Market commentary 2/12

The buying activity was slowing down in the afternoon session however I discovered the buying activity was restarted again after 4pm. FBM KLCI successfully broke the resistance 1270 today and closed at 1271.15. Total market volume increased by about 3.7% with 855 million shares traded. The market participation still consider low as the volume still below 40 days volume moving average. Right now 1270 level became the support of FBM KLCI. Can it sit firm above 1270 tomorrow? All these depend on market sentiment in the next few days. Anyhow it is a good time to re-enter the market today after been sold off for a few days.

Stocks that I mentioned in the Mid-Day already broke out. Are they able to sit firm is another question. As I mentioned above, we have to see the overall market sentiment.

Adventa - Double breaks for Adventa today, well done. It broke 2.26 in the morning and continues its trend to break 2.42 near the closing. It closed at historical high at 2.44. I saw some resistance at 2.45 but I believe it is not a big problem for it to break if the market sentiment remains like today.

Supermx- Supermx really a Super Man again. It broke the trend line resistance at 4.01 and marginally sits above it at 4.02. The volume for Supermx is slightly insufficient today. We hope that the buying volume for tomorrow can be much higher, otherwise it might return to below 4.01.

Sapcres - The stock price not really grow like Supermx and Adventa, only up 2.64% and closed at 2.33. It broke the short-term resistance at 2.31 and able stay above it today. As I mentioned in the mid day, there are many investors who stuck at July 2007 as well as those already make profit wanted exit at this price. However I took a close look at the buying activities, the buyers are much lesser than the sellers that line up to buy or sell. The good sign is the buyers who did not line up to buy the stock just took the seller price 2.33 aggressively toward the closing. So what it tells us? The next resistance I saw is 2.35. Although the volume for today is above 40 days VMA, but I hope it can increase further tomorrow in order for the trend to continue. By analysing the chart, there are much stronger resistances at 2.40, 2,50 and 2.70.

Others potential stocks

KPJ - Resistances 5.14 and 5.23 had been broken and closed at historical high 5.32. Buying volume continuous increase for 2 days. Support is about 5.14.

IJMLand - Volume increase but still not enough. Watch for break out 2.40 but the resistance very strong above 2.40 to 2.65. Good buy only if the volume continues to increase.

Mudajya - My favourite counter fly again. It broke out resistance 4.48 and closed at 4.58. The only problem is low volume for today. The next resistance is 4.60 and the support is 4.48.

Latexx - Latexx is another company has technical position like Adventa and Supermx. Watch for break out at 2.75 and 2.82. The only problem is the volume insufficient.

There are many other stocks rebounded and have technical position today but difficult to mention them. Good counters like WCT, Genting, E&O, Hiaptek and Unisem are worth to take a close monitor. The plantation index look good, also take a look at some plantation counters.

Mid-day Commentary 2/12

The market regain strength after the overnight Dow Jone Industry Index rose more than 1%. The regional markets as well as local market are in positive zone in the morning. FBM KLCI had penetrated the resistance 1270 but retreated at the mid-day closing. No doubt FBM KLCI still stay below 1270, the overall market is looking better in the morning session. Total gainers are 345 vs the losers 183. The trading volume is improving for the mid-day with 513 million shares exchanged.

A few counters retest the previous resistance. Please refer to the older charts in this Blog for reference.

Supermx - up 3.11%, retest the resistance 4.01

Adventa - up 3.59%, trend line resistance broken again and close at 2.31. Looking to test 2.42 soon.

Sapcres - up 2.20%, short term resistance 2.31 just broken and closed at 2.32. Look to rise higher however looking backward, they are still many investors stuck above 2.32 in July 2007. So we need a huge volume to overcome that in order for the trend to continue.

Change of Blog's Title 1/12

Please be informed that started from today 1/12/2009 onward, the Blog’s title had been renamed to "Technical Analysis Education". In my blog, you will find that I used many technical analysis tools to analyse each stock. Since most of the investors do not carry any technical analysis tools, my objective is to help you/our investors to maximize the gains and minimize the risk in the stock market, currency markets or futures markets. This knowledge is not limited in Malaysia but the whole stock markets in the world. You will find it very helpful if you know how to read a chart for trading a stock, currency or futures. Although the fundamental of a stock is important but you cannot lack of technical analysis tools.

Right now I am managing 3 blogs, an English version Blog, a Chinese version Blog and a Chart Pattern Blog. They all linked together. Starting next week, I will post more technical analysis education on the Chart Pattern Analysis Blog. It will be a step-by-step guidance for the beginners. If you find it interesting and important for you, please respond me by email or use the Blog’s comment under each post. Friend, I really need your feedback and comments, if not it will be a waste for my effort if you don't read them. I hope to see some emails from you. It will update at least once a week on the Chart Pattern Analysis blog. Please visit it regularly.

Bearish bias on KNM 1/12

Although the FBM KLCI gains 7.6 points today, the overall market sentiment is considered as neutral bias. The investors are very caution. As you can see the volume is only 824 million shares traded. The bear and the bull is about 50% Vs 50%. The resistance is about 1270-1271 while the support is at about 1256-1254.

I had posted KNM's technical view on 26/11. Please refer to my Chinese Blog, or the Chart Pattern Blog for reference. KNM after broke down the support trend line, it continue to fall until today for a total of 6 trading days. The volume is getting higher for yesterday and today. This means KNM is under selling pressure now. The next support is 0.69. 0.74 will became the resistance now. If 0.69 is broken, the next support is 0.53. If you are still holding KNM, please be caution. Most important, do not average down. Please refer to the chart for your reference.

Click to enlarge

Understand the market cycle

Many of us donot know there is a stock market cycle exists for an individual stock or the overall market. If you are able to master the stock market cycle for an individual stock or overall stock market, you will be earning a handsome income from the stock market. In order for you to do that, you must either financially sound or expert in technical analysis. If you are financially sound, you can start to pick up the stock slowly in the phase 1. This is so called accumulation. However if you are not financially sound but have rich knowledge in technical analysis, you can start to pick up the stock on phase 2. So your money will not stuck in the stock market for long time.

The market is composed of 4 phases

1)An accumulation phase
The professional team from the big financial institution or it can be fund managers normally pick up the stock or stocks in this phase. Sometime I refer this as the "Smart Money" accumulation as they are a professional teams and not a normal person. This is the longest phase in the market cycle. The time frame can be ranged from 6 months up to 3 years. It is very difficult for an individual retailers to participate in this phase due to the long time frame and capital limitation. The stock price in this phase normally go side way or within a trading range with low volume.

2)A public and media promotion phase
The media started to focus on the particular stock or sector and the public (retail traders/investors)started to jump in. These are the momentum traders and investors that see a trend forming and wanted to get into the action. That's how a technical analysts jump into the early stage of the phase 2 when they saw the price break out from the resistance or indicators. The price started to rise and volume increase.

3)A distribution phase
The “smart money” started to sells while the non technical retail traders and investors keep buying. The price keep increasing but the volume started to decrease. If you are a technical analyst, normally you are able spot a bearish divergence signal on this phase and say "Bye-Bye" to this stock.

4)A selling phase
More aggressive selling from the professional teams(Smart Money) as well as the retail traders. You can see the price fall very quick as the investors started to panic and wanted to get out as soon as possible. The price will drop very fast if there is a huge selling volume in this phase.

I will quote more examples/chart patterns in future for a better understanding.

Watch Sapcres

I normally don't recommend you to buy any stock when the market is in the down trend. However if the market is getting better, you may take a look at Sapcres. Sapcres was broke down from the ascending triangle on last Thursday. But today Sapcres successfully broke back the trend line again with buying volume increase. The immediate resistance is 2.25 and the next resistance is 2.31. The closing price is at 2.25 right now. The support is 2.20 and 2.10. Please refer to the chart below for your reference.

Click to enlarge

Market Closing 30/11

After having a panic selling in the morning , more than 200 stocks managed to recover and close positive. Some stocks like GPacket and Redtone even make a big gain for today. However I suspect the KLCI 30 components were under correction this time. Out of the 30 components, only Maxis, TM and Petdag are closing positive. Something is very unusual during the closing price calculation at 4:45pm. KLCI index suddenly drop about 6-7 points when the market resumed at 4:50pm. Futher analysed KLCI index, I discovered a few big caps like Bat, CIMB, Digi and a few others were pushed down during that time. KLCI minus 11.5 points and closed at 1259.11 with about 1 billion shares exchanged. Technically the KLCI had broken down the trend line. The resistance for KLCI now is at about 1264-1267 and the support is about 1250-1248.

Respect the market 30/11

The most important advice I can give is to trade with the general market, and not against it. For example, if the market is heading lower but you see a continuation uptrend in a certain stock, it’s advisable not to buy it in most cases. As with all technical patterns, there are failures and the easiest failures come from ignoring the general market direction. Since 3 out of 4 stocks follow the market, any continuation trend can fade toward the direction of the market, so don’t go against the market trend.

As expected, today the stock market open with a panic selling especially at the first 5 minutes. The KLCI dipped as low as 1248.5(-22 points) on the 3rd minute before it slowly gained trend. I usually advice people don't sell their stocks at the first 30 minutes. You normally got the worst price during the first half an hour because buyers not likely to bid higher. Usually it takes about 1 hour to settle down. KLCI continue to gain trend and closed at 1264.3 at the mid-day closing. Technically KLCI is supported by 1263, the next support line is 1250 to 1248. The immediate resistance is 1270. There are 583 stocks losing and 77 stocks gaining.

Dubai World financial crisis might or might not impact the stock market. However the construction and the building stocks were greatly impact. Other regional market are rebounding except Singapore and Malaysia are retreating due to the stock market did not open last Friday. Hang Seng index up >3%, Nikkei 225 index and Seoul composite index up >2%. The Europe markets were rebounded last Friday after they closed more than -3% on Thursday. Due to the market direction still unclear, we don't advice to buy any stock at this stage.