Malaysia Stock Market

KLCI in uptrend

2012-02-05T12:18:00.000+08:00

As with other stock market worldwide, the KLCI index has made impressive gains in recent week making it a great start to the year of the water dragon.

The bulls have managed to push the index above its 50 day and 200 day moving averages. The bullish move is confirmed in the GMMA chart with the bullish indication in both the short term traders chart and long term investor charts.

With MACD about to make a bullish crossover pattern, expect the index to show continue strength. Note that ADX indicator is still at below 30 showing that the bullish move is not strong enough for a sustainable trend. So traders do need to be nimble in taking profit and not to be too aggressive to add on to their positions.

KLCI Trading Sideways

2012-01-15T14:21:00.002+08:00

Malaysia stock market remains in sideway trading range since the start of the new year. The KLCI index has moved in an upward fashion since Dec 21 and it looks as if the index is starting to feel lethargic moving forward.

The index faces resistance at 1550 level and despite the index moving above its 200 day moving average, the market is facing headwinds which should limit the further upside. The index has established a support at 1500 level and judging from its 2 day RSI, the index will face further pullback in the next few trading days.

KLCI Downtrend To Continue

2011-08-15T08:00:00.002+08:00

The fall in Dow Jones Industrial Average shows a change in market trend and economic conditions. Big money from hedge funds, institution and fund managers withdrew in droves, causing great volatility in the market.

Looking at the charts of KLCI, it looks very similar to the drop in 2008 when the Lehman Brothers collapse brought about a big drop in stock market worldwide.

The index is trying to find a bottom and it looks like a rebound may materialize. However, it will face resistance at around 1500 level. Judging from the magnitude of the decline, the bears are still in control and the strategy should be sell on strength as the market is poised to move lower.

KLCI In Bullish Trend

2011-07-09T12:53:00.000+08:00

KLCI broke out of its resistance level of 1560 level and it is now at the upper channel of the Bollinger band.

The GAMMA chart is showing strong uptrend with the short term and long term groups of moving averages showing bullish trend.

This shows that both short term traders and long term investors are supporting the market.

In the short term, the market may pull back towards its 20 day moving averages.

If it does so, then it will be a good time to add into your positions.

KLCI Likely To Be In Trading Range

2011-03-07T08:20:00.000+08:00

KLCI index rebounded off its lower Bollinger band on 28 Feb. The index is now above its 20 day moving average and is set to test its upper Bollinger band at around 1539 level.

Technically the index looks bullish. The MACD indicator just made a bullish crossover with its signal line. The +DI is now above its –DI line. However the ADX indicator is still low at current levels and that means that we do not expect a strong uptrend. 2 day RSI is reaching overbought levels and we will most likely see a pullback. The index looks set to remain in trading range between 1476 and 1539 levels.

KLCI In Correction Mode

2011-01-29T14:16:00.002+08:00

KLCI has been in correction mode for the past week. The index hit the upper Bollinger band and has now pulled to the lower boundary. It looks set for a rebound on 26 Jan but the bulls could not overcome the selling pressure. With the Dow Jones dropping more than 100 points on Friday, the index should drop below the lower boundary soon.

The force index is also showing that the bears are having the upper hand. Buying could only start when the force index goes above the zero line. The MACD indicator is way below its signal line, giving more reasons for traders to go for a short position. The RSI rebounded from the oversold region but it did not manage to go above the 50% line. This is also a negative sign.

All in, the index is likely to go lower next week.

OSK Holdings Berhad - Weakness ahead

2011-01-19T11:54:00.000+08:00

OKS Holdings Bhd made a double top formation and the share price has broken the support of RM1.97 which is the mid point of the “M” formation. This usually mean that the stock price is on its way down.

The next support level is near RM1.70 which is the point at which the stock price rebounded from its previous uptrend channel line.

MACD line is way beneath its signal line indicating that the bears are in firmly in control. RSI has not reached oversold levels so expect the selling to continue today.

Tan Chong Motor Holdings Bhd

2011-01-16T20:30:00.000+08:00

Tan Chong Motor Hodings Bhd broke out of its down trend line on Thursday 13 Jan 2011 and it has managed to stay above the down trend for the Friday session. This is a good sign. The MACD indicator made a bullish crossover above its signal line indicating further strength may be possible. On the GAMMA charts, you can see that the shorter term moving averages are beginning to swing up meaning that short term traders are starting to push the prices up. The long term players have not joined in the party yet as shown by the longer term averages. The RM5.26 level is acting as a resistance for further up move. Support is at the down trend line and subsequently at RM4.94 level.

KLCI Still Bullish

2011-01-08T11:15:00.002+08:00

The stock market made a great start for 2011. The KLCI index is up 54 points for the point, a move of 3.5%. The question is whether this is just the Capricorn effect or is it an indication of better times.

The index is now clinging onto the upper band of the Bollinger charts. And the last 2 days we see 2 black candles and the last black candle looked like a hammer. The appearance of a hammer in an uptrend is usually dangerous as it will point towards short term correction depending on whether the price can stay above the low of the hammer which is in our case at 1572.

Trend wise, the market still has positive momentum. The MACD indicator is safely above its signal line and the ADX indicator is approaching 40 level with +DI above –DI. All these points to a high probability of a continuing uptrend. The Force index is also favouring the bullish investors and traders.

With indicators pointing towards further strength, it will be wise to load up during pull back phase. The support is at 1530 and any pullback towards this region is a good time to pick up some index stocks.

Double Top and Head & Shoulder Pattern

2011-01-02T13:07:00.002+08:00

Chart pattern is used extensively by traders to identify candidates that are likely to make a big move either upwards or downwards. Traders need to look out for two important patterns in 2011 in order to avoid being hit by a sell down. These two patterns are the double top formation and the head and shoulder formation

Conditions for double top formation

Stock is in an uptrend
Forms a high that is lower than the previous high
Drops below the valley between the two highs

Conditions for head and shoulder formation

Stock is in an uptrend
Stock makes a lower high compared to the previous high
Stock drops below the neckline between the two shoulders pattern

Note that for these two patterns, the stock price needs to drop below the valley or neckline in order for the pattern to be valid. Once the formation is complete, the price will usually go down dramatically as these two patterns are closely watched by the bears to identify candidates to short.

EURUSD Warning Signs

2010-12-31T08:27:00.000+08:00

EURUSD is making a comeback for the past few trading days. It has risen above its 20 day moving average which is a positive indication. The MACD indicator is still above its signal line showing that bulls still have the upper hand. But we should not lose sight of the big picture. If you look at the down swing from 25 Nov 2009 to 7 Jun 2010, the currency pair traded from its low in Jun 2010 to re-trace around 61.8% of the complete down swing. This coincides with the Fibnoacci Retracement rule and it still shows that the long term trend for this currency is still to the downside. However, we cannot ignore the fact that the currency is making higher lows and higher highs for the past few months. The danger is for the currency pair to fall below 1.30 level. This will violate the higher high and higher pattern. The 2 day RSI is approaching overbought levels and we will likely see the price testing its 20 day moving average in the next few trading days.

Coastal Contracts Bhd Weakness Ahead

2010-12-29T13:42:00.000+08:00

Coastal Contracts Bhd has been in a trading range between RM 2.4 and RM 2.1 for the past few months. It’s stock price has bounced off the lower boundary of the 20 day Bollinger band. The 20 day moving average is sloping downwards and will act as resistance for any up move. This resistance is currently at RM 2.2. The 2 day RSI is approaching overbought levels. This coupled with the fact that the MACD indicator is still below its signal line implies that the stock is unlikely to stay in overbought levels for long. The stock is unlikely to break the RM 2.2 resistance level and a test of RM 2.1 is likely in the next few trading session.

How To Identify Strong Or Weak Stocks

2010-12-09T14:52:00.002+08:00

In momentum trading, traders pick the strong stocks to go long and weak stocks to go short. However the key question here is how do you determine if a stock is a strong stock or a weak stock?

You should be able to tell from the price chart if a stock is looking strong. For example if a stock keeps making higher low and higher high, it falls into the strong stock category. By the same token, if the stock is making lower high and lower low, it is considered a weak stock.

A more mathematical method is to compute the distance between the current closing price and its 52 week’s price high and price low to determine which is the stronger and weaker stock trading in the market.

The formula is as follows:

Strength = (52 week high – closing price)/52 week high

Weakness = (closing price – 52 week low)/52 week low

If you compute the Strength and Weakness value for every stock trading in the exchange and sort it based on its Strength and Weakness, you get a list of strong and weak stocks respectively.

Based on the 7 Dec 2010 closing price of the 500 stocks in the S&P500 index, the list of strong stocks is:

Symbol	Strength	Close	Sector	Industry
CVX	0.003809237	86.30000305	Basic materials	Major integrated oil and gas
IFF	0.005945979	55.16999817	Basic materials	Specialty chemicals
PX	0.008431655	94.08000183	Basic materials	Synthetics
PPG	0.006667501	80.44999695	Conglomerates	Conglomerates
HRL	0.003592821	49.91999817	Consumer goods	Meat products
MKC	0.008097189	46.54999924	Consumer goods	Processed and packaged goods
CCE	0.008907806	25.59000015	Consumer goods	Beverages - soft drinks
XRX	0.009189692	11.85999966	Consumer goods	Business equipment
AMP	0.006901581	54.68000031	Financial	Asset management
AON	0.007722011	43.68999863	Financial	Insurance brokers
MMC	0.008971954	26.51000023	Financial	Insurance brokers
TMK	0.009245737	61.08000183	Financial	Life insurance
BIIB	0.002971281	67.11000061	Healthcare	Biotech
KG	0.004210556	14.18999958	Healthcare	Drug manfacturers - others
BDX	0.005985165	81.37999725	Healthcare	Medical instruments and supplies
ROP	0.002734462	76.58999634	Industrial goods	Industrial equipment and components
PLL	0.007170708	48.45999908	Industrial goods	Diversified machinery
SNA	0.007656701	55.72999954	Industrial goods	Small tools and accessories
ROK	0.008409406	69.56999969	Industrial goods	Industrial electrical equipment
FISV	0.001701587	58.66999817	Services	Business services
CHRW	0.004169377	76.43000031	Services	Air delivery and freight services
COST	0.005994836	69.63999939	Services	Discount variety stores
EXPD	0.006355943	56.27999878	Services	Air delivery and freight services
MCD	0.007412974	80.33999634	Services	Restaurants
ESRX	0.008229714	54.22999954	Services	Management services
AKAM	0.004964156	54.11999893	Technology	Internet information providers
ADI	0.006820523	37.86000061	Technology	Semiconductor - integrated circuits
TXN	0.006837085	33.40999985	Technology	Semiconductor - broad line
CPWR	0.007023698	11.31000042	Technology	Application software
A	0.007919726	37.58000183	Technology	Scientific and technical instruments

The list of weak stocks is:

Symbol	Weakness	Close	Sector	Industry
EOG	0.08708655	92.70999908	Basic materials	Independent oil and gas
CLX	0.080508095	62.18000031	Conglomerates	Conglomerates
DF	0.036465603	7.389999866	Consumer goods	Dairy products
K	0.051353151	48.90999985	Consumer goods	Processed and packaged goods
CAG	0.057359735	22.01000023	Consumer goods	Processed and packaged goods
GIS	0.066244774	35.04000092	Consumer goods	Processed and packaged goods
CL	0.076454904	78.16999817	Consumer goods	Personal products
CPB	0.079652261	33.90000153	Consumer goods	Processed and packaged goods
BAC	0.061467899	11.56999969	Financial	Regional - Mid atlantic banks
HCBK	0.069451875	11.97999954	Financial	Savings and loans
PBCT	0.070491854	13.06000042	Financial	Savings and loans
FHN	0.082618078	10.09000015	Financial	Regional - Southeast banks
AMGN	0.057103121	53.13000107	Healthcare	Biotechnology
ISRG	0.059337495	260.6499939	Healthcare	Medical appliances and equipment
ABT	0.060284018	46.88999939	Healthcare	Drug manufacturers - major
THC	0.076530538	4.21999979	Healthcare	Hospitals
ZMH	0.086449102	50.27000046	Healthcare	Medical appliances and equipment
LLY	0.09435657	34.11000061	Healthcare	Drug manufacturers - major
LMT	0.037046919	69.44999695	Industrial goods	Aerospace/Defense products and services
PHM	0.083197348	6.639999866	Industrial goods	Residential construction
BIG	0.002465646	28.45999908	Services	Discount variety stores
SVU	0.015853673	8.329999924	Services	Grocery stores
SAI	0.067249496	15.86999989	Services	Technical services
RSH	0.084268381	18.94000053	Services	Electronics stores
KR	0.093890482	20.68000031	Services	Grocery stores
CSCO	0.020526284	19.38999939	Technology	Networking and communication devices
NRG	0	18.85000038	Utilities	Electric Utilities
CEG	0.011255981	28.29999924	Utilities	Electric Utilities
ETR	0.022687719	70.41000366	Utilities	Electric Utilities
FE	0.090864527	35.56000137	Utilities	Electric Utilities

You can derive some basic information based on the list. For example, the Utilities sector is not doing well whereas Technology sector has more strong stocks.

Investment Madness

2010-11-28T07:34:00.001+08:00

We are all prone to having psychological preconceptions or biases that make us behave in certain ways. These biases influence how we assimilate the information we come in contact with on a daily basis. They also have an impact on how we utilize that information to make decisions.

Our very own psychological biases have an impact on our investment decisions and affect our attempts at building wealth.

Psychological Bias	Effect on Investment Behavior	Consequence
Overconfidence	Trade too much. Take too much risk and fail to diversify	Pay too much in commissions and taxes. Susceptible to big losses
Attachment	Become emotionally attached to a security and see it through rose-colored glasses	Susceptible to big losses
Endowment	Want to keep the securities received	Not achieving a match between your investment goals and your investments
Status Quo	Hold back on changing your portfolio	Failure to adjust asset allocation and begin contributing to retirement plan
Seeking Pride	Sell winners too soon	Lower return and higher taxes
Avoiding Regret	Hold losers too long	Lower return and higher taxes
House Money	Take too much risk after winning	Susceptible to big losses
Snake Bit	Take too little risk after losing	Lose chance for higher return in the long term
Get Even	Take too much risk trying to get break even	Susceptible to big losses
Social Validation	Feel that it must be good if others are investing in the security	Participate in price bubble which ultimately causes you to buy high and sell low
Mental Accounting	Fail to diversify	Not receiving the highest return possible for the level of risk taken
Cognitive Dissonance	Ignore information that conflicts with prior beliefs and decisions	Reduces your ability to evaluate and monitor your investment choices
Representativeness	Think things that seem similar must be alike. So a good company must be a good investment	Purchase overpriced stocks
Familiarity	Think companies that you know seem better and safer	Failure to diversify and put too much faith in the company in which you work

If you want to read more regarding human psychology and how it affects our trading and investment, please read the book “Investment Madness How Psychology Affects Your Investing and What to Do About It” by JOHN R NOFSINGER

KLCI Taking A Breather

2010-11-14T20:52:00.001+08:00

US market continued to fall on Friday with the Dow Industrial Average closing down 90 over points at the close. The drop was not as bad as initially thought and it is not as drastic as the drop we saw in China’s market. However, the negative momentum will set a negative tone on next week’s trading.

The KLCI has dropped for the past 2 trading session and the index looks set to test it’s 50 day moving average.

MACD is beginning to turn bearish with the indicator below its signal line. –DI is about to go above +DI which implies that the current up trend is likely to take a break.

Judging from the technical charts, the index is likely to drop below its 50 day moving average. The question then will be whether there is going to be a change in trend or just a pause in the rally.

2B Breakout System

2010-11-10T07:01:00.005+08:00

The 2 bar breakout system is designed to capture short term trends by going long or short depending on the pattern formed by the 2 most recent price bars. The essence of this method is to look for reversal of the immediate directional momentum.

The rules of this method are:

Long trades

Enter:
1. Today’s low is less than the previous day low
2. Today’s high is less than the previous day high
3. Today’s close is less than the open
4. Go long at the next trading bar if the price goes above today’s high + 1 tick

Exit:
1. Use a trailing stop at previous day’s low

Short trades

Enter:
1. Today’s low is greater than the previous day low
2. Today’s high is greater than the previous day high
3. Today’s close is greater than the open
4. Go short at the next trading bar if the price goes below today’s low - 1 tick

Exit:
1. Use a trailing stop at previous day’s high

To see this method in action, let’s try it out on AUDUSD currency pair.

For long trades, the trading record is as such:

This method generates 23 trading signals from May 2009 till Oct 2010. Of the 23 trades, 14 were profitable (not considering transaction cost). That gives a winning probability of 60.87%.

Coastal Contracts Bhd - Moving Up

2010-10-17T10:20:00.001+08:00

Commodities have a bright future given the fact that further quantitative easing in US will ultimately lead to inflation. This means that there is further catalyst in the pipeline for commodity price to move up.

Companies like Coastal Contracts Bhd looks set to benefit from the commodity up tick. The stock price has been moving in a consolidation range and is now close to the RM2.40 resistance level. ADX is beginning to move up and this coincides with the gain in momentum.

MACD indicator has moved above its signal line and stochastic chart is still in bullish territory. I will look to buy the counter if it manages to break the RM2.40 resistance level. Support is at RM2.20 level.

MISC - Potential To Test RM9.1

2010-09-21T07:57:00.002+08:00

MISC hit a high of RM9.1 on 14 Sep 2010. While the ability to reach a high of RM9.1 was a bullish move, the candlestick ended on the weak side with an inverted hammer pattern. When this pattern appears during an uptrend, it usually points to weakness for the next few days. This was evident from the price chart.

The price of the stock is now near its 50 day moving average. With the 2 day RSI forming an up tick, it is likely for the stock to move up in the next few days. However, the bearish crossover in the MACD chart points to a potential of a further down swing. Support is at RM8.7 level and resistance is at RM9.1 level. So long as the stock stays above its 50 day moving average, the bulls are safe.

QSR In Healthy Pullback

2010-08-31T07:24:00.002+08:00

QSR had a good run after breaking through the trading band between RM3.0 and RM3.70. The share price looks to be hitting resistance with the price chart forming a double top pattern. The moving average is still showing an intact uptrend, with the price firmly above its 50 day moving average. The +DI is still above –DI with ADX pulling back after a strong up move. This suggests that price in the short term will most likely weaken but that is to be expected after a strong move. The 2 day RSI is on its way to oversold levels. MACD indicator looks to be going flat. Support level is at RM4.00 level and resistance is at recent high of RM4.60.

Genting Berhad - Continuation Of Uptrend

2010-08-26T13:16:00.002+08:00

Genting Berhad tested the 38.2% Fibonacci retracement level of RM8.51 on 23 Aug and it has managed to pierce through the RM9.00 level. This is a bullish sign. Based on Fibonacci projection, the current move indicates a 61.8% projection target of RM9.32.

Forex auto trade – How to get monthly cashback form forex trading

2010-08-26T07:09:00.001+08:00

Forex auto trade – How to get monthly cashback form forex trading

Author: Douglas Smith

Forex auto trade is a way of making money on the forex markets by using Forex auto trade trading systems. The most widely used trading platform in forex auto trade is the Metatrader 4 trading platform. It has several advantages. For example, by using so called Expert Advisors you can trade forex automatically even when you sleep. Forex Megadroid, FAP Turbo and Forex Shocker is among the most popular Expert Advisors that you can use if you want to get into forex auto trade.

Brokers make money on spreads and commissions. When your turnover is very large, your broker make a lot of money from your trading. Is there a way to get a discount or cashback on all this money your broker is making from your trading?

Yes there is! Take a look at the following calculation example:

Assume that you open an account with FXCM which a very reputable MT4 Broker, which offers 0.6 pip discount per roundtrip lot traded. One pip equals about $10 on average if you trade EURUSD, EURCHF and EURGBP. Lets say that you deposit $2000 on the account. Our estimate is that you will turn over about 10-15 Lots per $1000 per month on your account when using FAPTurbo and Forex Megadroid. Assume that your turnover is 24 lots per month on your $2000 account.

Your monthly cash rebate during the first month would then be:

0.6 x 10 x 24 = USD 144

Your annual ROI would then be (144x12/2000) about 86% per year.

This is a very conservative figure since it does not take any compounding at all into regard and assumes zero growth from expert advisors. Assuming a monthly growth rate of 20% you could make $4500 per year from this program only in forex auto trade.

It is 100% free to sign up and your spreads or commission remains the same after joining this program so there is really no reason why not to join. It is simply just money waiting to be collected by you!

One of the major advantages with this service is that you get paid based on your trading volume, not the win rate of your trading. So even if you go break even on the actual trading results during a specific month, you will still be able to make a nice profit on your forex auto trade when accounting for the monthly cash back that you can receive when signing up for the broker cashback program explained in this article.

FXCM is not the only broker for forex auto trade that is connected to Cashback Forex. You can also claim a cashback from the following brokers: Alpari UK, Avafx, Dukascopy, Etoro, FXCBS, FXCM, FXDD, Fxopen, Fx Pro, GallantFX, Go Markets, Liteforex, Marketiva, Tadawul FX, X Forex

If you are in the field of forex auto trade, sign up for this program today and start to take advantage of the cashback system and get some money back from the brokers.

To learn more about this program and to sign up, please go to the link below.

Forex auto trade cashback Program: http://www.forexcashback.info

Article Source: http://www.articlesbase.com/currency-trading-articles/forex-auto-trade-how-to-get-monthly-cashback-form-forex-trading-1655700.html

About the Author

Douglas Smith is a professional day trader. He uses a combination of manual and automated strategies. His automated trading strategies are shared at his blog Forex Autotrading Insights.

Website: http://www.forexautotradinginsights.com/

Genting Berhad Still Bullish - Buy On Pullback

2010-08-23T07:17:00.002+08:00

Genting Berhad had a great run after breaking through the resistance level at RM 8.10. It went on the hit a high of RM 9.01 before retracing some of its move. Judging from the technical charts, the down swing looks more like a healthy pullback and the up trend is still intact.

The 2 day RSI is decreasing after hitting overbought level and is not approaching the oversold threshold. The price level is about to hit the 38.2% Fibonacci retracement level of RM 8.51 which may encourage some buying. A strong support level appears at RM 8.10 level.

This may be a chance to get into the counter at a cheaper level.

Bullish On Malaysia Stock Market

2010-08-20T08:27:00.001+08:00

The KLCI has an impressive run after breaking through the resistance level of 1370. The dip on 12 Aug couldn’t bring the index down its support level of 1340. This resulted in a technical rebound which has brought the index above the 1370 mark.

The short term Guppy multiple moving averages (GMMA) have also started to spread out. This indicates buying by the short term trader. It is likely that the rally is brought about by covering of short positions. The long term GMMA is also showing no signs of giving up its bullish bias. Long term investors are still staying with their long positions.

The 2 day RSI is on the high side which indicates a short term overbought conditions. Given the performance of US market overnight, we may see some profit taking. Any correction may be a chance to re-enter the market at a lower price.

Swing Trading With Stochastics – the Essential Momentum Indicator

2010-08-19T12:00:00.002+08:00

Author: Sacha Tarkovsky

Markets don’t trend all the time - there are periods where they tend to be in channels, and consolidating. These are the markets where swing trading can work well.

This article is an introduction to swing trading, and highlights the best timing indicator - to time you swing trades for big profits.

What is Swing Trading?

Swing trading sits in the middle, between day trading, and trend following - and swing trades normally last a few days. The swing trader will enter a position one way, and exit with a profit - and enter a possible position the other way.

The Swing Traders Best Market

For the swing trader, it’s best to trade, when a market is going nowhere fast.

Swing trading does not work in strong bull and bear markets - where price moves strongly in one direction - without a swing in the other direction, the swing trader will lose.

The problem with both swing trading, and long-term trend trading, is that success is based on identifying what type of market we’re looking at - i.e. bull, bear, or a period of consolidation.

Once you’ve identified a market as moving in a sideways channel - then it’s time to look for swing trading opportunities.

The Best Tool for Swing Traders

The best tool by far - the “stochastic indicator” - which is ideal for swing trading. The stochastic indicator is a momentum oscillator, which can warn of strength, or weakness in the market - often in advance of a final turning point.

The logic of the stochastic is based on the assumption, that when a market is rising, it will tend to close near the high - and when a market falls, it tends to close near its lows.

The Calculation

The stochastic oscillator as developed by Dr. George Lane, is plotted as two lines called %K, a fast line and %D, a slow line.

· %K line is more sensitive than %D

· %D line is a moving average of %K

· %D line gives the trading signals

Although this sounds confusing, it’s actually very similar to the plotting of moving averages.

For example, take %K as a fast moving average, and %D as a slow moving average.

The lines are plotted on a 1 to 100 scale. "Trigger" lines are normally drawn on stochastics charts at the 80% and 20% levels – this indicates when markets are overbought, or oversold.

Using Stochastics

The 80% value traditionally is used as an overbought warning signal, while the 20% is used as an oversold warning signal.

The signals are most reliable if you wait until the %K, and %D lines turn upward, below 5% before buying - and in reverse, above 95% before selling.

For swing trading, look to trade the crossover confirmations.

For example, buy when the %K line rises above the %D line, and sell when the %K line falls below the %D line.

Beware of short-term crossovers that may generate false signals. The best crossover is when the %K line intersects, “after” the peak of the %D line (a right-hand crossover).

Don’t worry if the above confuses you - you don’t need to understand the logic. When you look at stochastics on a chart, all you're looking for is the visual signals - not the calculation behind them.

Do some research and practice, before trying swing trading with stochastics - but if you want an indicator to help you swing trade, and make some big profits - check stochastics out.

Article Source: http://www.articlesbase.com/investing-articles/swing-trading-with-stochastics-the-essential-momentum-indicator-81690.html

About the Author

1,000 Pages Of Wealth Building Material FREE!

Including tips, strategies and systems and more on currency trading info. Visit our web site at

http://www.tradercurrencies.com

Mortgage Rates Predictions - What the Charts Are Telling Us

2010-08-13T06:50:00.001+08:00

Author: Ed Lathrop

Mortgage rates have a lot to do with how well the economy is performing. When mortgage rates go up, people can no longer afford to invest money in new properties. This, of course, brings a slow down to the building trade and it also means less money will be flowing through the economy.

On the other hand, when mortgage rates go down, more people are able to buy homes. The further down rates fall, the lower the income needed to buy homes. When homes are being bought, the building trade flourishes and this stimulates the economy in many ways.

Remember high interest rates?

It's been 20 years since we've seen double-digit mortgage interest rates. Going back to the late '70s and early '80s, double-digit mortgage rates were the norm. It wasn't until about 1985 after the Reagan administration had put an end to stagflation and the misery index that haunted the Carter years, that mortgage rates found buoyancy at around 7%.

Since that time, mortgage rates have fluctuated between 9% and about 5.5%. All in all, it has been a long stable interest rate environment that we have enjoyed over these past years.

Higher or lower?

Now, the question is where do interest rates go from here. By reading the charts, we will attempt to predict their future movement, just as if we were reading the commodities charts to get a handle on which way the price of soybeans were headed. Then, we're going to make a prediction about another commodity that is sure to be shocking!

At this time, it is wise to make a disclaimer. First, no one can truly predict the future and second, any world event can change what the future looks like now in a heartbeat. Also, you can't overlook the fact these unforeseen world events can happen out of the blue. With that behind us, let's take a look at charts.

The past 18 years

Throughout the '90s, interest rates on 30-year fixed mortgages ranged between 9% and 7%. At the time George W. Bush took office, the average 30-year mortgage rate was 8.75 %. From here, it eased downward steadily through the first George W. Bush term. It actually hit a low of 4.75% in late 2003. Here, interest rates ranged between 6.5% and about 5.5% for the next 3 years. This was an uncommonly stable interest rate environment and it was one of the reasons the housing market became red hot, and yes, overbought.

In 2006, the trend broke above 5.5% to about 6.5%, but rates never went any higher. Now, the interest rates are hovering around six percent and trending downward.

Reading the charts

The technical trader, that is, one who trades commodities by reading charts, would certainly believe interest rates, since they are heading downward, would have to once again test the low of 4.75%. It will be important to see if a double bottom is made at 4.75%. If this bottom is made, interest rates will go up.

Because of underlying fundamentals of the market, for instance the Fed trying to lower interest rates to stimulate the housing market, it seems much more likely interest rates will break through the 4.75% low once they arrive there. If they do, a new downward trend will be on the way. Just how much lower interest rates could get, is anybody's guess. However, it certainly isn't out of the question we could see 4% 30-year fixed mortgage rates sometime before this downward trend ends.

4%!

Historically speaking, 4% is a very low interest rate, but at this time it truly looks like we are much more apt to see 4% than a higher number, like 7%. So, for what it's worth, this is my prediction. We will see the interest rate on a fixed 30-year mortgage somewhere down around 4% before an inflationary aspect of the economy takes over.

Where you think this inflationary aspect will come from? Well, here is another prediction and you may find it more astounding than the first one!

The impossible dream

It's all over for the crude oil rally. Crude oil is overbought! There is no reason for crude oil to be trading above $100 a barrel. Like the tech stock boom of the '90s and the housing market bubble of a couple years ago, it is a rally that cannot be sustained forever!

It's anybody's guess as to what the true market value of crude oil is right now. However, to think it is somewhere between $50 and $60 a barrel would be logical. However, when prices fall they tend to go through the true market value before they float back up to it.

If this crude oil market bubble burst follows the same modus operandi normal market bubble bursts follow, I can't see why it is impossible to see $35 a barrel crude oil again; at least for a little while.

What would this mean for the price of gas? Maybe $1.49 a gallon? Well this may seem totally out of whack with what we're hearing constantly coming from our news reports day and night, don't think it can't happen.

Back to reality

Certainly, there will be a time when $100 will not be too high a price for a barrel of crude oil. There will come a time when $3.50 is not too much for a gallon of gas. However, the charts are telling us that time is not here yet.

So, cheap gas, like the JFK, Ronald Reagan and George W. Bush tax cuts will stimulate the economy, and like the Bill Clinton Tariff agreements, it will make the cost of living lower which will make more goods affordable to the public. These things, though healthy for the economy, will bring on some inflation and this will break the interest rate downtrend.

I know these predictions seem pretty goofy and maybe they are! Still, my strategy is to believe they will happen and if they don't, at least I'll be happy believing them for now. Then again, if they do happen, we'll all be happy!

Article Source: http://www.articlesbase.com/mortgage-articles/mortgage-rates-predictions-what-the-charts-are-telling-us-371824.html

About the AuthorEd Lathrop has developed EZ Calculator, which shows you how to save $100,000 on your mortgage and "How To Pay Off Your Credit Car Debt Quick." Plus many more calculators aimed at helping people get their finances in order! Come visit this free Website at: Free Financial Calculator. Also get a free amortization schedule or as many free amortization schedules as you want at:Amortization Schedules Free

KLCI Direction

2010-07-04T12:21:00.001+08:00

KLCI index hit a wall of resistance this week together with the stock market around the world.

Compared to other indexes around the world, KLCI is having a stronger performance. The index is still above its 200 day moving average and the death cross scenario where the 50 day moving average crosses below the 200 day moving average has not occurred.

However, there are warning signs in the technical chart.

Firstly, the MACD indicator is about to go below its signal line. The RSI indicator is decreasing but has not reached oversold values. This means that there is a short term weakness in the index. Stochastic chart is also showing weakness in the near term.

ADX is now at around 20 levels and looks to be ticking up. –DI is now slightly above the +DI. This suggests that the index is likely to continue moving down but the strength of the down move will not be strong unless we see a higher ADX value in the coming week.

All in all, the index will continue to go down in the coming weeks or at best be range bound. Do trade with care.

AirAsia Updates

2010-06-26T13:23:00.001+08:00

Share price for AirAsia is now at a crossroad.

The MACD indicator is still bullish with the indictor above its signal line. However a worrying sign is a weakening MACD histogram. This shows that the upward move is losing momentum. And from the price chart, we can see that the chart is now looking to form a lower low. RSI is at neutral level. Stochastic indicator is showing weakness in the short term.

The price action is showing weakness as well. The stock price could not hold above the downtrend line and is now about the test the support line.

Critical support is at RM1.25 level. The resistance level is at RM1.35.

Genting Weakness Ahead

2010-05-20T07:55:00.001+08:00

The chart for Genting is indicating weakness in the short term. This is in line with bearish conditions for the past few weeks.

The MACD indicator has just cut below its signal line, indicating that the bears are gaining the upper hand.

The price has pulled back towards its 50 day moving average and this will be a critical level to watch. If the price is not able to hold onto the 50 day moving average, bears may increase their selling pressure and it will violate the up sloping trend line that began in the month of Mar.

Any rebound will meet with selling pressure at RM7.06

KLCI Update

2010-05-15T15:34:00.002+08:00

KLCI has been holding well even though Europe has caused stock markets world wide to embark on a correction mode.

The index is facing resistance at 1350 level. It has tested this level 3 times for the past 1.5 months and has not been able to break through.

The –DI is now above +DI indicating weakness in the price action. However with ADX below 20 levels, there is no sign of a strong downtrend developing.

MACD indicator is just slightly below its signal line which is a bearish signal.

Gathering the evidences painted by the charts, index looks set to weaken next week. However possibility of a strong downtrend developing is still not present. The next support level is around 1310

KLCI Sell In May And Go Away

2010-04-26T07:31:00.002+08:00

The stock market has a famous saying of “Sell in May and go away”. Should you be doing it this year?

A look at the KLCI index from 1994 to 2010 shows that there is a 50-50 chance that the market will go down from May to Oct. The performance of the KLCI index is shown in the table below

Entry Date	Entry Price	Exit Date	Exit Price	% Change
4-May-94	1040.44	4-Oct-94	1126.34	8.26
3-May-95	944.55	3-Oct-95	983.75	4.15
3-May-96	1184.97	2-Oct-96	1135.53	-4.17
5-May-97	1099.39	2-Oct-97	794.10	-27.77
5-May-98	627.56	2-Oct-98	366.88	-41.54
4-May-99	681.75	4-Oct-99	680.33	-0.21
3-May-00	900.14	3-Oct-00	704.24	-21.76
3-May-01	615.98	2-Oct-01	613.00	-0.48
3-May-02	795.12	2-Oct-02	648.53	-18.44
5-May-03	627.62	2-Oct-03	738.98	17.74
6-May-04	845.74	4-Oct-04	855.74	1.18
4-May-05	895.50	4-Oct-05	924.98	3.29
3-May-06	950.99	3-Oct-06	968.93	1.89
4-May-07	1346.37	2-Oct-07	1361.03	1.09
5-May-08	1274.13	6-Oct-08	1013.39	-20.46
4-May-09	999.44	2-Oct-09	1204.20	20.49
				-76.74

If you buy into the KLCI on May 2009 and sell on Oct 2009 instead, you would have seen gains of 20.49%. However if you sum up the performance from 1994 to 2010, you will be down 76.74%.

So should you be a buyer this May or seller? Personally, I will not be a buyer as my feel is the index will not see double digit percentage gains and the risk of a correction is high.

AirAsia - Still in a downtrend

2010-03-21T14:33:00.002+08:00

AirAsia rebounded for the last 3 session. However, the bearish pattern formed by the 10 day, 20 day and 30 day moving averages is still intact.

The rebound can be viewed as a technical rebound and the fact that it is not able to clear it's 20 day and 30 day moving averages is a sign that the bears are still in control.

There is a high possibility that the price will test RM1.27 in the next few sessions. If this level is taken out, the next support is at RM1.22 level.

All bets are off if price moves above RM1.37.

Kuala Lumpur Kepong Bhd

2010-03-13T11:55:00.001+08:00

Kuala Lumpur Kepong Bhd was down 28 cents on Friday’s trading session. It closed at RM 16.62, just below it’s 8 day moving average.

So where do we go from here?

The

market did not move much on Friday night. The Dow ended at 10,624 up 12.85 points. The indecisive market action will not bring much cheer to market participant.

For Kuala Lumpur Kepong Bhd, the technical charts are showing a slightly bearish picture.

Firstly, the –DI is above the +DI which suggests weakness. However, the ADX is still at very low levels suggesting that a sustained down trend is not in the cards.

The MACD indicator is making a bearish crossover, moving below it’s signal line.

One way to play this stock is to short the counter on the next trading session at price that is slightly above RM 16.62, the low set on Friday. The stop loss should be at the RM 17 level.

The 2 day RSI for this counter is going downwards and is approaching oversold levels. The next one or two session will be weak for this stock and if you can short at RM 16.62, there may be a chance to walk away with a slight profit.

Good luck and happy trading!

Genting Bhd

2010-03-07T17:17:00.002+08:00

US market had a good performance on Friday with the Dow Industrial Average moving up 122 points to end the week at 10566. Volume on Friday was far from impressive showing a lack of participation among the traders.

Now let’s look at one interesting counter, GENTING BHD.

The technical picture was pretty bleak in the beginning of the week. The counter broke through it’s 200 day moving average and showed no signs of rebounding. However, the counter sprang into life on Friday and the counter is now testing it’s 200 day moving average once more.

The MACD indicator made a bullish crossover and is a good sign for the bulls in the short term.

The RSI indicator is not at oversold levels yet, suggesting that the up move still has some legs left.

However the –DI is still above the +DI with the ADX turning down. This suggests a slowing down of the down trend.

Given the current market conditions, I would be a seller if the counter managed to get to RM 7.00.

US Stock Market - More Weakness Ahead

2010-01-24T10:32:00.002+08:00

Dow, S&P500 and Nasdaq index broke below their uptrend line on Friday. Volume has been picking up and this suggests real selling and not just profit taking.

The recent weakness started off from China when news broke that banks have been told to suspend lending. Although the suspension was not system wide, the market reacted nevertheless with Shanghai index moving down more then 3% and Dow closed nearly 1.1% lower. Adding to the uncertainty was US President Barack Obama proposal to overhaul US banks in order to avoid future financial crisis.

Technical charts are looking weak with MACD below its signal line and –DI above the +DI together with an increasing ADX value.

The support level for Dow is near the 10,000 level which is where the Fibonacci retracement is located. Expect to have more weakness next week.

Forex Trends

2010-01-17T09:40:00.000+08:00

Forex Trends

Trends formed in different markets. For example stock market, commodity market, forex market etc. Trading with the trend is a proven method to trade any market, but it is particularly effective in trading forex market. Why?

Consider stocks in equity market. If a company is doing badly and its stock is trending downwards, the company can take measures to improve the situation. For example, the company can be restructured, CEO can be replaced etc. This can cause a rapid change to the company’s fundamental outlook which will sooner or later be reflected in its stock price. This process can happen in a fairly short period of time.

When we trade forex market we are trading the economies of entire nation. When a country’s economy is strong or weak, it usually takes a longer time for economy to recover.

Hence, forex tends to stay in a trend longer than other markets.

What Do I Need To Know About Technical Analysis Of Equities?

2010-01-14T06:58:00.000+08:00

What Do I Need To Know About Technical Analysis Of Equities?

By: Mike Singh

Predicting future moves in the stock market has become a science. This form of prediction has become known as technical analysis. Traders who take this approach to investing in the stock market usually hold stocks for a short time period and then sell their stocks once the predicted profit has been achieved.

The foundations to technical analysis can be found in the understanding that stock price movements are predictable. All the factors affecting the value of a stock are reflected in the stock market with the greatest efficiency that can be found in any type of market. Movements in the stock value follow predictable historical trends, coupled with the efficiency of the market make it possible to predict the direction the stock is going to go.

Technical analysis is a very short term method of investing because the potential long term growth of a company is not taken into account through this method. Trades are timed to exactly reflect the upward and downward trends in the market so nothing is left to chance. Because buying and selling go through at specific times, losses can be minimized if the market does not move in the predicted manner.

Many methods of predicting the movement of the market have been developed for use in technical analysis. These methods for the most part are based on the 'support' and 'resistance' concept. How this works is that, support is the level by which a downward price is predicted to increase by and resistance is the level by which an upward price is expected reach before coming down again. To put this in clearer terms prices tend to fluctuate between a support and resistance levels.

Market movements are predicted for a large part through the use of charts (mostly bar charts). The horizontal axis represent time be it a minute, hour, day or week, while the vertical axis represents the price of the stock. By looking at the chart a trend for the stock value can be traced.

A trained analyst studies the chart and can see certain patterns in the chart that they can then use to predict for future movements in the price of stocks. As is the case with most things there is no one single pattern that fits all. There are hundreds of different types of movements, indicators and patterns that can be used. By combining a number of different indicators technical analysis can make it possible for an investor to become very successful on the stock market.

Keyword Articles: http://www.keywordarticles.org

Check out www.stock-trading-made-ez.com/ for more articles on stock market graphs and stock buy signals.

KLCI Update

2009-12-19T18:44:00.003+08:00

We are near the end of 2009. The stock market has rallied from its March low and it has retraced more than 60% of it down swing from a high of 1521 to a low of 801.

The technical picture is indicating weakness ahead. The MACD indicator has made a bearish crossover. +DI is still above the –DI but it looks to be turning towards the –DI. ADX is also decreasing which shows a weakness in the current uptrend. Stochastic indicator is also showing a bearish stance.

The market needs more positive news to push it higher. Any retracement should be well supported at 1157.

Dow Update

2009-11-01T10:45:00.000+08:00

Dow Jones Industrial Average closed at 9712 on Friday down 249 points. The moved erased all the gains made on Thursday. The index closed below the uptrend channel and is at dangerous territory. The RSI is now at 45 level. Note that RSI has not fall below 40 level since Jul 09. MACD is showing bearish signal as well with the indicator below its signal line. -DI is set to cross the +DI, this may mark the beginning of the correction that the market has been expecting for some time now.

The next few trading days will be crucial. If the index is able to close within the
uptrend channel, it will be good for the bulls. If the index is not able to gather enough
momentum, then the correction looks set to test the low of 9378 set on 2 Oct 09.

KLCI Update

2009-09-07T06:40:00.002+08:00

KLCI manages to keep above its up trend support line last week. This is a positive sign.

The MACD indicator is still above its signal line, indicating that the Bulls are still in control.

However a danger sign is appearing on the RSI chart. The indicator is showing a slight divergence from the price chart with the index making a newer high whereas RSI is trending downwards.

All eyes will be on whether the index is able to maintain above its up trend line. If this line is violated, coupled with a diverging RSI, it will mean a sell down is in the cards.

Trade with care.

TELEKOM MALAYSIA BHD

2009-08-16T13:28:00.002+08:00

Telekom Malaysia broke out of RM3.06 on Friday. The technical charts are showing positive signs of further strength.

Firstly, the ADX value is increasing and approaching the 30 level. +DI is above the –DI indicating development of strong up trend.

The Force index is also showing pockets of strength.

RSI is starting to tick up after testing the 50 level indicating that buyers are once again stepping in again.

MACD indicator is slightly above its signal line. Price momentum is likely to continue if the MACD indicator can stay above its signal line for the next few trading days.

All bets are off if price breaks below RM2.85 level.

KLCI Updates

2009-08-09T15:21:00.001+08:00

KLCI index closed at 1184 points on Friday, the highest since June 30, 2008. The question now is whether this uptrend will continue or will we see a down swing that will take out the lows made in March 2009.

The index is now above its 50, 100 and 200 day moving average. And all three moving averages are increasing. This shows the strength of the current up move.

The MACD indicator is moving down and looks set to cut its signal line. If the crossover occurs, it will mean weakness in the short term. However, given the fact that the index is still above its up trend support line, “Bullish” investors are still in safe territory.

Dow Inverse Head And Shoulder

2009-07-25T10:04:00.002+08:00

Stock market has rallied across the board. The Dow Industrial Average is now above 9000 level. The index is currently at Jan 2009 level.

Technically, the charts are looking better. Just a few weeks ago, there was a possibility of a sell-off based on the head and shoulder pattern. That did not materialize. And when the pattern failed, the market rallied. The reverse seems to be happening. An inverse head and shoulder is now in the picture.

The ADX chart is showing the development of an uptrend, with +DI above –DI and ADX moving towards 30 levels.

MACD is indicating a bullish trend as well with the indicator above its signal line.

RSI is now at overbought levels but it an uptrend situation, market can stay at overbought levels for longer periods.

Based on the monthly charts, the 50% Fibonacci retracement level is at 9176 and 61.8% retracement level is at 9825 level. Market needs to scale these 2 levels for up move to continue.

Let’s see if the market is able to stay above 9000 level next week.

Happy trading!

Dow Potential Head & Shoulder Pattern

2009-07-05T20:06:00.000+08:00

Stock market around the world is in corrective phase except for the Shanghai market which went above the 3000 resistance level.

If you look at the technical charts from US, Hong Kong, Singapore etc, the charts are all showing a potential head and shoulder pattern.

For US Dow Industrial Average, the index needs to stay above 8200. If it breaks this level, the right shoulder will be completed and it suggests a target of 7523.

Let’s see if the US market is able to hold on to 8200 level next week.

LCL Corporation Bhd

2009-06-28T20:09:00.003+08:00

LCL Corporation closed at RM 0.725 during Friday's trading session.

The stock closed up on high volume a sign that investors are buying into the stock.

The technical charts are also showing bullish signs.

The MACD indicator just made a bullish crossover.

The +DI is above the -DI. However ADX is still at the lower end which means that the stock price although moving up, will most likely be a weak up trend.

RSI is increasing and is not in overbought region.

The resistance is still at RM 0.76. Support is at RM 0.62 level.

A way to ride on this uptrend is to buy when the stock moves above RM 0.73 and to take profit when RSI shows decreasing momentum. Stop loss level can be set at slightly below RM 0.64 which is near the 50 day moving average closing price.

Lafarge - Buy On Pullback

2009-06-16T14:10:00.002+08:00

Lafarge Malayan Cement broke out of its resistance level RM 4.74 near the end of May 09 and the stock has been gaining ground since then to reach a high of RM 6.50.

As the leader of the Malaysian cement industry and a major player in the Asian export market, this stock should benefit from the stimulus plan that are being implemented by Asian countries.

The ADX is above 30 with +DI above the –DI, indicating a strong trend that is developing.

MACD is also bullish at the moment with the indicator above its signal line.

Analysts are expecting a pullback in the stock market after a spectacular run from March lows. This stock should be a good candidate to buy on pullback. Look to enter near the RM 4.74 level, which is the previous resistance level.

Market Update

2009-06-07T17:37:00.002+08:00

Dow Industrial Average reached a high of 8839 in the opening minutes before succumbing to selling pressure. It lost all its gain and went into negative territory before buyers came in to bring up the index. Market closed at 8768, up 12 points for the whole session.

The non-farm payroll showed a decline of 345000, a better than expected number of job losses. However un-employment rates reached a high of 9.4%. This mixed picture also explains why the market closed near the unchanged mark.

Looking at KLCI, it has recovered more than 50% of its downswing from May 08 till Oct 08. Immediate resistance is at 1090, 1111 and 1141 respectively. Support is at 1055, 1036 and 1000.

US Market

2009-05-31T12:29:00.002+08:00

Market continued to rally higher in May. The upward momentum seems to be slowing down as the market hit critical resistance level.

The S&P500 index is approaching its 200 day moving average. The market has been going sideways for the past few trading sessions with the index moving in a band of 880 and 930 levels.

The index has rebounded from its 20 day moving average and seems to be moving towards the upper Bollinger band.

Next week should see the market testing the 930 level.

WTK Holdings

2009-05-25T08:11:00.001+08:00

The technical indicators for WTK holdings are showing further strength.

Price managed to close above its 200 day moving average for the first time since Jun 2008.

MACD made a bullish crossover on Friday and ADX is increasing with +DI above –DI. This shows that investors are bullish on this stock.

RSI is approaching overbought levels. Investors can consider entering into this stock on pullback.

Support level is at RM1.09 and RM 0.955 respectively

HAI-O Enterprise Bhd

2009-05-17T19:05:00.002+08:00

HAI-O Enterprise Bhd had a good run since Mar 09. It broke the resistance on 27 Mar 09 and reached a high of RM3.96 on 8 May 09.

It has since pulled back and tested its 20 day moving average on Friday.

A few negative signs are developing. Firstly, the MACD indicator made a bearish crossover recently and RSI is coming down from overbought levels. +DI is also getting closer to –DI with a decreasing ADX. This shows a weakening of the up trend.

The stock should find some support at the lower Bollinger band if it breaks through its 20 day moving average.

KLCI

2009-05-10T14:55:00.002+08:00

KLCI broke through its 200 day moving average, made a test before resuming its current bullish trend. This is a good sign for the market. It shows that investors are willing to buy on pullbacks.

RSI is showing a slight divergence with the indicator making a lower high on 7 May 09.

Immediate resistance level is at 1040 and 1060. Pull back should find support at 1000 level.

IOI Corp

2009-04-26T13:04:00.001+08:00

IOI Corp has moved up together with price of palm oil. Since breaking out of the resistance of RM 4.00, this counter has gained RM 0.40 to close at RM 4.40. Not bad for a one month gain.

The counter is processing the high of RM 4.48 set in 7 Jan 2009. MACD indicator is about to go above its signal line. This is an indication that there may further strength in this rally. ADX is approaching 40 level with +DI above the –DI, another bullish indicator.

RSI is moving down from overbought level. However, so long as price stays above RM 4.20, the upwards momentum should be sustainable.

Telekom Malaysia Berhad

2009-04-08T07:05:00.001+08:00

Global stock markets pullback this week after a spectacular rally in March that saw majority of the world indexes up with double digit percentage gains. KLCI went from a low of 836 on 12 Mar to a high of 926 on 6 Apr, a gain of 10%. Investors that missed out on this rally can consider picking up counters during the pullback.

Let’s look at Telekom Malaysia which made a bullish MACD crossover yesterday. The counter gapped up on 25 Feb with high volume. The MACD indicator made a bullish crossover and is now above its 9 day signal line. RSI is approaching overbought levels suggesting that the stock may pullback anytime soon. However with the MACD showing a bullish signal and the current +DI above the –DI with ADX above 40, pullback should be mild and not a severe downswing.

Resistance level is at RM3.68 and RM3.76 respectively. Support level is at RM3.46 and RM3.38.

KLCI Update

2009-03-31T08:13:00.001+08:00

The rally finally came to a stop yesterday. KCLI has broken through its 50 day moving average. It is now sitting at the support level of 867.

Bearish signals include a down sloping 20 day and 50 day moving average. Stochastic has made a bearish crossover and RSI is coming down from overbought levels.

MACD indicator is still above its signal line. If the index is able to bounce off from 857 which is the 61.8% retracement level, there is a chance for the index to test its recent high of 890. And penetration of the 890 level will set us the first Fibonacci objective of 911.

DOW Update

2009-03-21T10:26:00.001+08:00

Dow Jones rebounded from its low of 6440 set on 9 Mar 09 to end at 7278 yesterday. That is about 13% rebound in the span of 2 weeks.

The rebound has taken the index right up to its 50 day moving average. Last night the market was not able to take out the 50 day moving average. That is not a good sign. However, it may turn out to be just a pause before the index attacks its 50 day moving average again.

The 7392 level now serves as a critical resistance that the index needs to overcome in order for the rally to continue. Support level is at 7041

KLCI Update

2009-03-07T19:31:00.002+08:00

US market managed to edge out a slight gain on Friday. Dow was up 32 points to close at 6626 points.

Malaysia market has been affected by the negative sentiment as well. For the week, KLCI closed at 858 points, down 32 points.

The index is still above its low of 801 points set in Oct 2008. The index is now heading towards the lower boundary of the uptrend channel that goes all the way back to 2001. There should be buying support near the 830 level.

Dow Update

2009-03-02T08:28:00.002+08:00

Dow industrial average has fallen to 1997 levels. It has broken its Nov 07 low of 7392. The picture looks bad at the moment. ADX is at 49 levels and –DI is above +DI. This suggests a continuation of the down trend. MACD indicator has also crossed below its signal line, another bearish indication. The only bright spot is that the RSI indicator has not made a new low yet and divergence of RSI can still occur. For trend to reverse, Dow has to conquer the resistance at 7392 and 9175. In the mean time, the bears have the upper hand.

Dow Jones Industrial Average

2009-02-15T17:25:00.001+08:00

The Dow Jones Industrial Average looks to be forming a bottom. The index is near its Nov 07 low of 7392. The trend is still bearish at this point in time. However there are 2 positive signs in the technical charts. Firstly, the weekly MACD indicator is above its signal line and secondly, the weekly RSI seems to be forming a divergence signal. The index needs to break the downtrend channel line in order for a sustainable rally.

Resistance level is at 8446 level and support is at 7392 level.

KLCI Update

2009-02-08T18:11:00.001+08:00

US market managed to stage a rally on Friday. The Dow Industrial Average closed at 8280, up 217 points on Friday. Market look past the bad job numbers and are hoping that the Obama Administration is able to come up with a stimulus package that will save the financial sector which in turn will support the stock market.

Our own KLCI index is also making a comeback. The index closed above its 20 day moving average on Friday. The MACD indicator is looking to cross above its signal line, another positive scenario.

Note that the 13 day force index has just turned positive. If the index is able to hold above 867 points, there is a potential for the index to test its upper Bollinger Band limit.

Stochastic indicator is also turning up, indicating short term strength.

Resort World

2009-01-31T17:03:00.001+08:00

Resort World is trading on a downtrend channel.

MACD indicator is almost in line with its signal line. If the stock is able to pierce above the downtrend line, MACD will make a crossover above its signal line. If that happens, there is a possibility of testing the pivot point at RM 2.46.

With Dow Jones Industrial Average down 148 points last night, Monday should see further weakness in Resort World. The next level of support is at RM 2.15 level.

IOI Corp

2009-01-19T15:01:00.001+08:00

IOI corp closed at RM 3.78 on Friday.

The stock price is now sitting near the 20 day moving average. The stock price looks to be forming a pivot point at RM 3.68 level.

The fast stochastic line is about the slow stochastic line. Once the fast stochastic line cuts above the slow stochastic line, it indicates short term strength and a possibility of a short term rebound from current levels.

If RM 3.68 is not broken today, it will most likely test RM 4.00 level soon.

TM

2009-01-11T08:16:00.002+08:00

TM technical chart is not looking pretty. The stock looks set to break RM 2.98 level and to test support at RM 2.88 which is the 61.8% Fibonacci Retracement Level.

MACD indicator just crossed below it signal line and with Dow closing down 143 points on Friday, it looks bearish for TM at this juncture.

So Monday should be good for the bears. Happy trading!

KLCI Update

2009-01-05T21:05:00.002+08:00

KLCI closed at the high of 920.66. The next resistance is at 926.65 and 970 respectively.

The technical charts continue to show a bullish bias. The MACD line is currently above its signal line indicating a bullish market.

+DI is still above –DI. However ADX will need to go above 30 soon in order to have a sustainable rally.

RSI is approaching overbought levels. Unless there is a sustainable rally, market will not stay in overbought level for long. In this market, it is best to be nimble and take profit when a danger sign appears. For example the appearance of a graveyard doji, hanging man etc.

All eyes will be on US market tonight to see whether last week’s breakout is a false dawn.

Berjaya Sports Toto Berhad

2008-12-29T07:32:00.001+08:00

We have 3 more trading days before 2008 come to a close. For the bulls, 2008 is a year to be forgotten whereas the bears had a jolly good time.

2009 looks to be another tough year for business worldwide and economists have all predicted that recovery in the economy will come in the later part of 2009. Given that fact that stock market leads the real economy, a rebound in equities should materialize before the end of the second quarter

Company like Berjaya Sports Toto Berhad, which is in the gaming industry providing digit type games like 4D, 5D, lotto etc should be able to survive the downturn.

The technical chart is showing a slightly bullish bias. The MACD had just cut above its signal line. RSI is also increasing after hitting oversold levels. +DI is above –DI and ADX is beginning to bottom out. The stock price is now riding on an upward channel. However with ADX at a low level, it does not make sense to expect a strong rally at this point.

Support is at RM 4.40 and resistance is at RM 4.80. One way to play this stock is to wait for a pullback to the RM 4.40 level and to hold for a test of RM 4.80. For example, if you decide to enter at RM 4.50, stop loss at RM 4.40 and profit target RM 4.80, that will be a risk of RM 0.10 and potential profit of RM 0.30.

Sime Darby

2008-12-02T12:37:00.003+08:00

Sime Darby almost halved its net income target on Nov. 28 to 1.9 billion ringgit for the year to June 2009. Palm oil, the biggest contributor to profit, has tumbled and the global recession has weakened demand for houses and vehicles.
Sime Darby's revised earnings goal is about 34 percent lower than the average analyst forecast.

The technical chart looks bad. Yesterday drop was on heavy volume.

The MACD indicator is way below its signal line. ADX is creeping up and with –DI above the +DI, this may turn out to be the beginning of a downtrend.

RSI is in oversold territory but stocks that are in a downtrend will stay in oversold region for extended duration before rebounding.

The stock broke through the RM 5.45 support yesterday. This level will be the resistance for any up move from this point.

With fundamentals weak and technical chart not showing any sign of rebound, it is best to avoid the stock until a clearer picture emerges.

Genting Bhd Update

2008-11-30T13:41:00.002+08:00

Genting has broken down of the down trend channel and has broken through the previous support area of RM 4.30.

It closed at RM 4.08 which is just below the 61.8% retracement level. MACD just made a bearish crossover and indicates more weakness going forward. The breakdown occurred on high volume indicating that investors were eager to get out of the stock.

A re-test of RM 3.58 cannot be ruled out. The next few trading days will be crucial. Let’s see if the stock can hold above RM 3.58.

Genting Bhd

2008-11-27T10:00:00.002+08:00

Genting Bhd closed at RM4.52 on Wednesday.

The price is now within the Bollinger band and is sitting near the 20 day moving average. It looks like moving into consolidation phase.

The MACD indicator is above its signal line and is indicating further strength. The RSI indicator is moving up from oversold levels and is approaching the 50 level.

The stock is most likely able to hold on to support of RM4.30. Immediate resistance is at RM4.75.

KLCI Update

2008-11-24T08:12:00.001+08:00

KLCI should see some strength today. The question is whether we will see a more sustain move or just a one day wonder.

MACD is still showing a bullish sign with the indicator above its 9 day signal line.

RSI is ticking up but is still below the 50 level. If it is able to get above 50 level, it will be bullish. The RSI indicator has not been above to clear the 50 level in all previous attempts and the last time the indicator was above 50 was in July 08.

The –DI is still above +DI which indicates a weak market. However, the ADX has come down as well. This means that we are not likely to experience the severe down move that we saw in the past 2 months.

The index was able to hold on to the 61.8% Fibonacci retracement level last week. If this support holds, there will be chance for the index to test 926.

Dow Support Level

2008-11-19T07:36:00.002+08:00

Dow closed at 8424 on Tuesday, up 151 points. The index tested 7947 level, the low established on 13 Nov 08. It managed to rebound and claw back above the 8000 level. Buyers came in only in the last hour of trading.

The index looks to be forming a double bottom and has managed to find buyers whenever it hit below 8000. Next resistance level is at 8835 and support level is at 8085.

KLCI Update

2008-10-28T07:21:00.002+08:00

The market turmoil continues.

KLCI is now at 859 levels. It looks likely for the index to test the next support at 817.

The technical charts for KCLI are not looking good. The MACD line is still below its 9 day signal line showing a bearish bias. There is no divergence in the MACD with respect to price movement, so it is not logical to expect a sustainable a rebound at this point.

ADX is at value of 55 and with –DI above +DI, it indicates a continuation of the down trend.

RSI is oversold at this level but in a downward trending market, oversold market tends to become more oversold.

KLCI Update

2008-10-18T19:52:00.003+08:00

US market tried to overcome from market weakness on Friday. However at the close, it succumbed to market forces and Dow was down 127 points.

At one point, the Dow index managed to put on a gain of nearly 300 points. The optimism could not hold and the index gave back all the gains plus some extra losses to end at 8852.

The KLCI index dropped 14 points on Friday in anticipation of further weakness in the US market. The index gave up all the gains made on the first 2 days of the week.

The index has broken through the 62% re-tracement level and is now heading towards the low of 615 set in March 2003.

The support level is at 860 and 817.

VIX Indicator

2008-09-28T20:37:00.003+08:00

Market players are waiting to see whether US officials will be able to come to an agreement to the bailout package. The market has been plagued by high volatility lately.

The VIX closed at 34.73 on Friday. It spiked to a high of 42.16 on 18 Sep. Assuming that you buy into the Dow Industrial Average when the VIX went above 40 and hold the trade for approximately 1 year, the trading result is as follows:

Entry Date	Entry Level	Exit Date	Exit Level	% Change
1-Sep-98	7583.09	7-Sep-99	11079.08	46.1
4-Sep-98	7737.32	10-Sep-99	11087.00	43.29
8-Sep-98	7964.91	13-Sep-99	11027.40	38.45
11-Sep-98	7583.61	16-Sep-99	10795.77	42.36
14-Sep-98	7936.08	17-Sep-99	10745.38	35.4
1-Oct-98	7749.42	6-Oct-99	10399.77	34.2
2-Oct-98	7631.50	7-Oct-99	10588.34	38.74
5-Oct-98	7760.75	8-Oct-99	10534.52	35.74
6-Oct-98	7733.97	11-Oct-99	10649.76	37.7
7-Oct-98	7754.82	12-Oct-99	10648.81	37.32
8-Oct-98	7734.48	13-Oct-99	10412.31	34.62
9-Oct-98	7806.57	14-Oct-99	10230.89	31.05
12-Oct-98	8038.03	15-Oct-99	10286.61	27.97
13-Oct-98	7982.68	18-Oct-99	10018.45	25.5
14-Oct-98	7925.01	19-Oct-99	10117.54	27.67
18-Sep-01	8922.70	23-Sep-02	7984.77	-10.51
20-Sep-01	8375.72	25-Sep-02	7687.16	-8.22
21-Sep-01	8356.56	26-Sep-02	7844.62	-6.13
24-Sep-01	8242.32	27-Sep-02	7996.01	-2.99
23-Jul-02	7785.55	28-Jul-03	9284.92	19.26
24-Jul-02	7698.46	29-Jul-03	9268.19	20.39
5-Aug-02	8312.92	8-Aug-03	9127.36	9.8
6-Aug-02	8049.93	11-Aug-03	9189.62	14.16
7-Aug-02	8282.25	12-Aug-03	9218.12	11.3
20-Sep-02	7945.93	25-Sep-03	9425.58	18.62
25-Sep-02	7687.16	30-Sep-03	9378.10	22
8-Oct-02	7425.82	13-Oct-03	9675.72	30.3
9-Oct-02	7499.96	14-Oct-03	9763.27	30.18
10-Oct-02	7286.34	15-Oct-03	9824.09	34.83
19-Sep-08	11027.51	Open	Open	1.05

You have a total of 30 trades with 26 ending with a profit.

IOI Corporation

2008-09-28T13:51:00.001+08:00

All eyes will be on whether the US government is able to agree on a bailout package this Sunday. Although the bailout package may not be able to solve the current economic problems, failure to agree on a bailout package will definitely be negative for the stock market.

Commodities related counter have been affected by the expected slow down in the global economy which will result in lower demand and hence lower commodity prices. IOI Corp has not been spared the down swing as well.

The chart is looking better compared to a few weeks ago.

The MACD line has cut above its signal line, indicating a possible up move. There is also a divergence between price and MACD line.

Another promising sign is the decline that started from 23 Sep occurred with diminishing volume.

One possible way of playing this stock is to wait for a breakout of RM 4.86. This will reinforce the MACD divergence signal. Once entered, the stop loss level can be set at RM 4.36.

KLCI Fibonacci Analysis

2008-09-14T16:25:00.003+08:00

The KLCI is still in a down trend. Based on Fibonacci analysis, the index is set to drop below 1000 points.

Lets do a Fibonacci analysis on the recent down move. From Point A to Point B, the index dropped from 1436 to 1157. The rebound to Point C (1305) retraces 50% of the move from A to B. Since the index did not clear Point A, the down trend was still in place and the projected objective point rests at 1026 which is calculated from the following:

Objective Point = 1305 – (1436-1157)
= 1026

This objective point was near Point D of 1089.

The current up move from Point D to E did not clear the 38.2% retracement level. The objective point for this move will be:

Objective Point = 1164 – (1305-1089)
= 948

Hence based on Fibonacci analysis, the index is likely to go below 1000 points.

IOI Corp

2008-09-11T14:21:00.002+08:00

IOI Corp has been affected by the fall in palm oil prices. The price is now near the lower Bollinger Band.

The –DI is slightly above the +DI with the ADX decreasing from a high level indicating that the down trend is slowing down.

MACD line is about to cut the MACD Signal line which bearish if the cutover occurs. However, if the stock price is able to rebound from current levels, there is likelihood that we will see divergence in MACD as well as RSI. Divergence usually indicates a reversal in trend.

KLCI Sep Performance

2008-09-03T13:11:00.004+08:00

Historical results from 1994 to 2008 have shown that September is not a very good month to have a long position.

Entry Date	Entry Price	Exit Date	Exit Price	% Change
1-Sep-94	1,135.20	30-Sep-94	1,131.08	-0.36
1-Sep-95	1,014.96	29-Sep-95	992.16	-2.25
2-Sep-96	1,117.21	30-Sep-96	1,130.76	1.21
2-Sep-97	811.15	30-Sep-97	806.79	-0.54
1-Sep-98	294.76	30-Sep-98	376.61	27.77
1-Sep-99	766.01	30-Sep-99	683.18	-10.81
1-Sep-00	795.26	29-Sep-00	721.85	-9.23
3-Sep-01	686.35	28-Sep-01	614.57	-10.46
2-Sep-02	710.75	30-Sep-02	644.61	-9.31
2-Sep-03	743.17	30-Sep-03	736.37	-0.92
1-Sep-04	828.96	30-Sep-04	846.76	2.15
1-Sep-05	913.08	30-Sep-05	925.03	1.31
1-Sep-06	959.04	29-Sep-06	967.74	0.91
3-Sep-07	1,283.93	28-Sep-07	1,339.43	4.32
2-Sep-08	1,097.08	Open	Open	-0.92

In total there were 6 winning September months, about 42% that your position will be higher compared to the beginning of September. Let’s cross our fingers and hope that there will not be a double digit percentage losses this month. Do trade with care.

KLCI Update

2008-08-04T07:44:00.002+08:00

KLCI index closed at 1159 on Friday, up 18 points for the week. The technical indicators are looking better for the index.

The index has broken the upper channel line of the down trend line and there was a positive divergence between price and its 14 day RSI indicator.

The index has to stay above a low of 1089 in order to make a higher low. And if the index moved above 1163, then we will have a case of higher high and higher low which according to Dow’s theory is a bullish sign.

The ADX is also decreasing showing that the Bearish trend is weakening. The +DI is now slightly above the –DI another bullish sign.

IOI Corp

2008-07-21T13:51:00.002+08:00

Palm oil stocks have been sold down for the whole of last week. This drop coincides with the drop in crude oil prices.

Looking at the chart of IOI Corp, we can see that the trend is clearly downwards. The ADX is approaching the 40 level and the –DI is higher than +DI by a considerable amount. This indicates a potential for a strong down market.

The MACD is also painting a negative picture with the indicator below its signal line.

The stock is clearly oversold going by the RSI indicator. However, oversold market doesn’t mean the stock will rebound and going by the negative sentiment so far, any rebound should be seen as an opportunity to get out of this stock.

Dow Update

2008-07-13T07:33:00.002+08:00

It was a see-saw trading session on Friday for the US Market. The Dow Industrial Average dropped to a low of 10978 before bouncing to a high of 11239. The Bears attacked the market again bringing the index down to close at 11100.

The index managed to make a higher high and higher low on the 5 minute chart which indicates some strength towards the closed of the session.

The VIX is charging towards the 30 level again, with the indicator hitting a high of 29.44. There are fears in the market again.

The next support for Dow is 10849.

KLCI Update

2008-07-07T08:15:00.001+08:00

KLCI index is painting a “Bearish” picture.

The ADX is increasing and is above 20 level which shows a strong trend is developing. The –DI is greater than the +DI by a great margin, indicating a Bearish trend.

The MACD is below its signal line, another evidence of a Bearish market.

RSI is less than 30 indicating that the market is oversold. However an oversold market doesn’t mean that market will rebound strongly.

It is not advisable to trade the market from the long side given the bearish picture.

KLCI July Performance

2008-06-30T08:28:00.002+08:00

June is coming to an end. This is the historical performance of the KLCI index from 1994 onwards.

Entry Date	Entry Price	Exit Date	Exit Price	% Change	Draw Down %	Max Gain %	Bars Held
7/1/1994	1008.43	8/1/1994	1029.58	2.1	-3.2446	2.0973	21
7/3/1995	1025.85	8/1/1995	1059.91	3.32	-1.0391	4.9647	21
7/1/1996	1135.81	8/1/1996	1067.39	-6.02	-7.6404	0.4543	22
7/1/1997	1077.30	8/1/1997	1012.78	-5.99	-8.2456	0.7537	22
7/1/1998	454.73	8/3/1998	403.41	-11.29	-15.1211	6.8634	22
7/1/1999	819.70	8/2/1999	768.92	-6.19	-8.6605	6.184	22
7/3/2000	830.13	8/1/2000	799.59	-3.68	-5.4425	4.2198	21
7/2/2001	591.66	8/1/2001	660.06	11.56	-1.1814	12.7523	22
7/1/2002	727.73	8/1/2002	721.33	-0.88	-2.0365	3.1056	23
7/1/2003	691.93	8/1/2003	721.06	4.21	-0.1431	6.6466	23
7/1/2004	820.47	8/2/2004	832.69	1.49	-0.0073	4.6181	22
7/1/2005	888.18	8/1/2005	938.30	5.64	0	6.0427	21
7/3/2006	914.61	8/1/2006	935.41	2.27	-1.6816	2.717	21
7/2/2007	1357.78	8/1/2007	1367.29	0.7	-1.0348	2.5335	22

There is a total of 8 profitable and 6 losing "July" months.

Dow Update

2008-06-29T12:54:00.001+08:00

US market was hammered again on Friday. The Dow closed at 11346. From the 5 minute chart of the Dow, we can see that the index was attacked by the Bears from the opening bell.

The only positive sign is a bounce off the lower Bollinger band at around 1.45pm. The index managed to stage a higher low near the 61.8% Fibonacci Re-tracement Level. It is now resting at the lower Bollinger band. The resistance level based on the 5 minute chart is at 11401. If it manages to clear this level, the next resistance is at 11440.

US Financial Sector

2008-06-21T15:15:00.003+08:00

Dow closed at 11,824.69, down more than 200 points. The index is now very close to 11,508, the low established on Jan 22 2008.

The headlines are saying that the fall on Friday is due to credit woes and high oil prices. If you look at XLF (Select Sector SPDR-Financial), a fund that holds big financial names in US, the MACD chart is hinting on a potential reversal.

The XLF established a low of 22.13 on 11 Jun 08 and it reached a low of 21.86 on 20 Jun 08. However the MACD histogram has held above the low made on 11 Jun 08. This divergence is suggesting that a reversal is near.

However traders need to have strict discipline and stick to pre-defined stop losses in order to survive in this tough environment.

Happy trading!

KLCI Update

2008-06-14T16:23:00.003+08:00

KLCI closed at 1229.35 on Friday. For the week, the index is down 19.22 points about 1.5%.

The index has rebounded from the lower Bollinger Band. The index managed to form a pivot point on 12 Jun 08. MACD is also creeping up but it is still below its signal line. The –DI is still above the +DI and ADX is now above 20 level which means that a down trend is developing.

The only positive sign is RSI is increasing and has cut above the 30 level. There should be a rebound early next week since Dow Jones was up 165 points on Friday.

However, the index is still looking fragile. If it breaks below 1214.37, the next support is at 1157.47 which is the low set in March 08.

Dow Update

2008-06-07T10:53:00.002+08:00

The Bears came out to party this week. Dow closed at 12209, down 429 points for the week.

The loss on Friday erased the 214 point gain made on Thursday. Jobs number came in worst then expected and high oil prices were the culprit for the Friday decline.

Looking at the weekly chart for the Dow, there should be support at 12155, 11952 and 11508. If the index breaks below 11508, we are looking at possibility of index falling to 10849.

KLCI Update

2008-06-05T13:25:00.002+08:00

KLCI closed 1253.12 points on Wednesday. With the Government removing the subsidy on fuel, the market reacted negatively in Thursday morning trade down more than 37 points or 3.02%.

The index is now sitting at the pivot low of 1216.38 set on 7 Apr 08. If this support cannot hold, the next one will be at 1166.

The indicators do not look good either. The –DI is now above the +DI and ADX is increasing. MACD indicator is also showing bearish signs. The RSI indicator is indicating that the market is approaching oversold level. But if a downtrend develops and the ADX goes above 20, then the market may remain oversold for a longer period of time.

Air Asia Case Study

2008-06-04T10:12:00.003+08:00

Oil price has gone up from about 100 USD in the beginning of the year to 124 USD. That is an increase of around 24% just for 2008. High price oil will affect the earnings of companies that rely on oil for operation, example airline and transport companies.

Let’s look at the chart for Air Asia.

The stock closed at RM 0.99 yesterday. The price is currently below the 50 day, 100 day and 200 day moving average. A bearish sign.

The RSI has been below 30 since the beginning of May 08. However oversold doesn’t mean it will not go down further as illustrated by the chart.

The short term stochastic signal is showing some positive sign. But it seems to be moving down again. The bulls just do not have enough strength to push the price higher.

If you are looking to buy this counter, it is best to wait for the MACD indicator to do a crossover.

KLCI June Performance

2008-05-26T11:48:00.002+08:00

This is the performance of KLCI for month of June from 1994 onwards.

Entry Date	Entry Price	Exit Date	Exit Price	% Change	Draw Down %	Max Gain %	Bars Held
6/1/1994	991.60	6/30/1994	1011.58	2.01	-4.36	5.08	21
6/1/1995	1058.13	6/30/1995	1026.62	-2.98	-3.32	3.13	21
6/3/1996	1139.78	6/28/1996	1136.31	-0.3	-2.08	1.37	19
6/2/1997	1107.55	6/30/1997	1077.30	-2.73	-4.13	2.77	20
6/1/1998	537.60	6/30/1998	455.64	-15.25	-19.03	0.18	21
6/1/1999	742.70	6/30/1999	811.10	9.21	-1.81	12.07	21
6/1/2000	914.12	6/30/2000	833.37	-8.83	-12.82	0.25	18
6/1/2001	573.30	6/29/2001	592.99	3.43	-1.84	5.88	19
6/3/2002	741.90	6/28/2002	725.44	-2.22	-5.12	1.94	19
6/2/2003	672.92	6/30/2003	691.96	2.83	-0.42	3.41	20
6/1/2004	811.66	6/30/2004	819.86	1.01	-2.31	2.04	21
6/1/2005	861.05	6/30/2005	888.32	3.17	-0.26	5.22	21
6/1/2006	927.65	6/30/2006	914.69	-1.4	-4.78	0.83	21
6/1/2007	1348.36	6/29/2007	1354.38	0.45	-0.16	3.20	20

The records are pretty even with 7 winners and 7 losers. However, the average winning size is less than the average losing size.

KLCI Update

2008-05-23T07:18:00.002+08:00

Some danger sign is appearing on the KLCI index. The rebound from 18 Mar has taken us from a low of 1166 to a high of 1305. The rally looks to be running out of steam.

The MACD cut below its signal line on 20 May 08. This suggests weakness in the short term.

The +DI has cut below the –DI line. The last time this happened on 20 Feb 08, the index went down from 1414 to 1173.

The index is also very near the base of the Bollinger Band. If it breaks below 1271, it will be bearish.

Let’s see whether the index can gather enough momentum to break through 1303. If the Bulls are able to push through this level, there will be another rally towards 1437

ASTRO Update (Symbol 5076)

2008-05-15T07:02:00.003+08:00

ASTRO made a MACD Crossover on 22 Apr 08 and a trade was initiated on 23 Apr 08 with a buy stop order at RM3.46 and stop loss level of RM3.29.

This trade turned out to be a winner. ASTRO closed at RM3.82 on 14 May 08. That is a gain of about 10% within 15 trading days.

The price pattern made an inverted hammer yesterday. If the price goes below RM3.80 it will be suggesting weakness in the near term.

Both Stochastic and RSI indicator is reaching the top end which indicates that the stock may be reaching overbought condition soon.

MACD is still above its signal line so there is no sell signal from the MACD yet.

One approach will be to ride on the up trend and to take profit if the price falls below RM3.78.

KLSE Update

2008-05-14T08:12:00.002+08:00

The KLSE index closed at 1286.54 yesterday. The 20 day moving average is showing a positive gradient and is rising since the beginning of Apr. This is a bullish sign.

The Bollinger is showing a slightly upward channel and the index looks to be moving towards the upper part of the Bollinger bands. If the index can break out of 1305 level, the uptrend will resume and the most likely target will be the Fibonacci Projection level of 1359.

The RSI has retraced back to the 50 level so that market is currently not in overbought situation.

The ADX is turning up and the +DI is greater than –DI. This implies that uptrend will most likely continue.

Pristine Swing Method

2008-05-13T08:36:00.006+08:00

This is a method described by Oliver L Verez in his book, “TOOLS AND TACTICS FOR THE MASTER DAY TRADER”.

The method uses candlestick pattern and the relationship between the highs and lows of the price bar to determine entry points.

Entry Rules
1. Price made 3 or more consecutive lower highs
2. Price made 3 or more consecutive lower lows
3. Price made 3 or more consecutive black candle (closing price is less than opening price)
4. When conditions (1) to (3) are met, enter a long position at the high of the previous bar.

Exit Rules
1. Exit after holding the trade for 5 days.

Example of such a price pattern is shown below:

Lets apply this method to Digi.com Bhd (Symbol: 6947). Using data from 2003 to 9 May 2008, we have the following trades:

Entry Date	Entry Price	Exit Date	Exit Price	% Change	Bars Held
5/18/2004	4.42	5/25/2004	4.5	1.81	5
10/8/2007	20.4	10/15/2007	22.6	10.78	5
11/26/2007	23.8	12/3/2007	25.75	8.19	5

Dow Update

2008-05-10T20:16:00.002+08:00

The Dow Industrial Average closed at 12745 points, down 120 points. For the week, the index was down 313 points.

The index is now resting at the lower trend line of the upward price channel. It is also near the 50% Fibonacci Retracement level.

Next week will be a critical week. Let’s hope the index will be able to stage a rebound from current levels.

US Yield Curve

2008-05-07T08:41:00.004+08:00

The yield curve is simply a ratio that is derived by dividing a long term yield with a short term yield.

For example, the yield for the US Treasury 3 month bill closed at 1.62 and the yield for the US Treasury 30 year bond closed at 4.66 on Tuesday. Therefore the value for the yield curve is 2.88 (4.66 divide by 1.62).

The steepness of the yield curve can be used to predict the performance of the stock market. This is because when the yield curve is steep, banks earn money by borrowing short term and to loan long term. The reverse happens when the yield curve is inverted or flat. Hence when the yield curve is steep, banks have every incentive to loan out as much as possible and to borrow to the limit of their reserves. And when that happens, there will be excess liquidity to drive up the stock market.

I have done a study by using the data from Yahoo (Symbol: ^TYX - 30 year bond and ^IRX - 13 week Treasury bill).

The trading rule is simple.

Enter
1. Compute the Ratio = (^TYX)/(^IRX)
2. If ratio crosses value of 1.15, enter a long position

Exit
1. Closed the long position after 12 months.

The trading result is as follows:

Entry Date	Entry Price	Exit Date	Exit Price	% Change	Draw Down %	Max Gain %	Bars Held
6/2/1980	850.85	6/1/1981	991.75	16.56	-1.1929	21.1706	12
12/1/1981	888.98	12/1/1982	1039.28	16.91	-13.3861	21.3143	12
6/1/1982	819.54	6/1/1983	1199.98	46.42	-6.0473	51.8523	12
8/2/1982	808.60	8/1/1983	1199.22	48.31	-4.7762	55.9139	12
5/1/1990	2656.76	5/1/1991	2887.87	8.7	-11.7606	14.0656	12
9/4/1990	2614.36	9/3/1991	3043.60	16.42	-10.3295	17.3767	12
2/2/1998	7987.46	2/1/1999	9405.43	17.75	-7.6089	22.1845	12
4/1/1998	8818.50	4/1/1999	9825.29	11.42	-16.3157	15.1961	12
8/3/1998	8868.10	8/2/1999	10654.83	20.15	-16.7837	27.6667	12
10/1/1998	7749.42	10/1/1999	10335.69	33.37	-4.5118	47.4812	12
1/4/1999	9212.84	1/3/2000	11501.85	24.85	-2.3726	26.5482	12
4/2/2001	9877.16	4/1/2002	10402.07	5.31	-19.7448	15.7865	12
9/4/2007	13358.39	Open	Open	-2.91	-13.8464	6.8988	9

The trading result is not exactly spectacular but it is definitely better than return from fixed deposits.

Market Timing Using 30 Year Bond Yield

2008-05-02T16:27:00.004+08:00

This method was described by Mark Boucher in his book “The Hedge Fund Edge”. The method makes use of 30 Year Treasury Bond Yield to decide whether to enter or exit the market.

The method is pretty simple. It will buy the S&P when the 12 month rate of change of the 30 Year Treasury Bond Yield is less than 9%. The position is held until the 12 month rate of change of the 30 Year Treasury Bond Yield exceeds 9% again.

According to his study from 1947 till end of 1997, the probability of win is around 65%.

When I apply this same method using Dow Jones Industrial Average from 1979 till Apr 2008, I obtained the following results:

Entry Date	Entry Price	Exit Date	Exit Price	% Change	Bars Held
2/1/1979	839.22	3/1/1979	808.82	-3.62	1
4/2/1979	859.93	5/1/1979	854.9	-0.58	1
6/1/1979	822.33	11/1/1979	815.7	-0.81	5
3/2/1981	974.58	5/1/1981	997.75	2.38	2
12/1/1981	888.98	1/4/1982	875	-1.57	1
3/1/1982	824.39	12/1/1983	1276.02	54.78	21
2/1/1984	1220.58	3/1/1984	1154.63	-5.4	1
9/4/1984	1222.39	5/1/1987	2286.36	87.04	32
5/2/1988	2032.33	9/4/1990	2614.36	28.64	28
10/1/1990	2452.48	11/1/1990	2442.33	-0.41	1
12/3/1990	2559.65	7/1/1994	3624.96	41.62	43
4/3/1995	4157.69	1/2/1997	6448.27	55.09	21
3/3/1997	6877.74	9/1/1999	10828.44	57.44	30
4/3/2000	10863.28	5/3/2004	10227.27	-5.85	49
8/2/2004	10138.45	5/1/2006	11367.78	12.13	21
10/2/2006	11678.99	Open	Open	9.77	19

There were total of 16 trades with 9 being profitable. The average profit is about 20% and the average loss is about 3%.

IOI Corp Bhd (Symbol: 1961) Case Study

2008-04-29T07:40:00.004+08:00

Today I will do a case study on IOI Corporate Bhd (Symbol: 1961). This is an investment holding company that deals with palm oil and rubber.

This stock closed at RM7.55 on Monday. This stock has made a transition from down trend to uptrend.

The price is currently above the 10 day simple moving average, 20 day exponential moving average and 30 day exponential moving average respectively. The last bar on the chart showed a Harami candlestick pattern.

The price managed to bounce off its 10 day simple moving average yesterday which is a good sign.

You can use the method described in my earlier post
HAI-O Case Study to trade this stock.

The trading result for the method when applied to this stock is as follows:

Entry Date	Entry Price	Exit Date	Exit Price	% Change	Bars Held
6/9/2003	1.03	8/5/2003	1.14	10.68	41
2/24/2004	1.73	4/15/2004	1.89	9.25	37
7/9/2004	1.7	7/15/2004	1.65	-2.94	4
8/27/2004	1.7	10/20/2004	1.83	7.65	38
12/27/2004	1.88	12/29/2004	1.89	0.53	2
4/15/2005	1.82	5/18/2005	1.83	0.55	23
6/16/2005	1.92	11/15/2005	2.54	32.29	108
1/11/2006	2.52	1/24/2006	2.5	-0.79	9
4/25/2006	2.84	5/23/2006	2.94	3.52	20
7/10/2006	2.98	9/7/2006	3.28	10.07	43
10/25/2006	3.34	12/15/2006	3.72	11.38	37
1/10/2007	3.74	1/19/2007	3.68	-1.6	7
3/29/2007	4.28	6/5/2007	5.55	29.67	48
9/11/2007	5.35	11/23/2007	6.85	28.04	53
2/18/2008	8	3/4/2008	7.9	-1.25	11
4/23/2008	7.5	Open	Open	-0.67	3

The simulation data is from 2003 to 28 May 2008. In total there were 16 trades with 11 winners and 4 losers. The trade on 23 Apr 08 is still active. Lets see how this trade will turn out.

KLSE Update

2008-04-28T07:31:00.003+08:00

KLSE index closed at 1288 points, gaining 20 points for the week. The ADX chart is looking strong with the +DI being above the -DI. ADX value is now at 21 and is turning up. This shows that the market is gaining momentum.

RSI is turning down and is now at 60 level. There may be a slight pull back to the Fibonacci Retracement level of 1266, 1257 and 1247 respectively. These three levels correspond to the 38.2%, 50% and 61.8% retracement of the upmove from 7 Apr to 24 Apr 08.

HAI-O Enterprise Bhd Update

2008-04-27T13:57:00.005+08:00

The trade signal identified for HAI-O Enterprise Bhd did very well. From the identifed entry price of RM3.12, it has moved to highest point of RM3.58. It closed at RM3.54 on Friday. This trade produced a gain of about 13%. The method used is based on moving average crossover. For a detailed description of this method of trading please refer to my earlier post HAI-O Case Study

Based on candlestick pattern analysis, the Doji pattern that appeared on Friday trading session suggests that the bulls and bears are evenly matched. I will be looking at closing the trade if it drops below RM3.46 which is the low of the price action on Thurs 24 Apr 08.

KLSE May Performance

2008-04-23T20:57:00.004+08:00

There is a saying that you should sell in may and go away. How through is this statement? If you look at past performance from 1994 to 2007, there is no concrete evidence that KLSE will do badly in May.

Entry Date	Entry Price	Exit Date	Exit Price	% Change
5/3/1994	1054.13	6/1/1994	991.6	-5.93
5/2/1995	950.38	6/1/1995	1058.13	11.34
5/2/1997	1080.17	6/2/1997	1107.55	2.53
5/4/1998	625.24	6/1/1998	537.6	-14.02
5/3/1999	675.78	6/1/1999	742.7	9.9
5/2/2000	898.66	6/1/2000	914.12	1.72
5/2/2002	795.07	6/3/2002	741.9	-6.69
5/2/2003	631.16	6/2/2003	672.92	6.62
5/5/2004	840.42	6/1/2004	811.66	-3.42
5/3/2005	878.79	6/1/2005	861.05	-2.02
5/2/2006	947.8	6/1/2006	927.65	-2.13
5/3/2007	1329.13	6/1/2007	1348.36	1.45

So keep investing but you will need to be selective on the stock to invest in.

ASTRO (Symbol: 5076)

2008-04-22T13:58:00.003+08:00

ASTRO (Stock code: 5076) made a MACD crossover yesterday. That is a bullish sign.

The stochaistics chart has also made a crossover which indicates strength in the near term.

The 14 day RSI is at neutral level and is neither in overbought or oversold level.

The chart is indicating a support at RM 3.30. One approach is to buy when the price exceeds RM 3.46 and to set a stop loss at RM 3.29. The resistance after RM 3.46 is at RM 3.72.

KLSE Update

2008-04-22T11:17:00.003+08:00

KLSE managed to break through its 50 day moving average yesterday.

The recovery that began on 18 Mar 08 has brought the index from a low of 1166 to 1280. The index has also broken through the down trend line which is another positive sign of a recovery.

If the index can stay above 1264, the Fibonacci objective will be at 1314.