Super Charts from Wall Street 02 jUNE 2009

HAPPY TRADING & GOODLUCK2ALL

US Stocks Close Higher As Economic Data Spur Industrial Buying 02 June 2009

A wave of better-than-expected economic data fueled a broad rally for industrial and material companies Monday, with Alcoa, Boeing, Caterpillar and United Technologies pacing a more than 200-point jump in the Dow Jones Industrial Average.

The Standard & Poor's 500, with the broad gains, marked a new high for 2009. The index has recently been aided by a string of gains for energy and materials companies as economic sentiment has improved globally. For Monday, hopes for a turnaround in global commodities demand were bolstered by the Institute for Supply Management's index of U.S. manufacturing activity that came in above analysts' expectations, as well as improving reports on personal income and construction. In addition, data showing that China's manufacturing sector grew moderately last month also helped.

Overall, the Dow Jones Industrial Average tacked on 221.11 points, or 2.60%, to 8721.44, marking its biggest one-day gain since May 18. The Dow's close also marked its highest close since Jan. 8, with the index off only 3.5% from its 2009 closing high.

The S&P 500 rose 23.73 points, or 2.58%, to 942.87, and is now up 4.39% for the year-to-date. The S&P closed at its highest point since Nov. 5. The Nasdaq Composite gained 54.35, or 3.06%, to 1828.68, marking its highest close since Oct. 13.

But some investors are nervous that the month, traditionally a weak one for stocks, may not end as well. The market's gains on Monday came despite signs that the economy might have a tough slog ahead of it, including rising interest rates and the nation's fourth-largest bankruptcy ever.

Traders homed in Monday on better-than-expected readings on manufacturing, consumer spending and construction spending. The Dow Jones industrial average and other major indexes rose more than 2 percent, and the Standard & Poor's 500 index and Nasdaq composite rose to their highest levels this year.

Buy At Support; Sell At Resistance

Analysts pointed out that technical factors also pushed stocks higher on Monday. The first trading day of the month often brings with it a surge of new money from mutual funds, and the S&P and Dow both broke through their 200-day moving averages for the first time in well over a year. Moving averages are closely watched technical barometers for the market, and some traders will automatically buy or sell if those levels are breached.

CAUTIONS

This year's stock market has had an eerily similar pattern to last year's, falling until mid-March and then gaining through May. Then in June of last year, the market started to sink. Some analysts pointed out that the average return for the month of June during the past 20 years is negative 0.5 percent.

So while the stock market's technical achievements Monday helped bring about gains, they are also raising questions about the staying power of those gains.

Also, trading on the first day of the month is generally much stronger than normal. The S&P 500 index was down about 34 percent in the 10 years leading up to May 1. But according to S&P data, if someone invested in the index only on the first day of the month over that time frame, he or she would have gained 21 percent.

BURSA ends trading day higher 1.69% 01 June 2009

The local bourse ended Monday’s trade in positive territory in tandem with the region’s stock markets following renewed hopes that the global economy was in recovery mode after China’s factory orders rose in May.
The KLCI surged 1.69% to close at 1,061.80. At Bursa Malaysia, there were 424 gainers, 235 losers while 205 counters were traded unchanged. There were 1.61 billion shares done at RM1.68 billion.

Among the gainers, Maybank rose 25 sen to RM5.30, MISC-foreign added 35 sen to RM8.50, SP Setia gained 32 sen to RM4.08. Plantation stocks PPB climbed 60 sen to RM11.10, Sime fell 10 sen to RM7.10 and Sungei Bagan dropped 15 sen to RM2.25. TNB lost 25 sen to RM7.90, Shell gained 30 sen to RM11.20 and Scomi was 2.5 sen higher at 71.5 sen.
BAT advanced RM1 to RM44.00, DiGi dropped 40 sen to RM22.80 and Dutch Lady fell 20 sen to RM10.60.
Nymex crude oil climbed US$1.88 to US$68.19 per barrel.

Crude palm oil rose RM77 to RM2,637 per tonne. The ringgit was quoted at 3.471 to the US dollar.

Bluechips & Crude Oil lift markets 12.30pm June 01 2009

Signs of recovery after China reported better manufacturing activity and firmer commodities prices pushed Asian markets higher at midday break, with Hong Kong the top gainer among key regional indices.

At Bursa Malaysia, expectations of recovery in the economies saw banks leading the gainers’ list. At 12.30pm, the KL Composite Index rose 15.82 points or 1.52% to 1,059.93. Turnover was 792.13 million units valued at RM764.15 million. There were 368 gainers, 181 losers and 171 stocks unchanged.

Key Asian markets were traded higher at the midday break. Hong Kong’s Hang Seng Index surged 2.77% to 18,673.43; Singapore’s Straits Times Index added 1.9% to 2,373.86 while Japan’s Nikkei 225 rose 1.6% to 9,674.91.

A gauge of China's manufacturing activity offered fresh evidence of a recovery in the world's third-largest economy as new export orders grew for the first time since June 2008. Reuters reported growing optimism that the worst of the global downturn was over offset long-expected news that General Motors Corp will file for bankruptcy later in the day in a government-managed process that will pump another US$30 billion in US taxpayers' money into the ailing automaker.
At Bursa, BAT was the top gainer, up 75 sen to RM43.75, Oriental Holdings gained 54 sen to RM5.40, Ta Ann 24 sen to RM3.84 and DiGi 20 sen to RM23.40. PPB rose 40 sen to RM10.90 and United Plantations 30 sen to RM12.50 while among banks, BCHB rose 30 sen to RM8.85,

KNM rose 6.5 sen to 96 sen while companies with interest in the Iskandar Malaysduia region rose in active trade. Tebrau added 4.5 sen to 81.5 sen, UEM Land seven sen to RM1.72 and Mulpha 1.5 sen to 54 sen. Dutch Lady lost 50 sen to RM10.30. Tenaga lost 25 sen to RM7.90 and Sime Darby 15 sen to RM7.05. Nymex crude oil in electronic trade was 64 cents higher at US$66.95 per barrel. Crude palm oil 3-month futures gained RM57.00 to RM2,617 per tonne.

The ringgit was quoted at 3.487 to the US dollar.

KNM’s valuations compelling, says HLG

HLG Research has maintained its buy call on KNM Group Bhd at 80.5 sen with a target price of RM1, noting that the stock’s valuations remained compelling at 9.7 times FY10 price earnings (PE) and 35%-40% discount to global peers.

The research house said KNM’s 1Q09 earnings were in line with its estimate and that of consensus. It had not changed FY09-11 earnings per share (EPS) forecast for KNM, pending an update with management, on expectations that order flows would improve in 2H09 due to lower volatility in crude oil prices.KNM’s 1Q09 net profit of RM98 million was an increase of 82% on-year (y-o-y) and 19% on preceding quarter (q-o-q) and represented 24% of HLG’s full-year estimate. HLG added that revenue rose 59% y-o-y to RM525 million due mainly to consolidation of Borsig’s revenue. On a q-o-q basis, however, the revenue declined 38% due to lower progress billings and lower new orders.

“On our estimate, excluding new orders secured since February 2009, outstanding order book stood at about RM3.4 billion. Based on current pace of progress billings, the backlog orders are sufficient to last another 20 months,” it said.As of March 31, KNM had RM931 million net debt, implying a net gearing of 0.5 times. Term loans secured for the acquisition of Borsig would be repaid in six equal instalments and the first two bullet repayment of RM120 million each would be due in Jul/Aug 2009 and Jan/Feb 2010. “We see little default risk given strong operating cash flow (1Q09: RM72 million) and minimal expansion capex in FY09,” it said.

“Assuming zero new orders for the rest of FY09, existing orders are sufficient to last up to mid-2010. We think job flows will improve in 2H09 due to lower volatility in crude oil prices. ”It raised its discounted cash flow-derived price target to RM1 from 75 sen, imputing higher cash margin to outstanding order book and future job wins, noting that KNM’s shares could re-rate as news flow normalised.

“Despite strong share price performance (+99% year-to-date), valuations remain compelling... We think the huge valuation gap to peers is unjustified given similar geographical footprint and position in the high-end process equipment segment,” it said.KNM climbed nine sen to close at 89.5 sen last Friday.