Saturday, May 29, 2010

Selling On The Run. Quiet Market Ahead?

Writing an article or sharing our point of view regarding about the Malaysian share market, it is not an easy thing to pen down all the time. Every time when I want to write some article about the performance of the Malaysian share market, I have to choose the word nicely before I can put it on the blog.

Sometimes our comment also can easily make people feel a bit angry but some would appreciate it. For those who understand the share market very well, they would understand what I'm trying to write all the time. I have been involved in the share market since my first purchase during 1987 World Stock Markets Crash (Black Monday). I have learned a lot but still the mistake would eventually come and go. It is just that how well our patients and our actions will be (making a decision), it will determine whether we can win more or lose more.

Few of my articles lately argue quite well the behavior of our Malaysian share market movement and indeed it did help me a lot in terms of my speculation strategies. Those who choose to follow will benefit from it. I have been studying and watching the movement on our FBM-KLCI since 1995 until now. They always tend to move the same way all the time. Once there is a panic selling .... opportunity arise.

Well let us talk about where our index is heading to next? FBM-KLCI has gone up last Thursday after experiencing some huge sell off on Tuesday (25.04.2010). Last week on Thursday (20.05.2010) inside my article FBM-KLCI Down -21.94 Points. An Opportunity? I did mention that "any technical rebound play would only be considered once we have some huge panic selling activities all over our share market" and they really happened on Tuesday.

Last Monday (24.05.2010) my article "Technical Rebound Around The Corner" did mention that this week we can expect some technical rebound ahead. Inside my article I did mention that "any more sharps falls will be dealt as an opportunity to accumulate".

As I have mention Tuesday turnover and Wednesday turnover done was an opportunity to Catch A Falling Knife. For those who has accumulated the shares, they were smiling all their way until late Thursday where by our FBM-KLCI went up +20 points to close higher (technical rebound).

Right now, we still have to apply the same strategies " SELLING ON THE RUN ". For those who have accumulated the shares on Tuesday and Wednesday, they need to unload their shares as the world equities market still shows no sign of stabilizing. With the North and South Korean issue, PIIGS (European financial crisis), Securities and Exchange Commission (SEC) suing Goldman Sach and the 2010 World Cup South Africa around the corner, the world equities markets might experiencing some zig-zag or a quiet movement ahead. There are so many bad news ahead and I'm expecting the FBM-KLCI will follow the same way.

From now on, we still need to monitor how the Dow Jones Industrial Average and the world equities market performance. Their movement will decide whether we still have more rooms or more opportunity ahead? No doubt they seem to be heading for downtrend channel still we need to open our eyes and look for more opportunity ahead.

Whether there would be another opportunity to Catch A Falling Knife, we will have to wait because catching a falling knife don't always happen all the time. They only happen when there is a PANIC BUTTON being press (Sell Off).

Wednesday, May 26, 2010

Catching A Falling Knife?

Yesterday the Malaysian share market experiencing some heavy selling with the FBM-KLCI down another -23 points. This time I was not around to watch how they drop because I was in Pulau Redang, Terengganu but basically I like the way its drop because with this kind of drop we have more chances to look for more opportunity around the corner (technical rebound).

Yesterday and today movement I would rate it as CATCHING A FALLING KNIFE. Those who dare to catch a falling knife would eventually make some but it would be quite hard to choose which counters?

Why it is a good time? FBM-KLCI has dropped nearly -100 points from its previous high and share market don't always go down all the time, they must climb up a bit. For the last few days our market has drop quite hard with most of the counters recorded double digit losses.

Whether today evening or tomorrow, we might see more green ahead but I don't know whether it will happen or not? It is just that the share market need to make some adjustment (going up) before the next wave coming in. I'm just sharing what is in my mind and we cannot take it as it will happen. I might be wrong. We have to decide and to make our own decision whether today is the right timing to do so (accumulate for technical rebound).

Monday, May 24, 2010

Technical Rebound Around The Corner?

To be frank looking at the performance of the Dow Jones Industrial Average, I would expect that the DJIA might have started the downtrend move. How long the downtrend would be? Sometimes a downtrend can go for few week or maybe for few month. Right now I don't have any answer for it because during a downtrend being perform it is hardly to determine and to understand where the index are heading to.

Looking at the share prices right now and the overall last Friday closing (Malaysian share market), its looks a bit tempting as most of the share prices has come down and most of them are in oversold position.

I think this week we might have some technical rebounds but it won't be overall counters that are going to move up. It will be selective; counters which have experience some sharp falls recently.

FBM-KLCI has drop about -65 points from its previous high and we can expect some technical rebound ahead. When the index will climb? We have judge it by our monitoring. Any more sharp falls will be dealt as an opportunity to accumulate. RSI (Relative Strength Index) currently in oversold position.

To determine whether we still have some chances this coming weeks, it would depends on how the DJIA and the world equities market performance. Basically it is still not safe enough to invest or to speculate at these moments. Things still looks not safe enough or I can say we are being surrounding by lots of fire burning. Anytime we can get burn. If we are not careful enough, the burn will even hurt us until the bone.

Thursday, May 20, 2010

FBM-KLCI Down -21.94 Points. An Opportunity?

Well, well, well I didn’t expect that the FBM-KLCI to make a sharp fall yesterday. The FBM-KLCI was down -21.94 points to close at 1,308.23 points. All the while the index has been quite supportive, standing tall and we can’t even expect any major falls that would happen as the FBM-KLCI seems to be control by the government funds.

Yesterday they can’t even hold on that level any more. They need to respect the world equities market performance and their momentum. No matter how long or how strong we are the forces that beyond our control need to be released. The government should let the markets moves freely.

Yesterday we can see some panic selling and some sell down happen in our market. Now the question is? Can we buy right now for another technical rebound? When the technical rebound will happen? Can the share prices move down some more?

Basically looking at the world equities markets performance right now, it is quite dangerous to go in. Any technical rebound play would only be considered once we have some huge panic selling activities all over our share market. During that time we can only consider to speculate because the Reward or the Return will be greater than the Risk.

At these moments we might have some opportunities ahead with one or two counters but it is not easy to find one. I would prefer to hold more cash rather than going in (speculate counters) right now because the world equities market still not stablized yet. The European region still have lots of holes need to be cover up and to patch on.


Wednesday, May 19, 2010

Lack Of Interest. World Equities Markets In The Correction Process?

Like it or not, right now we are facing some negative impact from the financial crisis occur in the European region. The Dow Jones Industrial Average has been decline for few days and the index has also broken the important level of 10,700 points.

Although we are seeing some continuing selling pressure from the world equities markets, yet our control Malaysian share market still stand tall. This is not a good sign and it shows that the Malaysian share market is not really following the world fundamentals. I won't be surprise if the FBM-KLCI break the 1,300 points.

Technical rebound already finish and right now would be the time to study the share market movement. We are not going to experience a huge fall but rather a bit by bit fall. A bit by bit that will bite us until we didn't realize that most of our holdings have created big holes (losses).

Looking at the current share market performance, it seems that we are facing lack of interest from among the players. Last few of my articles supported me well in terms of my suggestion what we would be facing in the near terms. Right now staying away from the share market would be the best strategies to adopt rather than searching for opportunities because the world equities markets still look unstable.
Most of the world equities markets are experiencing some correction process and this correction looks quite dangerous in the near terms and we must be careful all the time.

Saturday, May 15, 2010

Why The Greek Financial Crisis Matters To Us

For the past several days, even casual observers of current events will have heard about the riots occurring in the streets of Greece. Greece is effectively bankrupt and the massive austerity measures being imposed are likely to inflict significant economic damage.

There is no doubt that the Greek crisis will have an effect upon our economy. California and other states, face many of the same economic challenges, which could mean that the problems that face Greece could very well be heading our way. If nothing else, the near 1,000 point intra-day drop in the U.S. stock market demonstrates nervousness in the markets as well as the strong link between what's happening in Greece and the rest of the world.

But stock market volatility is only a symptom of a much larger set of forces. First, there is the fact that just behind Greece awaits several other European countries in equally fragile predicaments. Collectively they are now being referred to as the PIIGS, which stands for Portugal, Ireland, Italy, Greece and Spain. Even if the European Central Bank can bail out Greece, there's no way it can also shoulder the load for the other, much larger countries.

Secondly, these events demonstrate that the PIIGS, along with other developed nations, have been borrowing beyond their means. Just as the U.S. banks discovered, too much debt is as dangerous. Their situation is made worse by the fact that they have exploded their national debt in order to prop up their banks and their floundering economies.

Third, the value of the common European currency, the Euro, is crashing and probably will not survive very long — certainly not in its current state. A bad case of financial chaos may very well be the dominant situation in Europe. That would have the effect of making their goods much more competitive than American goods, thus threatening to forestall the U.S. economic recovery.

Fourth, these events are reminding everyone that the financial crisis is hardly over. We are now facing a contagious global sovereign debt crisis, which is feeding a massive case market anxiety around the world.

Nobody can say with certainty that we fully understand all the remaining risks. There is still the possibility of more unpleasant surprises ahead. If anything, this crisis is showing how fragile the world economy remains, while underscoring what many people have not focused on.

The financial crisis of 2008 was not caused by just a single event like the subprime mortgage markets, Wall Street abuses, or regulatory failures, or thirty years of poor economic policies in the U.S. and abroad. We are facing the perfect storm of financial upheaval around the world caused by all of these and other forces.

Most of all, Greece matters to us because America is on a similar economic and financial path. Imagine the reaction if Washington announced sharp cuts in government programs including Medicare, Medicaid and Social Security, and or cuts in the salaries, benefits and pensions of federal government workers. Imagine the reaction if the rest of the world stopped buying our national debt and if the Treasury Department was forced to dramatically increase interest rates, thereby making our debt burden unsupportable.

It is astonishing that Washington is now adding on new entitlement programs, just as the European social welfare model is collapsing. If we stay on the course we're presently on, we may very well be forced to endure some of the same measures that Greece is now taking. We need to balance the budget by cutting government spending and growing the economy. We can do it now, in an orderly manner or later in a panic. But we will ultimately have to do it.

There is some cause for optimism, since the US has strengths and flexibilities that Greece does not and there is enough time for us to correct the current course. If we wake up to this reality now, we can avert the worst of it. But, if we do not see the writing on the wall and respond appropriately, all bets are off.

Thursday, May 13, 2010

Selling On The Run ? Was It A Correct Decision?

These two weeks will determine exactly where our world equities markets are heading to? It is very important to examine these few weeks movement because we will find out whether the Dow Jones Industrial Average (DJIA) is going for consolidation, uptrend or a downtrend move.

Two weeks from now the DJIA (must not break 10,700 points) will give us a clearer picture as to where our investment must continue on. Whether we can still keep on continuing investing in the shares market or we must hold and wait for more opportunities ahead. At these moments holding lots of cash will be consider as the KING of everything.

Patients will play an important role to determine whether we have the advantages to win and strike more. Having a gun and simply open fire will only wasted our bullets but if we patients enough and aim the target perfectly, the rewards will naturally run in for us.

At these moments our Malaysian share market is experiencing some technical rebound and as usual SELLING ON THE RUN would be the best strategies right now. I’m not trying to be negative but to be more cautious against the current European financial crisis. Whether it was a correct decision or not, we have to judge it nicely. For me I don't like the current scenario in the European region. It looks quite tricky .............

Tuesday, May 11, 2010

Sell On The Run. Share Market Might Not Stay Longer Enough?

Last week we have experiencing quite a drastic move from the world equities market and the Dow Jones Industrial Average (DJIA). Both market have tumble quite lots with the DJIA experiencing at one time DROP of 1,000 points in just 5 minutes. Looking at this scenario, we can say that the DJIA is heading for a correction. A correction that I have been expecting all the while but I didn’t expect it to be so drastic.

Yesterday as we can see, the Malaysian share market has started to rebound after most of the counters have experiencing some downfall recently. I’m not talking about the performance of FBM-KLCI as the FBM-KLCI didn’t represent our whole market true picture compare to other regional markets around the world. I’m talking about the overall Malaysian share market performance.

Overall counters have started to rebound but for how long the rebound will be? From my judgement; I would expect the technical rebound will last in few days but this will based on how the DJIA and the world equities performance. Looking at the rebounds today, I would rather say the rebounds that are happening were just a technical rebound and it won’t last long.

It is true we are seeing that the whole world equities markets are power up just like super Bull Run but for how long? Don’t get caught by this huge rebound. It might be a Big Bull Trap. A trap that might hurt us even deeper.

We have to be careful because after this technical rebound, it would eventually bring down the share market movement and the prices will eventually move lower. Why? The overall sentiment was hurt by the crisis in PIGS country and one thing for sure this is just a beginning. Basically whenever the share market been hurt by the drastic fall down, it would take some time to heal the wound. But I’m doubt that the wound would be heal on fastest phase.

I might be wrong in the whole process but we have to be extra careful. My comment was based on my 15 years experience in watching how the whole markets behave. As I have mention, this comment was just totally my point view and we cannot take it that this outlook will happen. You have to judge it deeply.

No one is great and no one is clever, only the smart one will win the last battle.

Thursday, May 6, 2010

It Seems That The Bears Are Controlling The Bulls Right Now.

Basically Selling In May And Go Away seems to be argue quite well at these moments. Looking at the overall Malaysian share market momentum and the world equities performance, it seems that we are entering into a correction mode. I don't think current momentum was a profit taking activities but rather a real correction coming in.

Whether how long the correction would be, it would depends on how the Bears will rule the world equities performance but it seems that it is quite difficult to determine how strong the Bears were. Right now we have to monitor whether there would be an opportunity arise? A technical rebound might emerge and it is not easy to catch or spot a counter that can easily rebound strongly. In order to catch a good rebound counter, we need to find which counter has already gone down a lot.

With the overall sentiments looks quite negative, it is advisable to ignore the current Malaysian share market unless we have some instinct that the counter we choose can really move up. As I have mention in my last few articles "Why I Wanted To Sell Before May", I did mention that if we build our portfolio during that time (Risk vs Reward), the Risk that we going to take during that time was high and it is not worth it at all. Today we can see there are so many counters going down bit by bit and some even went down up to double digits.

Whatever decision we make today will determine whether we can protect our portfolio and it is quite important that we know how to pull back when the share market is heading to the south. To have a negative feeling right now would eventually safeguard our investment and we will have to wait for another round of Bulls to emerge.

Dow Jones Industrial Average (DJIA) performance still didn't pose any great danger at these moments as long as the DJIA able to withhold the important key level of 10,700 points. Breaking that level would eventually turn the DJIA into a bearish situation and it is not a good sign at all.

Tuesday, May 4, 2010

Part 2 - Why I Wanted To Sell Before May.

My article " Why I Wanted To Sell Before May " get a respond from one of the readers. Here I would like to post his comment on my blog and we can share with most of the readers from his thoughts and his observation.

May I append my thoughts on your observation.

1. Stock markets comprise of many sectors - plantation, export semiconductors, properties, banking, health, construction and many more. My view is that not all these sectors move together in 2009. Sure prices of some say, construction or banking stocks have moved.

But what is their potential in the next few quarters. Are they overvalued? Maybe sentiment now is negative in view of so many headwinds. I will always look at value buys, taking into account of the economic cycle of each sector, stock valuation and its potential in relation to the ever changing world and local economies.

2. True SELL IN MAY AND GO AWAY. I have made analysis of this phenomena for three periods 1998, 2002 and 2006 - all these years coincided with the World Cup. In the first two, the markets went up in the earlier part of the year culminating in Mar/April and the market trend went down until the end of the World Cup in early July.

Subsequently, it went further down. However, 2006 was a bit different. Market trend, I believe went up until May before it gave up some gains, about 50/60 points but towards the end of the World Cup it picked up and with minor corrections in July and August and went all the way up leading to the 2007 bull run. I managed to catch it from Nov and Dec 2006. The bottom line I would like to share is still the economic fundamentals of the local and world economies.

Are they favourable for firms to make monies and are prices reflective of such potentialities. That I believe is what that counts. Economic data do not lie but the presentation of which is another story. Sometimes a lot of investors get carried away with newspapers reports of how bad a situation is that they forgot the trees for the forests.

3. The year 2010 will be marked by news of potential sovereign defaults. There is ample of these in the news. If we were to borrow from the bank, the bankers would want us to repay and the moment economic conditions do not look good, they will recall the loan. But this time, it is countries that are involved.

These PIGS (Portugal, Ireland, Grecce, Spain) countries borrowed heavily during the last financial crisis and certainly creditors will want their monies back. Have we forgotten? So, this crisis is not something that is not known.

Those who are in the know and followed the economics of Europe would have known and have profited much from the ups and downs. Between the initial stage to the final resolution of this Euro crisis, there is going to be many perception along the way.

Will it be a contagion like the last financial crisis or will be limited to Europe and US? How are the currencies affected? All these create different perception of risks and consequently the fear factor that moves markets up and down.

These are also profit opportunities for some. For example, Mark Mobuis of Templeton Fund read the Dubai crisis correctly and waited till it broke out before buying property stocks at rock bottom prices. For me, I am still at the learning curve or rather still way behind.

4. Lastly, the World Bank, our Government and a few banks have revised our GDP upwards. Does this mean that our exports in the next few quarters will be up, up and away. Will they peak at the end of the 1st quarter or the 2nd quarter. All said what is the bottom line for our companies in the next few quarters.

Are values now reflective of such potential. Is the market overvalued, therefore a correction is in store. How large will this correction be in the face of this improving economic fundamentals? How much of this forecast can be taken at this point of time?

Like I said at the start, I'm sharing my thoughts. The world of investment is truly a fantastic educational arena. Learn it well and make less mistakes. The ultimate outcome will be something worth all the effort.

James Lau Chea Yong

Monday, May 3, 2010

Why I Wanted To Sell Before May ?

Why I wanted to sell before May? Quite an interesting question? Well this is just few of my opinion. It would be good if I can share what is in my thinking right now.

1) I have found out that the possibilities to make more return or income in the Malaysia share market is getting lower and lower (Risk versus Reward). Basically looking at the share market momentum right now the Risk is higher than the Reward.

2) According to historical data created by the Malaysian share market, usually coming to the month of May - the share market will start to move down. Please refer to this article SELL IN MAY AND GO AWAY.

3) The immediate financial crisis in Greek and several European country after some downgrading in their debt rating may sparks another crisis. Greece, Portugal and Spain all saw their debt ratings slashed by Standard & Poor's last week. Greece's rating was cut to junk status. The concern in the markets is that a loan default could threaten the euro, the currency shared by 16 European nations, and in turn jeopardize the global economic recovery.

4) 2010 South Afica FIFA World Cup will begin in June and based on historical data, the share market tend to be slow and lack of interest.

5) The Dow Jones Industrial Average has been moving up since March 2009 until now. Will there be a correction in the process? Whether it might happen or not, a pre-caution measure need to be taken and consider.

6) Criminal investigation of Goldman Sachs. American market regulator Securities and Exchange Commission filed a lawsuit charging Goldman Sachs with defrauding and causing losses of over USD 1 billion to investors by misrepresenting facts about a financial product tied to sub-prime mortgages. A Standard & Poor's equity analyst downgraded Goldman's stock to a "sell" rating Friday.

This is just few of my opinion and we cannot take it as an assumptions that the share market will experience some downturn because of these few reasons. It was just for my cautious outlook towards the market. Even until now the FBM-KLCI still look quite fabulous and even stand at higher points. Anyway trade it with careful approach.