Moved To New Blog

This blog is now moved to Bursa Malaysia Trader. All posts in the future will be posted on the new blog. Please bookmark the new blog as I will be posting both fundamental and technical analysis on stocks and futures on Bursa Malaysia, as well as a myriad of other valuable information.

Happy Trading And Investing!

Aimless Drifting

The KLCI was trading around 925 in our previous update. Coincidentally, it is trading at the same level now. Having failed to break above the resilient resistance at 930 as we expected, the index traded down to a low of 910.80 on 8th Mar 06, before rebounding to the current levels.

In my opinion, we would be consolidating here for a while more. We still have a good probability of the index breaking above the 930 barrier after the current consolidation. Hopefully, the unveiling of the 9th Malaysia Plan would provide the necessary impetus to drive the index higher. So, the current technical picture is a neutral one with cautious bullishness.

I will update as soon as possible on subsequent developments. Stay nimble and happy trading and investing!

Is The Consolidation Over?

The index has range traded for the past 2 weeks since the last update. During this period, it first went to a low of 915.86 on 8th February 06 before rebounding to create a new high of 931.10 on 15th February 06. Currently, it is at about 925. Is the consolidation over? Are we ready for the next round of new highs? Is the bird flu scare going to worsen? These are the questions currently in everybody's mind.

My guess is that the recent high of 931.10 is quite unlikely to be broken convincingly for the time being. On the other hand, the market seems to be quite reluctant to go down in a hurry especially when the few index-linked blue chips are well supported. Given such scenario, the index might continue to drift sideways for a while more. So, again, for those inclined to go long, wait for the index to drift just a little bit lower to get a good price. Be patient. It is quite hard to make money on the short side currently. Of course, this is just my opinion at the current moment, given the information we have. Until the next update, good trading to all!

Expect Sideways Consolidation

The Year of the Dog started off with loud barks, to the surprise of most market participants. The index went up almost 15 pts at one stage compared to the close before the long break. Our long stance has certainly paid off. It is always prudent to lock in some profits during such run ups. In the immediate term, I am now neutral. Expect a period of consolidation with intermittent ups and downs. Don't get me wrong. I am still BULLISH on the longer term. It is hard to make money on the downside unless you enjoy super low commission trading the FKLI futures. For retailers playing retail rate, be patient again, and wait for a chance to go long after this downward correction. Keep your gun powder dry! Again, this analysis is for the Composite Index KLCI and FKLI futures. Individual stocks will perform differently. There will be rotational plays for sure. So much for now. We would reevaluate the situation when more facts become available. Nothing is etched in stone, when it comes to trading. The great economist, John Maynard Keynes said, "When the facts change, I change my mind."

Year Of The Dog Is A Good Year For Stocks

Our call for a buy 4 days ago could not have been better in terms of timing as the index printed a low of 898.61 on that day before rebounding to surge higher in 4 consecutive days. It is good that we caught the bottom, but we should not look expect to catch it everytime or even most of the time. It is just a bonus and not necessary for long term success. It is more important to trade according to plan as wins and losses are part of process of trading. Well, where do we go from here? In the short term, the index might pause or even retrace slightly after the surge. Second liners will continue to be played up in a rotational manner. Take some profits if you like BUT remember to stay in your LONG position both in stocks and FKLI futures. It is possible that the market is in for a sustained rally after the Chinese New Year. Of course, we would reevaluate this statement as we gather more information. For now, STAY LONG.

I also take this opportunity to wish all readers a healthy and prosperous Chinese New Year. I have also decided to make an effort to do some charity this year. There is a "Paypal Donate" button on the right column below the "Blogger" button. If you like what I do in my blogs here or you are simply in a charitable mood and would like to make a donation, you are most welcome. My vow is to donate to charity 80% of what I collect from the "Donate" button from now until the year ending 31st Dec 06. This would be done annually as long as the total amount collected is at least USD100, or until I state otherwise in this blog. You can donate whatever amount you wish. It is perfectly OK if you do not wish to donate. It is up to you. The amount donated and the recipient will be posted in this blog within 1 month of each year end. Thanks!

Accumulate On Weakness With A Stop In Place

Regional markets were jolted by the largest drop in the Dow Jones since 2003, as high oil prices and Iran worries continued to weigh on sentiment. Patience is of utmost importance. The current weakness is a good time to accumulate quality stocks as well as a long position in the FKLI futures. The bulls who entered too early by chasing rallies were getting slaugthered as the patient traders scale in their position on weakness. The possibility of the market to weaken further exists especially when regional markets are still highly dependent on the direction of the Dow. There are always multiple factors in play. Scale in your long position slowly and always have some gun powder in reserve. The risk/reward favours a long but that does not mean we are guaranteed a win, only that we are trading our plan. Strong support for the index is found in the 880-890 region. Unless the support is broken decisively, we remain long and would reevaluate our position as new progress is made. This is very important. We must be disciplined in executing our trading plan, yet nimble to market changes. We must not hold to our views stubbornly as market technicals change. "Trade What You See, Not What You Think."- Joe Ross.

Test Of Support At 900

As predicted, the index and FKLI tested the 900 support on bearish news from the Nikkei. Greed turned into fear as traders rushed to the exit door. The risk/reward favours a long position here. Wait for the right opportunity to buy on weakness.