26 year high of 9.3%. With very low interest rate of 0.25%, this will translate into a very vibrant stock market. Indeed, the steps taken by Obama few days back is deemed to force the hot money back to US market, and is thought to have direct link to the heavy correction on regional market.

The expert has also pointed out that Asia emerging markets are still strong. In term of savings rate, both China & Singapore has excess of 50%, Malaysia 40.2% compared to US which only have 12.6%. GDP of these market are also good, for example: China: 2009: 8.7% and 2010f: 9.4%. In addition, china has interest is at 5.31% (the government is trying to cool down the loan growth which is high and might still increase rate). The People bank of China has also recently increase the capital ratio for banks to 16% from 15.5%. In short the country has taken step to prevent a bubble proactively and overall Asia market should be positive over long term. As such , the expert is bullish with the market.

Despite the fundamental, the expert also pointed out that bull market normally last 24 months, which mean we have another 14 months of bull market to aim at. Mean time it is 15 months for bear market, which we should have past.

Index (with respect to US)

Consumer Consumer Index
is issued monthly by The Conference Board, an independent economic research organization, and is based on 5,000 households. Such measurement is indicative of consumption component level of the gross domestic product. The Federal Reserve looks at the CCI when determining interest rate changes, and it also affects stock market prices.

Purchasing managers index
PMI measures how well the manufacturing sector is doing. PMI’s index is based on five major indicators: new orders, inventory levels, production, supplier deliveries, and employment.

MANUFACTURING AT A GLANCE DECEMBER 2009
Index	Series Index December	Series Index November	Percentage Point Change	Direction	Rate of Change	Trend* (Months)
PMI	55.9	53.6	+2.3	Growing	Faster	5

trading strategy : dividend play in a seems to be expensive market

US stocks fell on Thursday. This happens as US President Barack Obama proposed tough restrictions on banks that would squeeze profits. The Dow had its worst two-day percentage decline since June, while the Dow and S&P 500 had their worst one-day percentage losses since late October. So it is only natural that today KLCI follow suit in declining, so far drop 7 points. Volume traded seems pretty high too. this has reminded me of what the chartnexus instructor say last week: are we on the verge of a market correction again? Will the dow celebrate chinese new year this year round?

Anyhow, if one stick to high dividend counter, i think this might provide a small opportunity to go in. Let see an example on this. Last week as i was in KL, the latex glove counters are very hot. Supermax went to RM6. Analyst's report are all very bullish, and don't know how many investors will be prompted to go in at that time? As of today, supermax has dropped to RM5.18, that is 13% drop. I didn't go to that counter (actually before the super run up in price prior to last week, i did think to diversify to glove counter), as the price has run up too much, and MOST important dividend is low for those counters.

So, what is the dividend stock i'm looking at? for the last two days, OSK and S&P has covered Zhulian. Its current dividend yield of 7.7% is pretty attractive. The counter has little debt and high ROE of 27%. For consumer based counter (it is MLM company) which has been able to weather the last year crisis, i think there is little risk that its business will drop a lot. By going in now, at least we can expect a stable 7.7% dividend

Mean time, hai-o is RM8.59 now. if it reach RM8.3 or below again, perhaps i will go in a little. It is still great to get its bonus and share split (ex date not year annouced) with decent dividend yield of >5%.

Lots of free investment seminar lately

Lots of free investment seminar lately at Penang. Is this a sign that shows investors are coming? if one look at the volume and index of bursa, volume is indeed higher than last year, and generally the market is up. I don't really rely on volume to time my entry, but it does make me feel good seeing this.

those organized by the investment banks together with Bursa (example, there will be one by RHB at G Hotel on 23 jan. click this to register

on the same day, there is one by fundsupermart

on the same day, there is a investment talk by Public Mutual for its gold investor at Sunway Carnival convention center

Chartnexus offers an almost weekly event at gurney drive as well

i'm gonna attend some of them

new resistant for bursa malaysia

Following US market 115 points up yesterday, if i were to take heed on what the instructor mentioned last saturday, it is highly likely bursa malaysia will try to break resistant rather than drop below support. Unfortunately i couldn't remember the resistant for bursa. But i do remember that the resistant for dow jones is 10800. Today, the bursa has up a bit so it seems to me what the instructor mentioned in the seminar does hold water so far. Let's continue and see

Hai-o when is the entitlement date for bonus issue and share split

I am searching to see when hai-o is gonna announce the entitlement date for the bonus issue and share split. many of us are thinking once announced, it might be interesting to see how the share price will perform. over the last 1 week plus, it has since yet another round of RM0.5 swing...not too much considering its current price. Yesterday the technical analysis trainer say he uses chart to buy stock and uses news (fundamental) to confirm the the logics behind. i think probably on hai-o i can do the reverse to see what is the reason of this sort of swing. the RM2 swing lately recently still hasn't been answered.

anyhow, here is the lastest news on 12 january.
Board proposes to increase the authorised share capital of the Company from RM100,000,000 comprising 200,000,000 ordinary shares of RM0.50 each in Hai-O to RM250,000,000 comprising 500,000,000 ordinary shares of RM0.50 each in Hai-O (after the Proposed Share Split) (“Proposed Increase in Authorised Share Capital”) to cater to the Proposed Bonus Issue and Proposed Private Placement and for future increases in the Company’s issued and paid-up share capital.

fundamental analysis + technical analysis = prosper

I attended a technical analysis seminar yesterday. I have never used TA in my stock purchase but i think it is not bad to learn another method. According to the speaker, FA + TA = FATA , which means prosper in mandarin. Anyhow, throughout the seminar, i begin to grasp some knowledge about what TA is. It is pretty much like trying to model how a stock price will go, based on a sample of historical data. It is very much statistic in nature, which i use quite a lot in my work. However, i'm still comfortable with my current fundamental method. Dow Jones support line is around 10538 and resistant 10800. A key knowledge about TA is that if the point drop below support, it may highly likely trend down further. Likewise, it is gonna up if it breaks resistant. So, it will be interesting to see what happens tomorrow after that the US market reopen. With and analysis based on other indicators such as MACD, RSI, it seems there is a bearish divergence. This simply means there is high chances for market correction. One 'fundamental' check would be the claim rate for FDIC (the equivalent of PIDM in Malaysia) that protect savings account of user with US banks. So far, US banks continue to fail (133 banks for 2009, and already 3 banks for 2010). Another key indicator used in TA is volume. Lately, we see increase in trading volume but stock indices is not going much higher, suggesting there is equal number of buy/sell order.

One speaker brings out an interesting question, how do we start select the stocks we want? do we look at the most actively traded counters everyday? For technical analysis approach, the chartnexus (the organizer of the seminar) enables user to set criteria (based on patterns or info such as support, resistance) to filter down to the share they want. For fundamental analysis approach, that reminded me that i actually started getting many of the stocks in my current portfolio by referring to dynaquest stock market data book. Here is the website www.dynaquest.com.my. It provides a rating system based on fundamental data which helps to filter down to the company we wish to invest.

My Malaysian stock portfolio and market strategy for year 2010

Every new year, we see analyst and investment banks recommending stocks and strategy for the new year.

I spent the last 2 days at Port Dickson and KL with my soon to be certified financial planner (CFP) friend Sean. He shown me what a financial planning proposal will be. It should covers a personal cash flow (actually it consist of net worth and monthly spending), tax and investment portfolio. All these info are important to provide a guideline to us as it can serve to guide us in personal financial planning. There will be a set of personal financial ratio (debt income, savings...etc, which i perhaps blog about in future) to be calculated as summary of one's financial standing, which is not unlike the ratios used by listed companies. By looking at the ratio, one can judge what he needs to do with his financial, for example if debt is too high, he must target to reduce debt. Or he can look at the cash flow to see where he can reduce spending and boost investment portion, in case the ratio suggested that one invests/saves too little.

i will start by properly listing down my stocks and calculate their return. in fact it is pretty hard to keep track of one's return in stock after few years, especially after so many dividend received.
A simple way is to use Excel to do the calculation, by utilizing the powerful XIRR uneven cash flow formula. I will blog about this in future.

back to my stock portfolio, here is my current one
---------------------------------------------

• genting -> let see how its forthcoming singapore casino fares
• pbbank -> public bank is always my favourite bank in malaysia. i also invest into its unit trust via public mutual
  
• melewar -> actually i don't favour it anymore but selling it at current price seems not a good move. after all, i have low holding on it
  
• mycron (thanks to melewar, i have this)
• digi
  
• hai-o -> 85% quarter eps increase just announced. decent dividend yield of 5%
• NTPM (my past favourite. manufacture Premier brand of tissue paper)
• ytlpower
• lpi
  

other holdings not actually owned by me: cscsteel, dreamgate, padini, uchitec

my strategy remains simple, buy and hold. I prefer dividend stock at the moment. They will be able to withstand market correction (even if their share price dropped i still gets dividend provided business is not adversely affected).