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Tuesday, March 31, 2009

EO >>> The Andrew's Pitchfork Indicator

What is the pitchfork indicator and how to use it
The technical indicator known as Andrew's Pitchfork is not that well-known, and it's rarely used by novice traders.

However, it is a quick and easy way for traders to identify possible levels of Support and Resistance for an asset's price. It is created by drawing a line from the first point that runs through the mid-point of the other two points. The reason this indicator is called a "pitchfork" becomes apparent from the shape that is created in the chart.

If the security breaks above the resistance line in this example, the target will then change to the top line and the broken resistance line will then become the new support. It is not uncommon for a trader to sell a security near the resistance line and then see it break through and head higher. E&O is now at the testing zone of immediate resistance.


TECHNICAL ANALYSIS 综合指数 2009年 03月 31日 / Composite Index 31/03/2009

合指数 2009年 03月 31日

如图所示,综合指数在布林中频带(Bollinger MidBand)及869点的胜图自动费氏线获得扶持,全日回弹3.21点或0.4%。这表示综指目前的支持水平依然是869点的胜图自动费氏线及布林中频带的动态支持水平,阻力水平则是885点的胜图自动费氏线。





虽然国际市场继续动荡,不过综指在布林中频带及869点胜图自动费氏线获得扶持,再加上布林频带收窄,这使到综指有望进入横摆巩固的格局。从技术分析的角度来看,综指目前最好的调整就是横摆巩固。若综指能够在860点水平以上横摆巩固的话,那将有望形成“较高的底”(Higher Low),这将是综指摆脱跌势转强的一个重要转势图形(Reversal Pattern)

Composite Index Daily Technical Analysis 31/03/2009
As indicated by A, the KLCI rebounded 3.21 points on Tuesday after being supported by the Bollinger Middle Band as well as the 869 Automatic Fibonacci Retracement. This shows that the support for the KLCI is still at 869 Automatic Fibonacci Retracement followed by the Bollinger Middle Band dynamic support, while the resistance is at 885 Automatic Fibonacci Retracement.

As shown on the chart above, the Bollinger Bands Width contracted another 10%, suggesting that the KLCI is still consolidating. Generally, the volatility of the KLCI is lower during a contraction of the Bollinger Bands Width.

As indicated by B, total market volume increased 5.2% on Tuesday, with volume still above the 40-day VMA level. This suggests that the market participation is still relatively sufficient. This is an important element if the KLCI should attempt to rally again.

As circled at C, the Stochastic does not decline further after breaking below 70%, this shows that the Stochastic is suggesting a beginning of a technical correction signal, but not a short term bearish signal. Nevertheless, if the Stochastic should return to above 70% level in the near term, the KLCI is expected to resume its short term bullish biased movement.

The contraction of the Bollinger Bands Width suggests that the KLCI is now consolidating while preparing for a new movement. From the Technical Analysis stand point, the best consolidation would be a sideways low volatility movement. If the KLCI should move sideways above 860 level, it is likely to form a higher-low, which is an important bullish reversal signal for the KLCI.

Depending on Mini Supports >>> Dow at important 7,500 Support Level

A few days ago, we identified mini support levels for the Dow Jones and the KLCI to help the bull scale the proverbial equities mountain.
Now the time has come to see how tough these mini supports really are. Dow Jones : At critical 7.500 Mini support level

Last Thursday, we identified the 7,500 (Uptrend line support) as an important mini support level to help the bulls sustain the Dow’s uptrend.
After correcting a significant 402.5 points in the last two days, the Dow has now reached the 7,500 support. Will this 7,500 support level hold?
No doubt the Dow’s volatility has managed to scare trader’s from all over the world with the massive profit taking in global equities yesterday (Hang Seng down 4.7%, FTSE down 3.5%). However, we think that this 7,500 support will hold and be a platform for the bulls to resume the Dow’s uptrend to assail the challenging 8,000 resistance level ahead.
KLCI : 873 break not a true break
The KLCI yesterday numerically broke through the 873 dynamic MAV support by 4 points when it closed at 869 points yesterday. But we can live with a transgression of 4 points and still not classify it as a true break yet. If the Dow can rebound tonight and drag the KLCI back above this support line, then this 873 dynamic support will still be intact, which means that the KLCI uptrend is still intact.

Strategy : Positive on KLCI and Dow
We maintain our positive view of the KLCI as we think that the KLCI’s 873 support and the Dow’s important 7,500 support level will hold and help the bulls sustain their uptrend. Traders are advised to enter positions in today’s session of weakness.


FCPO Market Outlook 31 March 2009

The crude palm oil futures were trading in roller coaster yesterday by opened gap down RM23 and closed RM20 lower at RM1970/MT for the benchmark June contract.
Increased soybean’s planting acreage in US has pressurized the cpo futures. Turnover reduced to 5,900 contracts from 8,264 contracts while open interest fell to 27,115 contracts from 27,980 contracts.
For records, previous month ITS and SGS stood at 1,168,539 and 1,160,000 respectively.Other Highlight(s): - Soybean futures in CBOT ended lower succumbing to selling pressure associated with economic woes and lack of fresh supportive news. May soybean ended 12 ½ cents lower at $9.04 ½ while May soyoil finish 38 points lower at 32.04 cents per pound. (Dow Jones)-
Crude oil futures dipped below $50 a barrel Monday, as the strengthening dollar and grim economic outlook knocked away support for recent highs.
Crude oil futures ended $3.13 lower at $49.25
Malaysian palm oil exporters are benefiting from the US recession, as cost conscious Americans buy more ready-to-eat meals that are mainly cooked in palm oil and margarine.
(BT)Market Outlook:
For today, the plunged in crude oil and soyoil overnight will further pressure the cpo market. The market is expected to open RM10-RM20 lower with limited downside tracking E-CBOT has started to rebound by more than 1 percent. Investors are staying aside ahead of export data due to be released today. For intraday, investors may long at RM1940/MT level and short around RM2023/MT levels. HAPPY TRADING !!!

FKLI OUTLOOK 31 Mar 2009

Further slid in overnight DJIA of 254 points, -3.27%, indicating that the DJIA may not able to test its important overhead resistant of 8000 level. The slumped was caused by:-
1) Obama warned of some banks need more government aid

2) GM and Chrysler given last chance to restructure

3) Tumbled in Alcoa after Aluminium Corp. of China’s profit reduced more than 99%

4) More writedown is expected in UBS

Technically, DJIA need to re-gain its posture above the important MA 50 level (7580 level) to resume its uptrend and to test the 8000 psychological level.[Reminder: US will release its Consumer Confidence data later tonight (Survey 28 Vs Prior 25)]

Composite index dip further tracking bad performance from regional index, amid renewing gloomy economy slowdown and recession might deepen.
The cash market settled lower at 869 after it slid 16 points yesterday with total 363M shares valued at RM600M traded. Leading the most losses was finance sector and trade & service sector. Meanwhile March contract retraced about 20 points to end lower at 867. Total volume increased from 19,323 to 16,317 while open interest shrinks from 31,051 to 29,187. It was the entire way downward trend for March contract touching the lowest of 864.
Asian Market:
Regional market ended bearish yesterday as Nikkei tumbled about 390 points to 8,236 amid Japanese stocks fell the most in more than 2 months on concern the recession will trigger more corporate failures and demand for vehicle will contract.

Meanwhile Shanghai composite was a little changed after it slid 16 points to 2,358. The HSI dropped about 663 points to 13,456 amid renew economy recession that might trigger more corporate failure and curb bank’s earning.

Today’s Outlook: Spot month contract surpass most of the support level as it dipped as low as 864 point, the steepest fall this month. The market might expect technical rebound on March contract due to oversold territory on RSI and remain resilient on downside as gloomy economy prospect is far from over. It is still bearish movement for long term trend.
Unable to close above the MA 50 and MA30 attracted our attention on whether the uptrend that we expect for short term (to reach 900 level) is achievable. Judging from technical and market sentiment, we literate that market is cap at 900 while support level would be 862 points (Bollinger Middle Band).

From Wall St. With Love 31 MARCH 2009 PART 2

From Wall St. With Love 31 March 2009 PART 1

Monday, March 30, 2009

TECHNICAL ANALYSIS Composite Index 30/03/2009 / 综合指数 2009年 03月 30日

Composite Index Daily Technical Analysis 30/03/2009
On Monday, the KLCI declined 16.09 points, to close at 869.34 points. As indicated by A, the KLCI rebounded precisely at the Bollinger Middle Band, before closing at 869.34 points, this suggests that the Bollinger Middle Band is still the dynamic support for the KLCI.

As shown on the chart above, the Bollinger Bands Width contracted 5%, suggesting the KLCI is now having its technical correction. Since the 869 Fibonacci Retracement is very closed to the Bollinger Middle Band, it will be a support for the KLCI for now, while the resistance is at 885 Fibonacci Retracement.
As indicated by B, total market volume declined 20.1%, despite the KLCI falling over 16 points. This shows that the market is no sign of panic selling, only an abrupt technical correction.

Nevertheless, from the technical point of view, a lower volume during a technical correction or a consolidation of the KLCI is considered normal, as investors choose to stay on the sidelines
amid the market uncertainty.

As circled at C, the Stochastic breaks below 70%, suggesting a beginning of a technical correction. If the Stochastic should also break below 30% level, it would be a signal suggesting a weakening short term movement for the KLCI.

Despite the sharp correction of the KLCI on Monday, the contraction of the Bollinger Bands Width is also suggesting that the KLCI is now gearing up for a new movement. If the Bollinger Bands Width should continue to contract, the correction of the KLCI is expected to continue.

综合指数 2009年 03月 30日

如图中箭头A所示,由于全亚太股市暴跌,综合指数也不能独善其身,闭市时下跌16.09点或1.8%,惟综指精确的在布林中频带(Bollinger Middle Band)上获得扶持。如图所示,综指随后稍微反弹以869.34点挂收,所以布林中频带成为综指重要的动态支持水平。
如图所示,布林频带(Bollinger Bands)开始收窄(-5%),这表示综指已进入调整的格局。综指目前的支持水平落在869点的胜图自动费氏线,加上布林频带与869 点的胜图自动费氏线几乎重叠,所以支持水平倍增,阻力水平则是885点的胜图自动费氏线。




Random Stocks Charts KNM Petra Perdana PROTON

Market Commentaries/Technical Analysis March / April 2009

On the US market, the odds are improving in the US economy as the housing market there appears to be turning around. The US economy will likely be in bad shape in the first two quarters of 2009 but there is some hope now (March 2009).

The US government is working to get credit flowing into the market and when various schemes start to function, the credit market there will stabilize. That will be the lead for global market conditions to stabilize. Only then can recovery take place.

There is currently a bear market rally in the US, partly die to some positive signs of recovery following better than expected new home sales and orders for durable goods in Feb 2009 after a sharp fall in Jan 2009.
But its still too early to say. The underlying consumer demand is not really there yet. We have to look at more economic data in the next few months.
Domestically, with the end of the Umno general assembly meeting, the stock market could revert back to its normal lacklustre state in the week ahead due to the lack of catalyst and positive news flow. Also, investors are expected to cash in on gains from the market rebound that happened over the week.

Any rebound is expected to attract heavy selling pressure ahead, hence profit-taking correction is bound to happen. Counters that have performed well would see their prices coming down in the week ahead.

Unless daily trading volume improve further towards the one-billion shares mark, selling on rally is expected to dominate and restrict the upside of the local stock market.

Investors at large are expected to scurry back to the sidelines towards the start of the second quarter of the year (2009) as they wait for positive signs that will encourage them to put their money in the market.

Liquidity is ample but economic uncertainties are still lingering, despite the fact that the US government has recently released some encouraging economic data and the Chinese government optimistic remarks that its economy will be roaring back soon.

The 21.48 points rally over the week has improved the market’s technical landscape dramatically. The near-term technical outlook for the CI would turn firmly bullish once the 50-day MAV line or 885 points is violated cleanly.
The fact that the 835 point-level, which was previously tested twice but not broken – with a subsequent CI rally towards the 100-day MAV line – is a very positive technical development,

The immediate resistance at the 50-day moving average (MAV) line or 885 points, followed by the psychological level of 900 points. To the downside, an initial support at the 100-day MAV line or 858 points, followed by the crucial pivot support of the early December 2008 low of 835 points.

WARNING : Bad days ahead for contrarians

What Is Quantitative Easing?

Put simply, it is the injection of liquidity into the financial system by central banks to jump start growth. While quantitative easing alludes to printing money, central banks have other means to do it, such as by buying assets like government bonds from the banks.

This way, the reserves of banks are raised which enables them to continue their lending activities.

With quantitative easing becoming more widely used to ease global credit crunch, the worry is that if continued for too long, it could hurt the currency and cause a bubble build in the assets that the implementing central bank is buying from the financial institutions.

Inflation can also be a by-product although in the current crisis, the threat of inflation has waned as prices have come down rapidly in the face of weakening demand.

The good news for us is that it is unlikely that there is a need for Malaysia to resort to quantitative easing as a policy option to mitigate the current economic downturn.

It is lucky in this regard because with the OPR at 2.5%, there is still room for the central bank to manoeuvre insofar as monetary policy is concerned. Additionally, the banking system is till flush with liquidity and the country’s fundamentals still strong.

Thus, of greater importance at this point in time is that monetary easing must be accompanied by fiscal measures that should be implemented as quickly as possible amid the deteriorating economic environment.

The US & Japan Entered The Territory Of Quantitative Easing …

The US .....

The Federal Reserve vowed to pump an additional US$1 trillion into the US economy in an aggressive bid to battle a deep recession, partly by buying government bonds for the first time since the 1960s.

The central bank said it would buy up to US$300 billion in longer-term Treasuries to bring down borrowing costs, harkening back to a program called "Operation Twist" that ran from 1961 to 1965.

In addition to purchasing Treasury debt, the Fed would expand an existing program to buy debt and securities issued by mortgage finance agencies by US$850 billion to US$1.45 trillion, an effort to lower mortgage rates.

Critics said that buying longer-term government debt was not the most efficient way to ease credit market strains.

The price of U.S. government bonds surged after the announcement, with yields taking their biggest one-day tumble since 1987. Stock prices also shot higher, while the dollar plunged. It's an attempt to keep rates low, particularly on the mortgage side, which is seen as critical to a big revival of the housing market.

The Fed would begin buying the Treasury debt late March 2009 and planned to focus on securities with maturities ranging from two years to ten years. It would make purchases about two to three times a week.

In addition to ramping up its efforts to pump money into the recession-struck economy, the Fed unanimously decided to hold its target for overnight interest rates in a zero to 0.25 percent range -- the level reached in December 2008.

The Fed said rates would stay low for "an extended period," a more explicit vow to stay on hold with rates for a prolonged time than it had offered in recent months.

JAPAN ......

The BOJ has effectively entered the territory of quantitative easing, and it may eventually shift its policy target towards that and cut interest rates to zero if it tries to further ease financial conditions to cope with worsening of the economy.

The BOJ would buy 12 trillion yen of the JGBs with maturities of one to 10 years, more than half the total of the 21.6 trillion allocated for purchases each year. The BOJ has has no intention of monetising government debt and it is not aiming directly at pushing down bond yields. JGB buying is just one of its many market operation tools to provide funds to money markets

Falls in Tokyo share prices have put a strain on banks’ capital adequacy ratios. The BoJ was concerned that banks’ declining capital ratios, if left unchecked, could lead to a fall in lending to businesses and deal a further blow to Japan’s recession-hit economy.

In a nutshell ......

In economics, quantitative easing is a monetary policy tool that allows central banks to boost money supply in the financial system by buying up assets such as government bonds and mortgage backed assets.

In plain speak, it means central banks are using the printing press to create new money to buy up these assets!!!

Sunday, March 29, 2009

TECHNICAL ANALYSIS 综合指数 2009年 03月 27日 / Composite Index 27/03/2009

综合指数 2009年 03月 27日
如图中箭头A所示,综合指数的布林频带(Bollinger Ban)的打开幅度从15%降低至2%,这表示了综指有出现调整或巩固的迹象。若布林频带接下来收窄的话,综指将出现技术调整,而调整的第一个目标将是布林中频带(Bollinger Middle Band)。

如图所示,综指精确的在885点的胜图自动费氏线获得扶持,所以885点是综指当前的支持水平,布林中频带(Bollinger Bands)则是综指的重要动态支持水平,综指接下来的阻力是900点的心理阻力及905点的胜图自动费氏线。



总的来说,当布林频带收窄时,辅助指标(Secondary Indicators)的讯号(如随机指标)往往会显得过敏,所以技术分析还是以主要指标如布林频带为根基。综指接下来在出现技术调整时若能在布林中频带上获得扶持的话,那综指的后市还是有望转强。

Composite Index Daily Technical Analysis 27/03/2009
As indicated by A, the Bollinger Bands Width expansion rate reduced from 15% to 2%, suggesting that the Bollinger Bands Width is likely to contract. If the Bollinger Bands Width should contract, it would be a signal suggesting a consolidation for the KLCI.

Nevertheless, the KLCI closed above the 885 Fibonacci Retracement, and therefore, the 885 level is now the immediate support, followed by the Bollinger Middle Band dynamic support, while the resistance is still at 900 psychological level.

As indicated by B, total market volume declined 20%, with volume still above the 40-day VMA level. This shows that despite the decline in volume, the market is still relatively well-participated. If the KLCI should consolidate, a lower volume during the consolidation is usually normal.

As circled at C, the Stochastic is still above 70% level, which is the short term bullish region. This shows that the short term movement of the KLCI has not turned negative. If the Stochastic should break below 70% level, it would suggests a beginning of a consolidation or technical correction for the KLCI.

Whenever the Bollinger Bands Width contracts, Secondary Indicators signals are usually over-sensitive. Therefore, during a consolidation, it is still a better idea to follow Primary Indicator like Bollinger Bands.

Nevertheless, should the KLCI have a correction, its target will be at the Bollinger Middle Band dynamic support. If the KLCI should remained supported by the Bollinger Middle Band, there is still a chance for the KLCI to resume its positive movement after the consolidation or correction.

Futures And Forex That Dictate Global Markets