ZLBT Chats

Saturday, February 28, 2009

SP500 Support And Fibonacci Off 1980s Low

It’s on the chart permanently now - the S&P 500 officially closed February beneath the 2002 Bear Market lows - but let’s look beyond that. Did you know the S&P 500 is at a very critical potential long-term Fibonacci support level? Let’s see it on a Monthly chart that dates back to 1980.
(You’ll definitely need to click on the chart to see the larger file)

Do you see something rather interesting?

Taken off the 1987 price low, a Fibonacci grid drawn from that level to the 2007 high price of 1,570 shows that the deep 61.8% Fibonacci Retracement comes in at roughly 735.
Today’s (and the month’s) closing Low? 735.
Perhaps there’s absolutely no significance whatsoever with that number, but it’s certainly worth observing and being aware of the possibility that buyers might swoop in at this level simply because of this development that might be taking many traders unawares.
Also, note the November lows found support 6 points above this level that formed the floor for a rally that took the index back to the 950 level.

If this Fibonacci support zone fails, then it’s likely the next possible zone of (Fibonacci) support would come in at 665, which would be the 61.8% Retracement of the Beginning of the Bull Market in 1980/1982 (when the S&P index was near 100).

Should this level fail, all bets are off.

Combining basic Elliott Wave and Fibonacci Retracements, we could certainly see a compelling argument for price to end Wave 5 and find support at the 655 level and finish off this bear market, or at least the ABC Retracement (with 2000-2003 being A; 2003-2007 being B; and 2007 - 2009 being C).

If you look objectively at the wave structure, you’ll see that we’re missing a little more room on the downside to complete the expected 5-Wave Downward Impulse that began in 2007… although technically with today’s new closing low, the expected 5-Wave structure has met the conditions to be considered ‘complete’ if price does begin to rally (which is perhaps why Mr. Robert Prechter, founder of Elliott Wave International, is doing the Speaking Circuit, encouraging investors to cover short positions immediately.

Remember, although 5th Waves can ‘truncate,’ or find support at the 3rd Wave Low (November 2008), more often than not, 5th Waves make lows slightly beyond the end of Wave 3. I’m not making the argument that stocks will fall to 665, but doing so would satisfy this requirement and the significance of the 1980/82 Fibonacci retracement.

My prior post this morning takes us deeper in the current structure, which seems to imply we’re missing at least one more swing to the downside to finish off the larger impulse.

Either way, at least according to the Wave Principle (as I understand it) and a potential Fibonacci support zone beneath us (or exactly upon us right now), we seem to be perhaps in the 8th or 9th inning of the initial downward move from 2007’s market peak.

China's Golden Rule?

Recently there has been a cacophony of calls for stockholders and bond holders of zombie financials to take their lumps as part of an overall reorganization plan. Instead of injecting more government money so that these institutions could maintain their zombie status. John Hussman’s comments are a good example of this school of thought (emphasis mine):

Take a look at Citibank's balance sheet as of the third quarter of 2008. The company had about $2 trillion in assets, versus about $132 billion in shareholder equity, for a gross leverage ratio of about 16-to-1. That's not a comfortable figure, because it indicates that a decline of about 6% in those assets would wipe out Citibank's equity and make the bank technically insolvent. Unfortunately, we saw credit default spreads screaming higher last week, while the bank's stock dropped below $2 a share, so evidently the market is deeply concerned about the possible immediacy of that outcome.

But keep looking at the liability side of Citibank's balance sheet. There is over $360 billion in long-term debt to the company's bondholders, and another $200 billion in shorter term borrowings. None of that is customer money. That puts the total capital available to absorb losses at $132 + $360 + $200 = $692 billion, which is about 35% of the $2 trillion in assets carried by Citibank. That's a huge cushion for customers, who are unlikely to lose even if Citibank becomes insolvent. Should that occur, the proper response of government will not be to defend Citi's bondholders at taxpayer expense, but rather, to take Citi into receivership, wipe out the shareholders and most of the bondholders, and sell the assets along with the liabilities to customers to another institution…

Simply put, institutions that are insolvent and would only avoid continued insolvency by large and continued infusions of taxpayer funds should be allowed to “fail” through the process of government receivership. It is wrong to squander the taxes of ordinary citizens and put a burden of indebtedness on our children in order to protect the bondholders of careless and poorly-managed financial institutions.

Ahhh, if economic policy is only so simple.
A recent article reports that China’s holdings of U.S. corporate debt may be hampering efforts to reorganize and/or nationalize banks. Rachel Ziemba, an analyst for RGE Monitor, estimates that China’s banks and investment funds holds close to $160b in U.S. corporate debt, much of which is concentrated in financials.

Could the U.S. relationship with China be the stumbling block?
It had written before that throughout this crisis, the attitude of China has been that it expects the U.S. government to insulate China from losses. The Chinese attitude to business has typically been based on long-term relationships. Part of the give and take of a relationship is to not let your business partner down.

We cannot know what has happened behind closed doors, but given the soothing sounds emerging from Hillary Clinton’s recent visit to China, could efforts to reorganize the U.S. financial system be hampered by U.S. efforts to maintain a friendly Sino-American relationship? The aforementioned article went on to speculates that “the Obama administration may be waiting for China to reduce its exposure to the debt of the latest U.S. financial institutions found lying near death’s door before it nationalizes them.

”As the saying goes, he with the gold makes the rules. China has the gold…

BURSA KLSE >>> Are there any bulls left?

Are There Any Bulls Left?

Its seems pretty much all of the bulls have thrown in the towel. It is pretty hard not to. Negative news has been cascading into the market, and the market has been reacting accordingly. Some things to consider though before we give up on stocks:

>>> The economic outlook is pretty weak, and possibly still weakening, but a lot of it is priced into stocks. The DOW is on the verge of breaking through 7,000, and could go lower. The KLCI is floundering on the presumptions Malaysia is doing better than her neighbours, but what positive scenario have traders priced into stocks? That is something to think about moving forward.

>>> The stock market tends to rebound before the economy does. This is mostly due to the market anticipating future events. Who doesn't know your granny have falsies?

>>> Bear market rallies are common, even if stocks aren't ready to make a significant move higher. There are opportunities to make money during these periods. Show me a winners and I will show you two losers.

>>> Although there is virtually no limit how much further stocks can fall, the downside momentum will eventually subside, even though it feels like it may never happen. Try to see both sides of the argument.

Some things to think about as we try to navigate this market.

KLCI 950 >>> Return Of The Calf?

KLCI 950 breakout needed before we could begin to feel bullish

A small ascending triangle in the first chart gives upside hope. Good support in the second chart. But resistance is strong in the first chart. 950 would need to break on strong volume to get out of the gutter before we could even start feeling bullish - again.


Friday, February 27, 2009

Stocks Update >>> 27 Feb 2009

Dataprep Holdings Bhd’s (DATA MK, MYR0.20)
3QFY09 (Mar) results were ahead of our expectations, largely due to ICT contracts secured during the quarter. Revenue increased by 98.5% QoQ (26.6% YoY) to MYR18.8 mln, narrowing losses to MYR0.2 mln vs. MYR0.72 mln in the preceding quarter. Segmental wise, revenue was notably higher from its core business - outsourcing and managed services division (-71.9% QoQ, -19.5% YoY), which was the only profitable unit during the quarter. Our most recent recommendation is Sell with a 12-month target price of MYR0.18.
KLCC Property Holdings (KLCC) (KLCC MK, MYR2.90)
results for 9MFY09 (Mar) is below expectations as 9MFY09 net profit amounted to only 65% of our full-year net profit forecast. Despite a 2.8% YoY improvement in 9MFY09 turnover to MYR649.6 mln, KLCC recorded a 2.1% YoY drop in net profit to MYR173.1 mln. The lower net earnings were due to the weaker performance if its hotel division. In 3QFY09, however, turnover rose 4.3% YoY to MYR218.8 mln, while net profit improved 14.4% YoY to MYR58.9 mln. Our analysis of the results is ongoing and our last recommendation was 3-STARS (Hold) with a 12-month target price of MYR3.10.
Rexit Berhad’s (REXI MK, MYR0.54)
results were ahead of our expectations. 2QFY09 (Jun) revenue grew by 31.8% to MYR5.71 mln, driven mainly by higher transaction and subscription fees, and system software sales. While we had expected lower QoQ earnings arising to higher cost from workforce expansion, net profit surged 51.0% to MYR2.61 mln. Management cited its slowdown in recruitment drive following the delay of its e-Cover project with Sompo Japan. We await further details from the management on this. Our most recent recommendation is Buy with 12-month target price of MYR1.20.
IGB Corporation (IGB) (IGB MK, MYR1.43)
with an increased 12-month target price of MYR1.60 (from MYR1.50). Although IGB’s shares trade at higher prospective PER of 12.x and 11.3x for 2009 and 2010 respectively at the present price compared to the average industry prospective PER of 7.0x for 2009, we think valuations are fair on the strength of the stable cashflow stream generated by its
portfolio of investment properties and hotel businesses. The stable cashflows also serves as a hedge against the slower property development activities over the next two years.
Jadi Imaging's (JADI MK, MYR0.085)
4Q08 results were below expectations,with full-year earnings falling 29% short of our forecast. This, nevertheless, was due to several one-off items which if excluded, would have brought results in line. We expect demand to remain relatively stable, for in this current economic slowdown, businesses may be compelled to switch over to compatible toners which are cheaper. Nevertheless, we expect selling prices to come under pressure and thus project a 15% decline in 2009 revenue. We also expect the strong JPY to have impacted 1Q09 earnings. We cut our 2009 net profit forecast by 7.8% and introduce our 2010 net profit forecast. We maintain our Hold call and 12-month target price of MYR0.12, having rolled forward our valuations.
Lingkaran Trans Kota Holdings (Litrak) (LTK MK, MYR1.98)
We maintain our Buy recommendation for Lingkaran Trans Kota Holdings (Litrak) (LTK MK, MYR1.98) with an unchanged 12-month target price of MYR2.60. Litrak has declared an unexpected dividend of MYR0.20 in 3QFY09. In total, this would translate to a MYR0.25 dividend in 9MFY09 or a yield of 13.2%. We are positive on this as it suggests that management is willing to increase dividend payout to reward shareholders. We have forecast a dividend of MYR0.17 in FY10 (80% payout ratio)
Malaysian Pacific Industries (MPI) (MPI MK,MYR5.50)
We cut our recommendation on Malaysian Pacific Industries (MPI) (MPI MK, MYR5.50) to Strong Sell from Sell and reduce our 12-month target price to MYR3.60 (from MYR3.90 previously), amid the deeper-than-expected semiconductor downturn. Capex spending in 2HFY09 is expected to fall to ~MYR60 mln, translating to overall MYR150 mln for FY09. Management also plans to undertake further cost-cutting measures to arrest falling margins, which include reducing headcount through VSS and terminating contracts with 1,700 foreign workers this year. In line with the weaker outlook, we
have reduced our sales forecast for FY09-FY10 by 9%-10% and EBITDA margins to 19%-23%, from 28% previously. We think a dividend cut is likely for FY09, reducing our DPS projections to 10 sen/share.
Mudajaya, (MDJ MK, MYR1.19)
we maintain our Strong Buy recommendation with an unchanged 12-month target price of MYR1.80. At current levels, Mudajaya is trading on projected PERs of 4.8x for 2009 and just 3.3x for 2010, which in our view, have yet to reflect its near-term growth potential (2-year forward EPS CAGR of about 74%). 2008 results were broadly within expectations.
Sarawak Plantations' (SPLB MK, MYR1.71)
4Q08 results were below our expectations. The group would have incurred a small net loss of MYR0.8 mln for the quarter due to the fall in palm oil prices, but bottomline was saved by a MYR8.9-mln gain from the sale of a piece of land in Miri. We cut net profit for 2009 by 16.6% after trimming projected margins and reducing our projected growth in CPO output to 4%-5% (from 10%). The growth in production, however, will be muted by our expectations of a drop in the average CPO price to about MYR1,800/ton in 2009 from MYR2,800/ton in 2008. We maintain our Sell recommendation on the stock with a revised 12- month target price of MYR1.50 (from MYR1.80) following the earnings revision.
9MFY09’s results came in below our and market expectations as net profit of MYR1.22 bln (-26.2% YoY) accounted for only 58% of our total FY09 projections. This is despite a modest increase in revenue in 3QFY09 to MYR3.68 bln (+10.8% YoY). We believe the variance arose from larger-than-expected losses in the liner division of MYR328.8 mln (from MYR171.2 mln loss in 2QFY09). Going forward, earnings will come under pressure as MISC will feel the full impact of the weakened economy in FY10. In line with the weakened market conditions, we have reduced our FY09 and FY10 net profit forecasts by 25.5% and 22.8%, respectively. We maintain our Hold call but lower our 12-month target price to MYR9.20 (from MYR9.50)


***(This article contributed by courtesy of Blogger diamond)



Features Of Success (Dedicated to blogger zenho)

Courageous Features Of Success
Recently I was involved in a trading training class. I taught the class a single trading method. The final activity for the class was live trading. They knew the theory of the trading method but now they were trading with a small amount of money. I identified the entry conditions for the index trade. There was enough time for all the students to evaluate the trade suggestion and enter an order. All the students had the same computers, the same software and a similar knowledge of the trading methods I had been teaching.
Logically we think all the students should obtain similar results. In fact, the results of all the students were very different. A similar trade is shown in the example chart. The trade plan is to “enter on rebound from the lower edge of the long term GMMA.” These conditions are activated at point B on the chart.
When I identified a profitable trade conditions some of the students made more money than me. They entered the trade early because of their greed. This is point A on the sample chart.
Some students made less money because they waited to get extra confirmation before entering the trade. Other students lost money because they entered too late. This is point C on the chart example. A few students did not trade because they had experienced losses and were "afraid" to have another loser. If my trade suggestion was not successful then the same variety of student results also happened. Some students lost more money than me. Some students lost less money than me, and some students had a profitable trade.
The most important difference in results came from the way students acted on their stop loss. Students who acted quickly had good success. Students who did not act quickly on the stop loss were less successful and their trading was not profitable. Every student was looking at the same chart and the same market index. The students all acted differently and their trading results were all different.
These experiences in the training class confirm that psychology is an important part of trading success. A good trading plan is important but it is the psychology of the traders which will decide if the trade plan is successful. Every trader works in the same market, but the results are very different. Some traders have good profits while other traders have many losses. The reason for the difference is the method each trader uses and the psychology of every trader. When the method traders use is the same, the results are not the same. Aggressive traders will enter the trade before it is correctly confirmed. Cautious traders wait too long before they enter the trade, and they miss out on profits. Timid traders use a tight stop loss and they have an exit signal before the trade can fully develop.
Long term trading success in the financial market comes from 3 features. They are all related.
The first feature is the method the trader is using. There are many successful methods. Many of these methods are simple, and this makes the method very effective. We prefer to use simple method rather than complicated methods.
The second feature is consistency. The trading method must be applied in the same way every time. Every trading method will make mistakes. The best trading methods have a long term success rate average of around 70% including bull and bear markets. Using the method, the trader is correct for seven out of every ten trades. In some market conditions the method will have a higher success rate, perhaps eight out of every ten trades. This is higher than the longer term average success rate of 70%. The consistent trader knows the extra successful trades happen because the market is good.
In other market conditions the success rate may fall to four out of every ten trades. This is lower than the long term average success rate of 70%. In this condition the trader will do less trading and use more caution. He continues to use the same method because he knows the long term success rate average is 70%.
A trader who does not have consistent trading will change the method when the success rates falls because he looks at the short term result. He should look at the long term result. The trader who has consistent trading will not change the method because he knows in the long term the method has a high success rate.
The third feature is discipline. Discipline is required so the trader can consistently develop and manage every trade according to his trading method and trade plan. Discipline is necessary to continue to use a trading method when the success rate is lower than the long term average success rate.
These three features are related. When the trading method is simple it is easier to develop consistent trading and it is easier to continue to use good trading discipline. The falling market in 2008 tested trading discipline and consistency. The recent market has many short uptrend rallies followed by rapid downtrends. In these ‘choppy’ market conditions there are no strong long term trends. In this market condition it is important to apply consistent and disciplined trading.

Next Stop for Gold $2,000 Per Ounce!

Next Stop for Gold $2,000 Per Ounce!
Ever heard of tulip mania? Well how about gold mania? It’s estimated that all the gold that was ever mined on Earth would fit into just two Olympic sized swimming pools. The world's biggest deposits are being depleted quickly, and new discoveries are uncommon. The bottom line: the demand for gold exceeds supply. Gold can easily explode higher to new highs.
Gold is near the $950 level and I expect it to break above its record intraday high of $1,030.80 that it hit on March 17, 2008. Once it goes above this psychological barrier of $1,031, it will head much, much higher.
Now please keep in mind that investing in gold does have risk and gold tends to be quite volatile. We may see a speed bump here and there in the coming months. But, I do think you should invest in gold as an insurance policy, just in case the global economy gets worse.
How high can gold ultimately go? Mark my words... gold will hit $2,000 per ounce or even higher.
Recently gold has been on an absolute tear as investors are piling into the yellow metal as a safety hedge. People are still quite concerned about the current economic crisis and are unsure what will happen in the future. The financial downturn we’re experiencing has crushed conventional investments like stocks and real estate and gold has shined throughout this downturn.
Gold is certainly in full bull market mode right now. Recently it headed higher on worries of both inflation and deflation. Surprisingly, central bankers are in favor of higher gold prices because it suggests their attempts to head off deflation are starting to work.
Now, the average person is not worried about inflation or currency debasement. They are worried about the money in their bank account. That’s just one reason that gold prices are rising. People are turning to safe havens because they think their banking system is on the brink of failure and they see the stock market is in the toilet.
Monetary disorder in general is very bullish for gold. The U.S. government is printing up huge amounts of new money and other governments around the world will have to follow suit. Currencies are going to be devalued around the globe. Paper money will be worth less and real assets will be worth more - plain and simple. Hard assets like gold, silver, copper and even real estate will rise in value.We know that gold is a safe haven in times of financial and geopolitical instability. Gold has often been nicknamed the "crisis commodity" because it tends to outperform other investments during periods of market distress and world tensions.
World demand for gold continues to rise and production is declining. It is extremely difficult to open new mines swiftly to address the supply shortage. Gold demand is coming from central banks, but also from private institutions and individuals. The biggest, most enduring buying force of them all is billions of people in India and China that can now freely buy gold.
Again, my target price for gold is $2,000 per ounce or higher. What I’m saying is that gold prices will double giving you an opportunity for a 100% return. I think this could happen within a year or soon after. Gold has produced outstanding investment returns over the years.

So take advantage of this golden opportunity and invest in gold!

Random Stocks Charts Muhibbah Landmark YNH

Thursday, February 26, 2009

Composite Index 26/02/2009 / 综合指数 2009年 02月 26日

Composite Index Daily Technical Analysis 26/02/2009
As indicated by A, the KLCI tested the Bollinger Middle Band again on Thursday, but remained resisted by the Bollinger Middle Band. This shows that other than the 905 Automatic Fibonacci Retracement, the Bollinger Middle Band is also another resistance for the KLCI. Support for the KLCI is still at 885 Automatic Fibonacci Retracement.
As shown on the chart above, the Bollinger Bands Width expanded only 2%, which is insignificant, and therefore, the KLCI is likely to remain in its consolidation. Furthermore, the KLCI is still trading within the symmetrical triangle, and therefore, the consolidation remains intact.
As indicated by B, total market volume increased 1.6%, but still below the 40-day VMA level. This shows that the market activities is still low as investors are still being cautious while waiting on the sidelines. Nevertheless, a lower volume during a consolidation stage is normal.
As circled at C, the Stochastic failed to break above 50% level, which suggests that the KLCI short term movement still has not regain its strength. If the Stochastic should break below 30% level again, it would be another short term bearish signal for the KLCI.
Since the KLCI is moving closer to the tip of the Symmetrical Triangle, the fluctuation is expected to be low. Nevertheless, if the KLCI should break above the L2 line, it would be a signal suggesting the KLCI might be gaining strength. If the KLCI should break below the L1 line, it would be a signal suggesting a weakening trend for the KLCI.
综合指数 2009年 02月 26日
图中箭头A所示,综合指数一度上探布林中频带(Bollinger Middle Band)的动态阻力水平,惟综指再次精确的在布林中频带遇到阻力然后回软,使到综指按日微跌3.09点或0.3%。这表示除了905点胜图自动费时此案以外,布林中频带依然是综指的动态阻力水平,综指的支持水平依然是885点的胜图自动费氏线。
如图所示,布林频带在周四打开了2%,但是这打开的幅度属于微小,所以综指还是属于巩固中,不至于确定出现跌势。无论如何,由于综指还没有突破对称三角形(Symmetrical Triangle),所以严格来说综指依然是属于横摆巩固的格局。
如图中箭头B指示,马股总成交量减稍微增加1.6%,但是却还是未能突破40天的成交量平均值(Volume Moving Average)。这表示了投资者还是保持谨慎的态度,继续在场外观望,所以目前市场的交投还是属于淡静中,这是综指横摆时的典型状态。

BT biznewz4u 26/02/09

US Stocks Rally Led by Financials After Fed Chief’s Statement
Overnight US stocks snapped a six-session losing streak by rallying 4.0%, helped by short covering after the stock market registered a multi-year closing low in the prior session. The market also took the cue from Federal Reserve Chairman Ben Bernanke’s statement that warned that the "severe" U.S. recession could drag into next year, but said banks should be able to weather the downturn without being nationalized, sparking a rally in the financial stocks.

The Dow Jones Industrial Average gained 236 points, or 3.3%, its best day on a point basis in over a month. The S&P 500 index rose almost 30 points, or 4%, after ending the previous session at the lowest point since April 11, 1997. The Nasdaq composite added 54 points, or 3.9%.

MARA Inc, the investment arm of Majlis Amanah Rakyat (Mara), is set to partner Can-One Bhd in its takeover of Kian Joo Can Factory Bhd, sources said. The partnership would help Can-One fund the purchase of Kian Joo, which is a much bigger company. It is understood that the partners have negotiated for
a loan from Bank Rakyat, which would cover the funds needed for the initial purchase

Maybank Bhd plans to raise about RM5bn to RM6bn through a rights offering, banking sources said yesterday, up from what it had originally planned. Maybank said last month that it needed to raise RM3 billion to boost its working capital and was looking at various options. The sources said that Goldman Sachs
and Credit Suisse had been hired to arrange the rights offering

TM International is looking to raise more than US$1bn (RM3.67bn) in a rights offering in the first half of this year to cut debt, sources with direct knowledge of the deal said yesterday. A TMI spokeswoman said nothing has been finalised yet, but the firm is on track to announce details of its capital raising plan in the
first quarter

Mah Sing Group Bhd registered a drop in its net profit for the fourth quarter to RM16.5mn compared with RM20.5mn recorded in the same period last year. Fourth quarter revenue was higher at RM151.7mn from RM120.4mn in the previous corresponding period. For the full year ended December 31 2008, the group recorded a net profit of RM93mn compared with RM82.3m in 2007, while revenue grew to RM651.6m in 2008 from RM573.4mn the year before

IJM Corporation Berhad announced that it plans to lengthen the Middle Ring Road II (MRR2) and the Pandan area by a further 12km to ease the traffic congestion at the southern end of Kuala Lumpur and the MRR1 and MRR2, which are now exceeded their vehicular capacity. The additional work is estimated at RM649mn and would be implemented by Besraya(M) Sdn Bhd in 36 months. Besraya is a wholly owned subsidiary of Road Builder (M) Holdings Bhd, which is in turn a wholly owned subsidiary of IJM.

AirAsia Bhd has put in a proposal for a lower international passenger service charge (PSC) or better known as airport tax, at RM10 and the domestic OSC remaining unchanged as part of its “wish list” for the new low-cost carrier terminal (LCCT) at the KLIA, source said.

Plus SPV, a special purpose vehicle owned by state-controlled toll road operator PLUS Expressways, is planning a book-building exercise for RM400mn of 10-year notes, a source said. The book-building opened yesterday and will close on Friday. CIMB and Bank Islam are managing the deal.

Sell on Rally AirAsia, BCHB & TM Switch to Sell on Rally AirAsia, BCHB and TM towards the upper Bollinger band to maximize profits upon a rebound, while revert to Buy on Dip MRCB, Tebrau and Puncak Niaga given likelihood for return of rotational trading plays to lower liner construction and property stocks.

FKLI Spot month February KLCI futures contract gapped down to open at 876 on Tuesday, but promptly bounced back from low of 875.5 and gradually traded upwards to a high of 890 by late afternoon. The contract closed at 887.5 for a 3.5-point gain for the day, while total traded volume ballooned to 22,434 contracts on rollover trades.

The surge from early lows to close higher yesterday formed a bullish engulfing candle and triggered a buy signal on the daily slow stochastics oscillator, improving upside momentum for the short-term. However, the wider discount to cash implies weak undertone and good likelihood that selling on strength will cap near-term upside, with strong resistance seen at 900.


综合指数 2009年 02月 25日 / Composite Index 25/02/2009

综合指数 2009年 02月 25日
如图中箭头A所示,综合指数在美国隔夜道琼指数及区域股市回弹的带领下,一度上探布林中频带的动态阻力水平(Dynamic Resistance),惟综指精确的在布林中频带遇阻而回软,按日微扬2.44点或0.3%。如图所示,综指目前依然在对称三角形(Symmetrical Tri)里巩固,885点的胜图自动费氏线继续是综指的支持水平,阻力水平则是905点的胜图自动费氏线。
如图中箭头B指示,马股总成交量减少了3.3%,所以成交量依然处于40天的成交量平均值(Volume Moving Average)以下。整体市场的交投依然不足,这是综指处于调整巩固的典型状态。

Composite Index Daily Technical Analysis 25/02/2009
As indicated by A, the KLCI tested the Bollinger Middle Band and closed at the Bollinger Middle Band, up 2.44 points. Therefore, the KLCI continues its consolidation within the Symmetrical Triangle. Support for the KLCI is still at 885 Automatic Fibonacci Retracement while the resistance is still at 905 Automatic Fibonacci Retracement.
Meanwhile, the Bollinger Bands Width contracted 4%, suggesting that the KLCI is still consolidating. Generally, the consolidation is expected to continue until the Bollinger Bands Width re-expands.
As indicated by B, total market volume declined 3.3% on Wednesday, and therefore, it is still below the 40-day VMA level, suggesting that the overall market participation is still insufficient. Without sufficient market participation, the KLCI is less like to pick up any strength.
As circled at C, the Stochastic continue to rise on Wednesday, but failed to break above 50% level. This shows that the KLCI short term movement is still not turning bullish. Generally, the Stochastic has to break above 70% level, in order to signal a short term bullish signal.
Regional markets rebounded on Wednesday as lead by the rebound of the Dow Jones Industrial Average. However, the market is still lack of fresh lead, thus the KLCI is likely to continue its consolidation as investors are still staying on the sidelines.


Fundamental Analysis SUNCITY Technical Analysis Eastern and Orient

Still decent
Within expectations
Suncity’s 2QFY09 results came in within our expectations. On q-o-q basis, turnover and net earnings fell 13% and 21%, respectively. The lower turnover was due to slower sales and delay in construction progress of certain projects in the property development segment. However, bottom line was hit by additional depreciation charges arising from reclassification of “non-current assets classified as held for sale” to “property, plant & equipment” and “investment properties”. Depreciation that relate to the previous 3 quarters (i.e. 3Q and 4QFY08 and 1QFY09) was also charged out in 2QFY09. This amounted to RM21.5m in total. Excluding this impact, net profit actually improved by about 5% in 2QFY09. No dividend was declared for the quarter.
Stable EBIT margin
EBIT margin decreased to 25% from 34% in last quarter. This was due to the reason mentioned above. However, excluding the additional depreciation charges, EBIT margin still stayed at a healthy level of about 32%. This was largely held up by stronger margin for its property investment segment.
Property investment showing some weakness
2QFY09 turnover for Suncity’s property development segment still showed some improvement compared to last quarter. However, revenue for its property investment division showed some marginal weakness. We believe this was due to weakening consumer sentiment, and hence affected retail sales for its Sunway Pyramid mall. Bottom line impact was mitigated due to the better margin for its property investment segment.
Maintain BUY, with a TP of RM2.00
No changes in our estimates and likewise our BUY recommendation and target price of RM2.25. Our valuation is based on a 60% discount to our RNAV estimate, which implies a PE multiple of 6.2x against our CY09 EPS forecast. We think our forecasts are reasonable, as we already factored in slower property sales as well as slightly weak earnings from property investment (for Sunway Pyramid mall). However, we cut our DPS forecast slightly as we think the company will conserve more cash due to the prevailing economic downturn

More downside pressure expected soon…
♦ After falling below the RM1.07 level in Aug 2008, the share price of E&O constantly encountered strong selling momentum and drifted to below the RM0.54 in late Oct 2008.
♦ The stock staged a technical rebound to rechallenge the RM0.74 technical hurdle in Nov, but reversed and hit a lower low of RM0.395 in late Dec.
♦ There was another rebound in Jan 2009, but the stock’s upside momentum was weak.
♦ Since then, it fell into a declining trend and drifted lower in recent trading.
♦ The 10-day SMA has also recently cut below the 40-day SMA, pointing to a possible medium-term bearish scenario on the stock.
♦ As it has just fallen below the RM0.54 support level and coupled with the downbeat momentum readings on the indicators, more downside pressure is expected.
♦ If the negative momentum persists, the stock is likely to ease lower towards the Dec 2008’s low of RM0.395.
♦ It will be a fresh multi-year low if that final support level gives way.

Technical Readings:
♦ 10-day SMA: RM0.547
♦ 40-day SMA: RM0.5755
♦ Support: IS = RM0.395♦ Resistance: IR = RM0.54 R1 = RM0.74 R2 = RM0.92

Attn : This article is contributed by courtesy of Blogger diamond

Fundamental outlooks KNM MRCB

Oil & Gas
KNM (RM0.41) - SELL
No one-off impairment >>> Within expectations 4Q08 results were well within our expectations but 14% below consensus estimates. Turnover increased by 14% q-o-q but net earnings fell 20%, hit by higher effective tax rate arising from overseas operations (due to lumpy invoices that were taxed at 30% in Germany). Note that, KNM has started consolidating Borsig’s contribution into its accounts since June 08. Based on our estimate, assuming Borsig is generating about RM20m/month of net profit based on management’s guidance, this implies that the profit from KNM’s existing business only rose by 5% y-o-y for FY08. Overall, including Borsig, full year turnover was
almost double but net earnings upped by only 79%. A 1.5 sen dividend (1 sen taxable + 0.5 sen tax exempt) was declared for the quarter.
Warnings for amortisation
KNM has completed its fair value valuation by auditors in Germany and there was no write off on goodwill for Borsig. Instead, the RM1.7bn goodwill has now been reclassified to Intangible Assets of RM872.7m (total fair value for technology, brand & marketing) plus Goodwill of RM925.8m (goodwill arising from the acquisition of Borsig. Hence, a RM35m (for 7 months FY08) amortisation charges on Intangible Assets was incurred in 4Q08 result. We revise down our FY09-FY10 earnings projections accordingly to reflect the
amortisation expense of RM80m for full year (assuming 10% amortisation for intangible assets).
Minimal capacity expansion for the next 2 years
Over the next 2 years, we think KNM is unlikely to embark on any acquisitions, but would rather form partnerships with industry players. Given the low oil price and hefty cut in capex by international oil majors, it is reasonable for KNM to do so and meantime to digest its largest ever acquisition – Borsig. To recall, KNM as aborted its acquisition of Ellimetal in Belgium due to the tough operating environment. KNM has also announced at its 3Q briefing that its capacity expansion plan for its plant in Canada has been suspended as many oil sands projects are being reviewed by clients following the slump in oil price.
Downgrade with a lower TP of RM0.36
We downgrade our recommendation to Reduce (from Trading Buy) with a lower TP of RM0.36, based on a lower 3.5x FY09 PE (about 30% discount to sector’s PE). Our downgrade stems from: (i) higher amortisation expense; (ii) higher net debt (net gearing of 0.5)x; (iii) NTA of only 1sen; (iv) operating cash flows that did
not commensurate with higher net profits; and (v) higher effective tax rate. Current orderbook of some RM4bn would last for 1 year. Given the current level of oil price, we are not optimistic on the outlook for orderbook replenishment. Earnings & Valuation Summary FYE Dec (RMm) 2007

Construction & Infrastructure
MRCB (RM0.845) - BUY
Way below expectations, more provisions :
Losses again in 4QFY08
MRCB chalked up a higher net loss of RM39.3m in 4QFY08 as a result of provisions for remedial works and writedowns of land and unsold property inventories (around RM26m), surprised provision of around RM9m for the Sabah East-West transmission project which was completed in FY07 as well as lower property development bookings. The group suffered a net loss of RM26.8m in 3QFY08 due to provision for doubtful debts, writedown of goodwill, impact of construction cost escalation as well as sharply lower property development profit. 12MFY08 net loss of RM56.6m vs net profit of RM40.7m in 12MFY07
As a result of the heavy losses in 3QFY08 and 4QFY08, the group reported a net loss of RM56.6m in
12MFY08 versus a net profit of RM40.7m in 12MFY07.
The net loss in 12MFY08 was in spite of the gains from redemption of non-cumulative preference shares in an associate and subsidiary (RM16.1m), and gains on disposal of an associate and subsidiary (RM15.9m). As in the past, no dividend has been declared.
Below expectations, cutting FY09-10 forecasts, introducing FY11 forecasts
The FY08 net loss of RM56.6m is way below our forecast of RM0.04m and consensus of RM52.3m. Variation to our FY08 forecast is attributable to our assumption of lower cost of building materials leading to some recovery in E&C margin, lower-than-expected property development profit as well as the surprised
provision and writedowns in 4QFY08. In view of the poorer performance in FY08 and current sharp economic slowdown, we are cutting our E&C and property development bookings and profit contributions – leading to cuts of 75.3% and 57.5% in our FY09 and FY10 net profit forecasts. We have not taken into
account any potential writeback of the provisions for the Sabah East-West transmission project as well as earlier E&C provisions (around RM23m) which the group will make VOP claims. We are introducing our FY11 forecasts, which assume revenues of RM500m for E&C, RM150m for property development and
RM150m for infrastructure.
BUY maintained on RNAV and likely positive impact of second stimulus
Based on the 4QFY08 net debt of RM534.9m, property RNAV and target price is adjusted lower to RM1.33, which is 55% of the RNAV of RM2.43 for the group. BUY is maintained as we continue to expect share price to reflect the true value of its assets, especially KL Sentral, when markets stabilise. The group is also expected to benefit from the second stimulus package to be announced on 10 March. Outstanding order book end-08 was around RM1.8bn.

Wednesday, February 25, 2009

Random Stocks Charts KLCI Summary, YTL AZRB EPIC


FKLI market outlook 25022009

Asian market tumbled on Wall Street slump with Nikkei 225 shed 107.6 pts or -1.46%, STI plummeted -22 pts or -1.37% and HSI plunged 376 pts or -2.86%. However, KLCI closed marginally higher at 894.07, +6.24 pts or +0.7% on strong support from local fund. Meanwhile, FKLI reversed from the red and closed 3.5 pts higher to settle at 887.5. The basis widen to 6.5 pts discount from 3 pts previous day closed. Turnover increased significantly to 12,317 lots from 8,104 lots. Bank Negara Malaysia has announced to cut its Overnight Policy Rate by 50 basis point to 2% to bolster an economy that policy makers say faces an increasing risk of contracting this year.

For today, the unexpected rate cut to boost local economy will bring some positive sentiment to the market, and the overnight surge in Dow Jones could help to lift sentiment. We maintain our call to short at 890 and long at 870. Support 870 and resistance 899.

We can expect more downside for KLCI due to rate cut by Bank Negara indicating more severe economy situation ahead, stock market needs time to digest and reflect the weakening fundamental side of economy.

News Highlight:

Dow Jones gained for the first time by 236.16points yesterday, closed at 7350.94points after 5 consecutive days loss. US stocks prices were lifted as Federal Reserve Chairman Ben Bernanke made a statement that banks need not be nationalized, the statement spurred the surge in banking stocks, such as Citigroup and Bank of America Corp gained more than 20%.

US consumer confidence collapsed as Americans are growing pessimisms over employment prospects, and their financial well-being in future months. Federal Reserve Chairman warned that the gloomy economy situation could until 2010.

Technical Stock Picks Compilation Table

The table below is a compilation of actively traded stocks with their stop-loss, support and upside targets together with some popular technical indicators. Stock name in bold represents stocks that are expected to attract momentum trading plays and hence encourageretail or short-term trading participation. Share price in bold reflects revised stop-loss, support and upside targets. Recommendation (REC) in bold indicates changes to recent technical calls.

Comments: Maintain SELL call on banking stocks AMMB and Maybank and switch to Buy on Dip Gamuda and IJM Corp towards the 30-day SMA or lower Bollinger band for better leverage on a rebound. The immediate supports of Genting and KNM are revised lower to RM3.40 and 39sen respectively due to buyers’ strike, while revert to Sell TM given the strong chart resistance from the upper Bollinger band and 200-day SMA.

Tuesday, February 24, 2009

Malaysia Economics >>> Call It a (Deeper) Recession

Malaysia Economics
Call It a (Deeper) Recession
 We cut our GDP forecasts for 2009 and 2010 to -1.5% (from 0.5%) and 3.5% (4.2%), respectively — This is in line with recent forecast downgrades by our G3 economists and dismal trade data for Asia. With cushion from commodity prices evaporated, Malaysia’s growth will likely converge with other Asian tech exporters, all of which have seen significant contractions. Risks to our belowconsensus forecasts probably remain to the downside.
 We anticipate a deeper and more prolonged recession, with the economy to contract 2-3% from a year ago in 1H09. The trough is more likely to be in 2Q09 at the earliest — A return to positive YoY growth is not likely till 4Q09, when base effects kick in and the pace of manufacturing contraction abates.
 External demand headwinds remain formidable, which will deepen the recession and limit the pace and sustainability of any recovery — Chief is the structural increase in the US household savings rate. The near-term impact of the Obama stimulus plan should also not be overstated. Neither will an expected recovery in Chinese domestic demand be of much help, as exports for China’s domestic demand contributed less than 10% of Malaysia’s export growth in 2008.

 Domestic demand resilience giving way – Both domestic and export-oriented IP have fallen recently, while retail sales have also been falling. The largest drag on domestic demand is probably the deteriorating labour market. We expect the unemployment rate to rise to c.5%, with risks to the upside. A significant rise in unemployment would thwart other policy efforts to help the consumer.
 Credit constraints rising, as seen in falling loan disbursements to households and overall loan approvals – Despite moral suasion and other efforts to increase credit availability, banks probably have little incentive to increase lending at a time when credit risk is rising. Household balance sheets are relatively stretched, with household debt to GDP ratio (67%), higher than many Asian economies of comparable GDP/capita. The high debt service ratio (~40%) will further drag spending, especially if interest rates are not lowered further.
 Prospect of a full-year GDP contraction could prompt BNM to cut the OPR a further 50bps in 2Q09 – Monetary easing may also be needed to anchor backend yields and accommodate looser fiscal stance. The Second Stimulus Package (10 Mar) may include possible targeted tax incentives, cuts in EPF contribution rates, and liberalization of the services sector. The size of the package remains unclear, and could likely be as large as RM30bn (~5% of GDP vs. our previous expectation of RM10bn-15bn). This would bring the fiscal deficit to 10% of GDP, raising supply risk in the MGS market and likely leading to a sovereign credit ratings downgrade, and further sell-off by foreign investors. We see upside risks to our end 2Q08 USDMYR forecast of 3.73 and 5Y MGS forecast of 2.8%.

综合指数 2009年 02月 24日 / Composite Index 24/02/2009

综合指数 2009年 02月 24日
如图中箭头A所示,由于885点的胜图自动费氏线与L1的趋势线重叠,使到支持力量倍增,所以综合指数周二再度精确的在885点的胜图自动费氏线上获得扶持而回弹。由于综指在L1线上反弹,所以综指继续的在对称三角形(Symmetrical Triangle)里巩固,酝酿着一个新的趋势。综指当前的阻力水平是905点的胜图自动费氏线,支持水平则依然是885点。

如图所示,布林频带(Bollinger Ban)稍微打开了2%,但是这打开的幅度相对的小,还不算是明显打开,这表示综指还是属于横摆巩固。布林中频带(Bollinger Middle Band)接下来也将继续的成为综指的动态阻力线。

如图中箭头B指示,马股总成交量稍微增加6.3%,所以依然未能达到40天的成交量平均值(Volume Moving Average)。换句话说,马股交投目前还是属于淡静,综指有倾向于调整巩固的格局。

如图中C圈指示,随机指标(Stochastic)回弹并且突破了30%的水平,表示综指有望开始技术反弹(Technical Rebound)。若随机指标接下来能进一步上扬突破50%水平的话,那综指有望出现短期转强的趋势。


Composite Index Daily Technical Analysis 24/02/2009
Despite the Dow Jones Industrial Average Index closing at its 12 year low, the KLCI rebounded 6.24 points after supported by the 885 Automatic Fibonacci Retracement and the L1 line. Therefore, the KLCI continued its consolidation within the Symmetrical Triangle, and the resistance for the KLCI is still at 905 Automatic Fibonacci Retracement. (Study A)
As shown on the chart above, the Bollinger Bands Width only expanded 2%, and therefore, the signal is insignificant. Nevertheless, if the Bollinger Bands Width should expand significantly, it would be a signal suggesting a beginning of a new movement for the KLCI.
As indicated by B, total market volume increased 6.3%, but still below the 40-day VMA level. This shows that the overall market participation is still low, thus the KLCI is less likely to pick up any strength, and it is expected t continue its consolidation.
As circled at C, the Stochastic rebounded and broke above 30% level, as the KLCI closed higher at its daily high. Therefore, the Stochastic is now suggesting a beginning of a technical rebound. If the Stochastic should also break above 50% level, it would be a signal suggesting a continuation of the technical rebound.
In short, since the KLCI is getting closer to the tip of the Symmetrical Triangle, we shall only wait until the KLCI break out from the Symmetrical Triangle to show its new direction.

Random Stocks Charts GAB Genting AirAsia KianJoo


KLCI And FKLI Market Outlook 24/02/09


The Asian market closed in mix note after Dow futures rebounded on nationalization of CitiGroup Inc. lead to reducing the risk of bank failures. KLCI eased 1.88 pts or -0.21% to settle at 887.83, STI gained 37pts or +2.33%, HSI added 475 pts or +3.75% while Nikkei 225 shed 40 pts or -0.54% on financial services company SFCG filed for bankruptcy protection. Meanwhile, the FKLI gained 6 pts or +0.68% to settle at 884. The basis narrowed to 3 pts discount from 11 pts against cash. Given the weak momentum reading on RSI-14 days at 48 and unable to sustain above SMA 20 at 885, we expect the market to have further downside potential.

In addition with overnight loss in Dow Jones, sentiment would be further weakened today and lead to more sell off on shares, recent performance in US and regional market is giving more pressure on KLCI. While economists in different financial institutions in Malaysia are giving various 2009 GDP growth forecast for Malaysia to be 1-3.5%, market is fundamentally weak and hence doesn’t give much chance for upside. Investors may Short at 890 level, more downside is expected if breach the support level at 870.

综合指数 2009年 02月 23日 / Composite Index 23/02/2009

综合指数 2009年 02月 23日

如图所示,布林频带(Bollinger Bands)进一步收窄20%,这表示综指正在酝酿一个新的趋势,所以综指处于巩固格局中,直到布林频带重新打开或综指突破对称三角形为止。 如图中箭头B指示,马股的成交量减少了14.1%,所以目前继续的处于40天成交量平均值(Volume Moving Average)以下,这表示了市场的交投还是属于淡静的。无论如何,当综指横摆巩固时成交量偏低是很正常的,这是因为大部分投资继续维持离场观望的态度所致。

Composite Index Daily Technical Analysis 23/02/2009
As indicated by A, the KLCI failed to sustain its early gain, closing precisely above the 805 Automatic Fibonacci Retracement and the L1 of the Symmetrical Triangle dynamic support. Resistance for the KLCI remains at 905 Automatic Fibonacci Retracement.
As shown on the chart above, the Bollinger Bands Width is still contracting 20%; therefore, the consolidation of the KLCI is expected to continue until the Bollinger Bands Width re-expands or the KLCI breaking out of the Symmetrical Triangle.
As indicated by B, total market volume declined 14.1%, and therefore, continue to stay below the 40-day VMA level. This shows that the market participation is still low, as investors are still staying on the sidelines. Nevertheless, a lower volume during a consolidation is considered normal.
As circled at C, the Stochastic is still below 30% level, which is the short term bearish region. If the Stochastic should continue staying below this level, the short term market movement for the KLCI is likely to be bearish biased.
With the Dow Jones Industrial Average moving in downtrend, together with no fresh lead in the local market, the KLCI is expected to consolidate further. However, with the KLCI near to the tip of the Symmetrical Triangle, the KLCI is expected to break out of the Triangle in near future. If the KLCI should break out from the Symmetrical Triangle, it is a good idea to combine the Bollinger Bands signals to monitor the new movement of the KLCI.

My Trading Strategy

Using Indicators
ZL almost always base decisions on the price/volume chart. All an indicator does is summarize the information already visible on the chart. While useful for highlighting patterns in price and volume behavior, indicators can never replace the depth of information on the original chart. When you summarize data, you sacrifice some of the attributes in order to highlight others — so an indicator never gives the full picture. Indicators have two main purposes:

#1. To act as a filter when screening stocks; and
#2. To act as a form of executive summary before you examine the price/volume chart in detail.

Do The Charts Discount Everything?
You will often see technical analysts repeating the mantra: the charts discount everything — and all information available to the market is reflected in the current price. ZL believe that the market often takes time to react to new data. We are not dealing with a vast super-computer that can detect and analyze the full implications of a minute change in market conditions. The market is driven by mass psychology and pulses with the ebb and flow of human emotions. Emotions may respond rapidly to extreme events, but normally change gradually over time. Individuals are seldom comfortable acting alone: the market is dominated by a vast herd instinct.

The Economy
By appraising yourself of market conditions you can learn to anticipate the broad movement of the market. Study general market conditions, especially the supply and demand for money (the Ringgit?), which drives market prices. If there is no money to buy stocks, prices will fall. Likewise, if the market is awash with money, prices are likely to rise. The value of the MYR is vital to the intraday market sentiments.

Try to avoid making predictions. The market can go up or down at any time — it is only the probability (of each move) that varies. When you make predictions, you may lock yourself into a position and be less open to evidence that you are wrong. Attempt to eliminate bias by presenting both possible signals (bull and bear) wherever practical. That's one reason why ZL is consistently bottomish instead of bearish. A pessimistic trader seldom create optimistic opportunities.

Technical Analysis Not An Exact Science
We never know the outcome of a particular pattern or series of events in the market with 100 per cent certainty. The best that we can hope to achieve is a probability of around 80 per cent for any particular outcome. That means something unexpected will occur at least one in five times. My approach is to assign probabilities to each possible outcome. Assigning actual percentages would imply a degree of precision which, most of the time, is unachievable. Terms used are more general: "this is a strong signal"; "this is likely"; "expect this to follow"; "this is less likely to occur"; "this is unlikely"; and so on. Bear in mind that there are times, especially when the market is in equilibrium, when we may face several scenarios with fairly even probabilities. Analysis is also separated into three time frames: short, intermediate and long-term. While one time frame may be clear, another could be uncertain. Obviously, we have the greatest chance of success when all three time frames are clear.

A Simple Formula
The market is a dynamic system. ZL often compare trading to a military operation, not because of its oppositional nature, but because of the complexity, the continual uncertainty, the conflicting intelligence reports, and the element of chance that can disrupt even the best made plans. Prepare thoroughly, but allow for the unexpected >>> "expect nothing but be prepared for everything." The formula is simple: trade when probabilities are in your favor and apply proper risk (money) management — and you will succeed.