Counter to watch - CMSB

Latest update: Stocks and FKLI started to cool down in the noon session after the launching of the 10th Malaysia plan. The market lack of support ahead of the World Cup which will kick off this coming Friday. Apparently the volume at this stage (3:37pm) has >530 million shares but Talam alone has contributed 237 million shares exchange. We advice to trade with caution or stay sideline. Please check our trading strategy located on the right hand side timely.
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Please take note that the 10th Malaysia Plan will be launched by our PM today. Some of the GLC companies like UEMLand, MRCB, CMSB, Gamuda......etc may be awarded some big projects. CMSB, HSL, Coastal....are located in East Malaysia. Below is the chart of CMSB....click to expand.

Counters to Watch with ALERT!!!

When the market is dull with low volume, being a technical analysis individual should spend more time on the chart to spot or monitor for possible reversal signal in counters. Particularly at this moment, Bullish Divergence identification would help us to monitor for the next possible reversal of counters. I mean price vs MACD divergence.

Of course at this juncture of market uncertainty, our technical analysis is vulnerable to the market sentiment. Should our KLCI could stay above the Bollinger Middle Band (BMB) and supported from that dynamic level, AND regional markets sentiment is not getting worse than now, then those counters in our KLSE with bullish divergence may have their doors open for rally. For counters that had rallied within these few days, monitor for the higher-low as the next possible entry point. Of course, the risk management particularly individual's cut loss policy MUST be firmly practice to preserve capital from unexpected scenario that may cause KLCI to dip. At any point in time, the BMB level could be treated as immediate cut loss point in most of the cases.

We have observed some counters are having their early stage of bullish divergence technical position BUT is yet to be confirmed by the higher-low position in the reversal trending up direction. The following are some examples of such counters: Daya, E&O, Redtone, HWGB, DBE, EDEN, Ranhill, TSM, Petra, Zelan...etc.

ALERT!!! Should our FBMKLCI turn below Bollinger Middle Band, it is suggested to abort the position respectively, because it is not hard to notice that most of these counters are very vulnerable to our KLCI sentiment.

Some sample charts below are for reference:

Technical Commentary on FBMKLCI 09-Jun-10, Wed.

DJI dipped to the recent lowest low at 9757 and rebounded to close at 9940, that's up by +123 points. IF that low is going to be the lowest low in the recent downtrend, then DJI may form a bullish divergene from yesterday onward. However, should DJI were to break below this low (9757), then the bullish divergence is nullified and the lower than that low is awaiting ahead of us.

With DJI up +123 pints, FBMKLCI is encouraged to open high above EMA14 and finally closed on the ema14 level, that's 1290 up by merely +1.90. The overall market’s trend is considered as side way today as there are 344 up counters and 266 down counters with the market total traded volume is increased by 20% to 630 MIL shares but unfortunately still below the expected VMA of 780mil shares.

Today’s FBMKLCI top 5 contributing components are GENM, MAXIS, TENAGA, AXIATA, and GENTING. The top 5 lagging components are MMCCORP, IOICORP, RHBCAP, MAYBANK, and PETDAG.

FBMKLCI Technical Indicators

The KLCI stays above the Bollinger Middle Band (1281) with the Bollinger band expanded 4%; this indicates FBMKLCI still considers as consolidation with slightly up swing.

RSI goes side way to 37.21, this indicates FBMKLCI is considered as consolidation.

STC %K hooks up to 85.77 and the %D increases to 85.12, this indicates FBMKLCI is bullish biased.

MOM has increased higher above zero level, this indicates momentum of participation is increased.

The MACD line is ticking up and further crossing the trigger line but it still stays below the ZERO level. This indicates FBMKLCI is slightly bullish but still vulnarable to market sentiment.

Summary
Most of the indicators indicate FBMKLCI is still under consolidation above the Bollinger Middle Band. FBMKLCI also staying on the EMA14 level 1290 now. The nearest possible resistance levels for FBMKLCI are 1290 (EMA14), 1296, 1300, and 1309. The nearest possible support levels are 1284, BMB, and 1269.

Please click on the charts below for better visual understanding.

Stocks are safer than bonds, fund manager says

The following information is quoted from an article: "Stocks are safer than bonds, fund manager says" By Chuck Jaffe, MarketWatch, May 23, 2010, 12:01 p.m. EDT

“Quote”

Chris Davis: Investors should be worried about bond bubble

..... "The only real bubble in the world is bonds," Davis said, at the CFA Institute annual meeting. "When you look out over a 10-year period, people are going to get killed." .......... Davis did not predict an immediate implosion in the bond market -- he said it might hold up well for up to two years -- but he said he believes a fall is inevitable .......... "When you have deficits this high and rates this low, something has to give," he said, "and I don't think you can look at this and think the deficits are going to give any time soon." .....Stocks as safe haven

..... Davis urged looking at the "earnings yield," which goes beyond the dividend payout to include what the business itself keeps .......... he said that investing in bonds when the government is so deep in the financial hole is much riskier than buying a stock like Nestle, "which has a 7.5% earnings yield, where it is reinvesting half of that money in the business and pays the other half to you in dividends." .......... corporate yields tend to adjust automatically to inflation, through the price increases that big companies can pass along to customers, whereas bond yields lose ground if inflation returns to the market .....

“Unquote”

Click on the following link to read more detail on this article:
http://www.marketwatch.com/story/stocks-are-safer-than-bonds-manager-says-2010-05-23

Technical Commentary on FBMKLCI 08/06/10

DJI dipped another –115 points however most of the Asian bourses and FBMKLCI were traded sideway. FBMKLCI opened flat at 1285.78 (-1.09) and then it traded sideway until closing at 1288.18 (+1.91, +0.15%).

The overall market’s trend is considers as sideway today as there are 349 up counters and 271 down counters with the market total traded volume increased by 5.9 % to 521 MIL shares. The market’s volume is below 40 days volume moving average and many investors still remain sideline.

Today’s FBMKLCI top 5 gainers components are MMCCORP, GENTING, HLFG, MAYBANK and RHBCAP. The top 5 lagging components are BAT, KLK, MISC, BJTOTO and PPB.

FBMKLCI Technical Indicators
The INDEX stays above the Mid-Band with the Bollinger band expanded 1%; this indicates FBMKLCI still considers as consolation.

RSI went sideway to 35.5; this indicates FBMKLCI is considers as consolation.

STC %K hooks up to 82.24 and the %D increased to 82.77, this indicates FBMKLCI is bullish biased.

The MACD line slightly hooks up and crosses the trigger line but it stays below the ZERO level. This indicates FBMKLCI is slightly bullish.

Summary

Most of the indicators indicate FBMKLCI still under consolidation above the BBMB. FBMKLCI had broken out 1287 today but EMA14 continues to provide a resistance for FBMKLCI at about 1290. The nearest possible resistance levels for FBMKLCI are EMA14 (1290), 1296 and 1309. The nearest possible support levels are 1284, BBMB, 1269. Please click on the chart below for better understanding.

Technical Commentary 07/06/10

Due to US’s job data disappointment and Euro debt concerns, DJI plunged -323 points and closed below 10,000 levels on last Friday. Asian market typically plunged from the range of -1.5% to -3.8% today except FBMKLCI was not affected much. It opened with a gap down of -9.88 points at 1284.51 and it went as low as 1278.89 (-15.5) before it recover to lose only -8.12 points at 1286.87 (-0.63%).

The overall market’s trend is considers as bearish biased today as there are 151 up counters and 463 down counters with the market total traded volume decreased by 27 % to 492 MIL shares. This means that the market’s volume is far below 40 days volume moving average and many investors are sideline today.

Today’s FBMKLCI top 3 gainers components (only 3 gainers today) are BJTOTO, MMCCORP and IOICORP. The top 5 lagging components are GENTING, YTL, MISC, HLFG and HLBANK.

FBMKLCI Technical Indicators
The INDEX stays above the Mid-Band with the Bollinger band contracted another -11%; this indicates FBMKLCI is considers as consolation and not fall in the down- trend yet.

RSI went sideway to 33.63; this indicates FBMKLCI is considers as consolation.

STC %K hooks down to 78.7 and the %D increased slightly to 68.03, this indicates FBMKLCI is weakening but still stays above 70.

The MACD line went sideway and crosses the trigger line but it stays below the ZERO level. This indicates FBMKLCI is considers as consolation.

Summary
Most of the indicators indicate FBMKLCI still under consolidation above the BBMB. It broke below the EMA14 and 1287 support level with very a low trading volume today. The short term view of FBMKLCI is considers as consolidation. Today it was resisted by the EMA14 and the descending trend line but supported by the BBMB.

The nearest possible resistance levels for FBMKLCI are 1287, EMA14 and 1320. The nearest possible support levels are 1272, BBMB, 1254. Please click on the chart below for better understanding.

The Weekly Outlook of SP500, FTSE, NIKKIE, STI

What FEARS Drive the Markets Bearish

Fears, Fears, Fears

The latest's fear is on 4-Jun-2010, Hungarian, in Euro-zone, warns of the similar scenario of Greece's sovereign-debt, another possible default.

• Hungary's new government added to sovereign-debt fears in EU, shaking global financial markets after a spokesman for Prime Minister Viktor Orban was quoted as warning that the economy had been left in a "grave situation" and that talk of a default wasn't "an exaggeration."
• This fear may drive the European share markets for another dip;
• Definitely, the US market cannot escape from such fear too; on top of that, the unemployment status is not favorable to the market because most of the nonfarm employment in May mostly are temporary employment and private-sector hiring is still very weak;
  

After April 2010, the eruption of Greece sovereign-debt crisis is making investor fear of next round of US Subprime crisis.

• In currency or money market point of view, that may lead weakening of Euro currency. Investors are selling Euro and switch toward a more favorable (perhaps the next better off) green back USD;
• In funds situation, investors are liquidating out from equity funds that in turn make the fund managers sell off more shares to fill the withdrawal in equity funds. And the equity funds may have switched to bond funds for shelter;
• In equity market, after the V-shape recovery from last Mar-2009 until this April-2010, the fear of slumping in equity making investors liquidate from equity and divert into bonds for shelter too;
• Investors mostly only know what they've seen in the past 25 years, which for the most part has been a period of steadily declining treasury interest rates and rising bond prices. The fears of further losses encouraging investors divert into perceive to be safer fixed income, bonds. That in turn inflated the bond prices by investors pouring cash in at record rates;
  

The next possible fear is:

• What happen when the treasury interest rates are likely to increase down the road?
• With that low treasury rate for a country, by maturity of bonds, how the country is going to overcome the bonds' returns for investors which is currently higher than treasury rate compounding with inflation? That may lead to the next possible fear of snow balling effect of bonds or bubble burst of bonds in baking now;
• Bond prices are closely related to treasury rate of countries. Many countries are keeping their treasury rate low to fight against economy. The lower treasury rate favorable to bonds. That's why piles of cash are pouring into bond funds in turn forcing fund managers to acquire low-rate securities;
• However, when treasury rates move higher and the value of their bond holdings slides, in reciprocating effect, many fund investors are likely to head for the exits -- further baking in losses as managers are forced to sell to meet redemptions;
• Interest-rate hikes may be many months away, but at that point bond-fund managers could have trouble as demand for lower-yielding securities becomes scarce and prices fall.