Joy! As I scalp $185 from speculating in shares of Integrated Rubber Corp(IRCB) without paying a cent...

...and the profit paying for a delicious 6" personal pizza with 'cheesy lava' crust from Pizza Hut!

My market sixth sense prevented me from buying stocks on Monday...

...and how fortuituously so!

The stockmarket index did not even open in the green & proceeded to weaken gradually throughout that day.

Today, the weakness broke open from the get go and the fear that spread through Asian markets amidst the North-South Korean tensions weakened the M'sian markets considerably.

I tiptoed into the market nonetheless today, sensing that perhaps a sharp rebound is nearby, buying small lots of IRCB and MPI(which happened to declare the anticipated $100 dividend after the market close).

We'll see how the US market fares tonight.

Ready to do some short-term trades come Monday...

My targets are one or more of the following:

-Parkson



Short reasons : It's a fundamentally sound stock currently oversold & at good supports, with share buybacks accelerating in recent days.


-BRDB



Short reasons: Fundamentally a solid property company, Bandaraya is currently close to supports established in January and June '09


-Rubberex



Short reasons : It has come full circle,returning to the starting point of a huge breakout move from around $1 to a high of $1.80. Fundamentally, it's a sound stock that is in a hot industry ~ rubber gloves

-MPI



Short reasons: The stock has reached an oversold level that coincides with support from the Feb/March lows of this year. Also, a nice tax-exempt dividend is expected to be declared soon.

Olympia defies a red stockmarket day...

I'm able to claim a small profit on this company's stock as it surges 20% by the close, after being 'stuck' at a relatively high cost price since the beginning of the year.

What I am most proud of is my ability to resist the siren song of the market thus far, and adhering steadfastly to my view that the stockmarket has not bottomed in the current 'correction'.

A sneak peek : Bolton Bhd

This will be the last stock I'll be recommending gratis

[Hopefully, some readers can make enough money on this, if it turns out, to decide on subscribing to my service]

The charts below show the daily, weekly and monthly technical picture for Bolton Bhd.

Things to note :

TECHNICALLY

- MACD has crossed on all three timeframes,an extremely bullish sign for the stock!

- RSI is signalling a continuation of the rally which started at around 63c in early March

- the intermediate resistance at 73c seems to have been overcome on good volume last Friday, but whether the stock will fall back on profit-taking remains to be seen

- However, the likely targets in the current sentimentally bullish environment are 78c followed by 80c.

FUNDAMENTALLY

-Major shareholders have been buying, with one increasing his stake from 19.95 million to 21.93 million shares lately

-In its latest quarterly report, the company seems to be trading at a 51% discount to NAV, and has a trailing P/E of less than 10.

Finally, the Property Sector is being touted in many analysts' reports these days, and Bolton Bhd is one of the most ignored and undervalued gems in this sector.


Daily chart


Weekly chart


Monthly chart

Going into Paid Analysis starting 12th April 2010

Dear faithful blog readers,

Because of my ability to spot profitable trades using technical analysis, I've decided to share my top picks.

Until now, I've only leaked out three winners, two on this blog(Mitrajaya in Feb '10 and Petra in Mar '10), and one in a facebook group(Ramunia in Mar '10), but have kept other profitable trades largely to myself(BinaPuri in Mar '10, WTK in Dec '09 etc etc)

Based on my outlook on the M'sian market(as well as markets globally), I have screened and distilled a select list of stocks that can offer returns as wonderful as the ones revealed so far.

The equity market these days is a difficult and treacherous environment for small retail traders, as many stocks(apart from the quality blue-chips) can remain stagnant for months and cause one's capital to be stuck for an indefinite period of time.

I've decided to share these 'tips' for a small fee of RM63 monthly payable in advance. Subscribers therefore have the option of cancelling on a monthly basis if my advice isn't working out.


Please e-mail me at zirdex@yahoo.com.sg if you are interested in this service

Best regards,

Dominic Lim

Update on my double bottom call(Petra Perdana)

The stock has risen 11% since my March 8th posting. The April Fool's day chart shows the stock overcoming moving average resistance(black line) and this seems to portend further advances in store.


No fooling!

What I've Learnt In 2010 Thus Far...

Lesson #1 ~ Follow the advice of 'gurus' only with a large pinch of salt


Being only a passive observer of futures markets since late last year, I did not, fortunately, have to pay a monetary price for admiring and believing my favourite 'gurus' : Jim Rogers and Marc Faber.

Had I had an active account since late 2009, I would most likely(and most conceivably) have blown my balance going long on agricultural commodities like Wheat
and Sugar.

I actually entered a long position in my Virtual Trading account in late December @ 538.5 and was sitting on a nice profit as the market rallied to about 575 by early January, feeling pangs of regret at not expediting my account opening.

That sentiment ended as abruptly as the about-face in the grains complex started shortly after, dragging Wheat to 468 currently, and also almost all members of the Grains complex with it.


Sugar fared even worse, as it broke all supports as the price collapsed 33% from $30 to briefly below $19 recently(chart below).




(My pet Chihuahua named 'Sugar' grew fatter than ever in direct contrast over the period. Not that I'm complaining as I love my pets fat and furry)


Make no mistake: My convictions still lie on the side of 'ol Jim and 'ol Marc.

However, I no longer worship any one investor as a 'God' as some peoples' timing may be slightly off.

And the slight deviation in timing, in these volatile investment environments, can make all the difference!

Possible double bottom in Petra Perdana?

The stock had a gargantuan rally from $1.20 to a high of $2.08 the last time the candle chart saw a bullish engulfing pattern.

I was caught at a high price of $1.78+ the last time and got out with relief at point with the red circle, at a price average of $1.9511.


Could history repeat itself?

Whither goes Volatility from here?

Having only learnt of this variable at the onset of the turmoil in July 2007, I have a general notion that it increases dramatically when the price of risky assets fall, and vice-versa.

After a brief spike from 17 to almost 30 in the most recent stockmarket correction, it has now dropped back to around 18.30.






Looking at the chart above, it seems that the CBOE Volatility Index has reached what is a relatively strong support line(in yellow).


Also, notice the divergence(blue and red arrows) between price and the MACD indicator.

This chart suggests strongly that a sense of complacency has returned to the markets and that we might just see a spike up in Volatility soon.

Some see Bond yields rising in the near future

A prominent technical analyst was interviewed on Bloomberg over the weekened and she said she saw a 'reverse head-and-shoulders' pattern forming on the chart of US Treasury bonds.

I looked today and verified the truth of that.





Looking at the yield on the 10-year Treasury bond, the line on the bottom right hand shows a possible 'neckline' for the reverse head-and-shoulders that the analyst was referring to.

Yields have dropped from 8% in the mid-90s to a low of about 2% at the height of the Financial Quake in late 2008, indicating that prices have gone up over these years and peaked at the time that yield on these bonds plumbed to their lows.

I didn't know what Marc Faber and Jim Rogers were talking about when they asserted that there was a bubble in the US Treasury market.


Now I know. And I agree.

Pondering whether to take the bold step to open a Futures trading account.

Was a bit discouraged when I saw a stock that had looked bullish with a possible flag breakout pattern drop today on moderately heavy volume.

I have already received a stack of forms on request to open a Futures trading account.

However, I'm starting to have cold feet, especially when I try to imagine myself caught on the wrong side of a contract like that for Wheat or Sugar.


Look at the chart below. If you had cut off the chart at Feb 1st 2010 and only seen the patterns to the left of that day, you might have concluded that the Sugar contract had a bullish breakout of a pennant consolidation pattern(in technical analysis parlance), a move that usually continues in the direction of the prior move.

However, I have circled the MACD and Stochastics indicator to speculate that this contract may be overdue for a sharp rebound.



But look what happened instead. The contract suffered a sharp decline of almost 28%, undoubtedly inflicting huge losses on those bullish on the prospects of the crystalline solid who were not quick enough to cut losses.

Even as I surmised that, had my trading contract been opened already, I had a bullish feel for the Wheat contract and might have entered a long position at around $4.90-$5.05,I find that the contract declined from a high of around $5.11 to $4.90 currently.

Not pretty.

US equity market at a Crossroads...

Looking at the chart of the broad measure of the US equity markets, the S&P 500 Index, the positives are:

- The index seems to have breached the major downtrend line established by the huge downturn following the 2007-2008 Financial Earthquake.

- The Stochastics signal has hooked up(blue circle), perhaps suggesting that the rally might resume after a three-week hiatus caused by worries over the Greek debt drama


The negatives, however, are:

- The MACD, in my opinion a stronger indicator than the Stochastics, seems to have hooked down, issuing a sell signal on the weekly chart.

-the current rebound that started in early February seems to be on much lower volume than the nascent upturn last year, and this indicates a lack of conviction on the part of the bulls.




Looking at the monthly chart above, the circles highlight the similarities with past indicator patterns that I can see from a charting perspective, which may indicate that this recovery could turn out to be similar the the recovery off the end-2002 to 2003 low, which will make equity bulls happy, I'm sure!


My overall prognosis is that there's a roughly 60-40 risk-reward ratio currently.

Thus, I'd merely be waiting for my current equity positions to turn profitable rather than commit new money to the markets.

I was only confident to take ONE long position(Mitrajaya Holdings Bhd) since the end of the CNY vacation, and fortunately, it's turning out quite well!

Follow-up to my 'Buy' call on Mitrajaya

A bullish Malaysian stock chart I stumbled upon today...

About a quarter to a third of the stock volume shown from Feb 2nd till 12th is due to the company's share buyback programme.

The latest quarterly report was also eye-poppingly good, the 4th straight quarter of black ink.

The Greenback is probably heading North again

The resistance at S$1.41 seems to have been breached.

The DOWNSIDE risk is high at this stage.

After poring through the charts of various bellweather US stocks like Merck, Google, Microsoft, Disney and GE, I would say the equity market there has turned decidedly BEARISH, and will likely drag many global markets down with it.

Another even year to sell in May & go away?

Perusing various old charts that I had used in 1998-1999 to place wagers on the Malaysian equity markets that ultimately bought me freedom from employment for over two years, an idea struck me today:


What if the investment adage 'Sell in May and Go Away' holds true this year?

I perused my old charts that dated back to the late 1980s in some cases and noticed that the durations between the peaks from 1987 to 2000 averaged 3-4 years give or take a couple of months : 1987, 1990, 1994, 1997, 2000.

In the new millenium, the pattern changed slightly, with the peak in most second-liners occurring in late 2003 after a speculative frenzy from April to November of that year, making the first peak-to-peak duration roughly 3.8-4 years in duration.

Then came the 2007 peak(most Malaysian stocks peaked in June-July 2007), making the second peak-to-peak duration of the millenium about 3.5-3.7 months.

If we project that to the current timeframe, this places the next peak at roughly 3.5 to 4.0 years after June-July 2007, which forecasts an imminent selling target of end-2010 to mid-2011.

Conservative investors may recycle the old average of 3-4 years and place their sells squarely in the May-June 2010 timeframe.

Additionally, selling in May & avoiding the Malaysian equity market seemed to be profitable in 1988, 1990,1991, 1992, 1994, 1996, 1998, 2000,2002, 2004,2006 and 2008!

Yup. You begin to notice the preponderance of even-numbered years in that list!


In 1998, I prepared a one-page analysis projecting a bottom in the Malaysian equity market at 'between Aug-Sep' that year, due to a 8-9 month duration between bottoms that held in the 1990s.

As it turned out, the Kuala Lumpur stockmarket bottomed on September 1st 1998.
Unfortunately, I'm unable to locate that particular analysis among the many investment detritus shuffled & scattered by the passage of time...


But the bottom line is : Equity markets have become soft(and even downright dangerous) in the even-numbered years for the past two decades.

So 2010 may indeed prove to harbour a risky equity market from as early as March of this year!

S&P 500 Index looks poised to head towards 1150.

The major downtrend line seems to have been breached (finally!), despite the disappointing job loss numbers on Jan 8th.

Now we can look forward to the possible inverted head & shoulders target of 1225 points.

But before that, I surmise that the index faces a moderately tough resistance at 1150 points, established by the turning points in the market in 2001-2002 and the support-turned-resistance in 2005.

My trading positions in the US markets heading into 2010