Singapore Market Technical Analysis

Hi from Canada

2010-07-30T10:44:00.001-07:00

Testing

Review of trade this week (17 Aug to 21 Aug 2009)

2009-08-22T21:27:00.000-07:00

I told myself I'd come back to trading breakouts only when the 200 day moving average confirmed an uptrend. So I'm back.

Wing Tai

Original idea was

Long
Entry price 1.83
30 day ATR 0.07
1.5X ATR30 0.11
Cut loss stop on 1.5ATR30 1.73
Recommended cut loss 1.49
Loss on recommended cut loss -703.54

Target price 2.3
Profit on target price 910.72

Reward/risk ratio 1.29

Flag pattern breakout.

Flag pole 1.85 - 1.38 = 0.47

But as the stock pulled back, my breakout stoplimit order never got triggered. Until 20 Aug (Thurs)

So I entered at 1.69 instead of 1.83. Happened to also be a breakout of the high of past 3 days. Recovering from oversold RSI as well. Target is now 2.14.

See how it goes.

Review of trades this week (23-27 June 2008)

2008-06-27T18:07:00.000-07:00

I came back from my overseas trip last week and went over the charts. My initial feeling was to look for stocks to short. But going through the charts I just saw the very oversold market situation going into the FOMC meeting and thought it was better to bet on a short term bounce.

My time frames for trading are getting shorter. This has to be the case if trading is to fit into my future plans.

Anyway here's a review of my trades this week.

1) COSCO
BOUGHT 2 lots 15 May 2008

Long
Entry price 3.51
30 day ATR 0.2
1.5X ATR30 0.3
Cut loss stop on 1.5ATR30 3.21
Recommended cut loss 3.23
Loss on recommended cut loss -607.7810732

Target price 3.89
Profit on target price 707.540068

Reward/risk ratio 1.164136396

Last done price = $3.22
Paper loss = -$634

This trade should have been cut out long ago during the time I was in Canada. Anyway I'm probably going to just hold this counter as it has not had any real bad news and is holding up pretty well so far. $3.10 seems to be the support. Volatility in this counter has also come down tremendously so this is not a counter on the top half of traders' radars anymore.

As a result I've decided to adopt a buy and hold strategy for this one. I'm still betting oil prices to have a sharp correction and stocks like COSCO are bound to benefit. There are many "good skeletons" not out for this stock. Eg their proposed increase in stake of the shipyard, new orders etc. When those do come out it will be positive.

We'll have to wait and see.

2) UOL

Bought 3 lots 23 June 2008 at 3.42

Long
Entry price	3.4
30 day ATR	0.08
1.5X ATR30	0.12
Cut loss stop on 1.5ATR30	3.28
Recommended cut loss	3.24
Loss on recommended cut loss	-550.6082328

Target price	1.63
Profit on target price	824.500233

Reward/risk ratio	1.497435352

One of those really oversold counters that had broken support levels. RSI super low and UOL seldom stays that oversold for too long. Remember I'm talking short short term here. Not talking about trends. Trend is still down. But my tools make me feel more comfortable doing long trades at the moment.

Again looking for rubber band trades.

Anyway sold it off at 3.51 on 26 June 2008.

Sold 3 lots at 3.51
Profit = $185

3) Wing Tai

Bought 5 lots (should have bought 10!) at 1.49 on 23 June 2008

Long
Entry price	1.5
30 day ATR	0.065
1.5X ATR30	0.0975
Cut loss stop on 1.5ATR30	1.4025
Recommended cut loss	1.4
Loss on recommended cut loss	-551.396555

Target price	1.63
Profit on target price	594.5271665

Reward/risk ratio	1.078220676

Similar picture as UOL but even more oversold and below NAV! Was always due for a bounce going into the FOMC meeting.

I also look at these indicators to look for rubber band trades.

Sold 5 lots on 26 June 2008 at 1.57
Profit = $337

3) Allco Reit

Bought 10 lots at 0.78 on 25 June 2008

Long
Entry price	0.78
30 day ATR	0.02
1.5X ATR30	0.03
Cut loss stop on 1.5ATR30	0.75
Recommended cut loss	0.75
Loss on recommended cut loss	-354.232227

Target price	0.87
Profit on target price	841.514265

Reward/risk ratio	2.375600527

Allco Reit is a counter my good friend and trading buddy has done a lot of research on and his assessment is that the stock has very very good fundamentals (he was a FA guy before he turned TA after Chinese New Year)

Anyway I've been watching this stock for a LONG time now. There was the news that the parent company Allco was in financial difficulty and the stock tanked in January. And there was the news that they might have difficulty refinancing their loans in March. And in May there was the news about their Moody's rating drop. And each time the stock just went up again. This is one of those quiet quiet stocks which are not trader's cup of tea. But I've been watching it for so long and seeing my good friend make money that I decided once and for all to just join him. In any case it's a REIT! REITS are going to be good during bear markets. I won't go into the fundamentals but briefly Allco Reits owns buildings with office rentals. And rental rates have gone up (although won't be going up so soon). But look at the Allco chart and you know how far it has dropped. At most just collect dividend. REITS will be defensive counters and Allco is one of those quiet ones that has little or no coverage. Shhh...dun tell too many people ok?

In any case I'm quite confident we'll see a bounce for Allco Reit as well. In the POEMS CFD this is a long only CFD. So not so much on shortists' radars. It is also trading below NAV liao.

Can lah.

Last closing price 0.76
paper loss = $-263

Total realised profit/loss = $3565 +$185 + $337 = $4087
Unrealised profit/loss = $-634 - $263= $-897

Review of trades this week (16-20 June 2008)

2008-06-20T17:49:00.000-07:00

I just returned from my trip to North America on 19 June 2008. I had not been monitoring the market much but have just realised that the major indices have all broken key support levels and are about to test the lows of Jan and March 2008.

I'll need to spend some time analyzing once again. Got to look at the Elliot Wave count among other things. But I decided to take some profit off the table on Singtel first.

1) Singtel (Bought on 9th May 2008)

Long
Entry price 3.66
30 day ATR 0.09
1.5X ATR30 0.135
Cut loss stop on 1.5ATR30 3.525
Recommended cut loss 3.57
Loss on recommended cut loss -231.2547714
Target price 3.89
Profit on target price 406.476691
Reward/risk ratio 1.757700775

Sold on 20 June 2008 at 3.76
Profit = $130

2) COSCO
BOUGHT 2 lots 15 May 2008

Long
Entry price 3.51
30 day ATR 0.2
1.5X ATR30 0.3
Cut loss stop on 1.5ATR30 3.21
Recommended cut loss 3.23
Loss on recommended cut loss -607.7810732

Target price 3.89
Profit on target price 707.540068

Reward/risk ratio 1.164136396

Last done price = $3.34
Paper loss = -$396

Total realised profit/loss = $3435 + $130 = $3565
Unrealised profit/loss = $-396

MIDAS Valuations Projections

2008-06-02T23:06:00.000-07:00

MIDAS is in the business of large-section aluminium alloy extrusion products and polyethylene pipes.

Return of Equity (ROE)	Net income/Equity

	Net income	Equity	ROE	ROE growth
2007	31,914	181,574	17.57630498	11.98320581
2006	25,567	162,894	15.69548295	-21.29386054
2005	18,322	91,877	19.94187882	2.14511304
2004	15,302	78,379	19.52308654	-82.91239343
2003	8,954	7,837	114.2529029
2002	7,019

ROE is >15%. Profitable company.

Net Profit Margin (NPM)	Net income/Revenue


	Net income	Revenue	NPM	NPM growth
2007	31,914	140,399	22.73093113	-6.857149094
2006	25,567	104,764	24.40437555	-6.131996613
2005	18,322	70,473	25.9986094	2.295404166
2004	15,302	60,208	25.41522721	-3.595847996
2003	8,954	33,964	26.3632081	-10.33354224
2002	7,019	23,873	29.40141583

NPM has been flat or even dropping which is not a good sign of competitiveness.

Liquidity


	Total Current Assets	Total Current Liabilities	Current ratio
2007	111,280	36,198	3.074202995
2006	103,241	38,978	2.648699266
2005	68,396	22,179	3.083818026
2004	67,666	23,688	2.856551841
2003	28,151	36,228	0.7770509

No liquidity problems.

Solvency

	Long Term Debt	Total Shareholder Equity	LT Debt/Equity Ratio
2007	2960	181,574	1.630189344
2006	2946	162,894	1.808538068
2005	2581	91,877	2.809190548
2004	2490	78,379	3.176871356
2003	23394	7,837	298.5070818

Little or negligible long term debt.

Free Cash Flow


	Net cash from operating activities	Capital expenditures	Free Cash Flow(FCF)	FCF/Revenue
2007	34,027	12723	21,304	15.17389725
2006	27,765	31668	-3,903	-3.725516399
2005	13,013	10029	2,984	4.23424574
2004	3,362	1503	1,859	3.087629551
2003	9,651	1830	7,821	23.02732305

They generated better free cash flow in 2007. However dividend payout ratio is only about 10% at best.

Not a bad set of numbers.

Let's look at valuation....

EPS Data	EPS	EPS growth
2007	3.78	18.86792453
2006	3.18	33.05439331
2005	2.39	4.366812227
2004	2.29	42.23602484
2003	1.61

EPS growth has been >15% for past 2 years, I use a EPS growth rate of 10%.

	Projected EPS at yr end
End year 1	4.158
End year 2	4.5738
End year 3	5.03118
End year 4	5.534298
End year 5	6.0877278
Total EPS for next 5 years	25.3850058

Current price of stock	0.96
Current EPS	0.0378
Current PE ratio	25.3968254

I use a future PE of 17 to calculate the price in 5 years time. Hence price based on EPS of 6.08 and PE of 17 in 5 years would be $1.03

Dividend payout ratio is about 10%. So for total EPS for next 5 years = 25.38 cents. Dividend = 2.53 cents.

Price based on dividend payout would be $0.925(current price) + $0.0253 = $0.95

Using a desired return rate of 5% dividend yield,

	Present price to pay for stock
Year 5	0.904761905
Year 4	0.861678005
Year 3	0.820645719
Year 2	0.781567351
Year 1	0.744349858

Present price to pay for stock should be $0.744 if I want 5% dividend yield.

FJ Benjamin valuations projection

2008-06-02T05:39:00.000-07:00

FJ Benjamin is a high end luxury goods retailer.

I own 20 lots of this stock at an average of 0.6175.

Here are some figures :

Return of Equity (ROE)	Net income/Equity

	Net income	Equity	ROE	ROE growth
2007	21,468	198,614	10.80	1.85
2006	10,171	95,840	10.61	92.3
2005	4,262	77,249	5.51	108.7
2004	2021	76,466	2.64	34.32
2003	1517	77,098	1.96	-63.3
2002	3100	57,819	5.36

Not a high ROE business. They did have some impressive ROE growth between 2005 and 2006.

Net Profit Margin (NPM)	Net income/Revenue


	Net income	Revenue	NPM	NPM growth
2007	21,468	257,618	8.33	53.40
2006	10,171	187,235	5.43	85.65
2005	4,262	145,658	2.92	68.77
2004	2021	116,573	1.73	20.64
2003	1517	105,569	1.43	-47.55
2002	3100	113,147	2.73

It is also not a high NPM business.

Liquidity


	Total Current Assets	Total Current Liabilities	Current ratio
2007	251,050	102,003	2.46
2006	107,251	74,727	1.43
2005	73,557	57,538	1.27
2004	58,112	40,969	1.41
2003	56,490	40,287	1.40
2002	61,924	55,494	1.11

Solvency

	Long Term Debt	Total Shareholder Equity	LT Debt/Equity Ratio
2007	3104	198,614	1.56
2006	21210	95,840	22.13
2005	21634	77,249	28.0
2004	20242	76,466	26.47
2003	20984	77,098	27.21
2002	31702	57,819	54.82

FJ's has good cash position though. Little long term debt at present and current ratio is healthy.

Free Cash Flow


	Net cash from operating activities	Capital expenditures	Free Cash Flow(FCF)	FCF/Revenue
2007	-31,148	11945	-43,093	-16.72
2006	7,694	4107	3,587	1.91
2005	5,529	3396	2,133	1.46
2004	2,444	3128	-684	-0.58
2003	5,803	2147	3,656	3.46
2002	13,630	3235	10,395	9.18

It is interesting to note though that the free cash flow for FJ is not anything to crow about. So where is the cash coming from? I have to look into this further.

However EPS growth has been good.

EPS Data	EPS	EPS growth
Year 1	1.22
Year 2	0.53	-56.55
Year 3	0.71	33.96
Year 4	1.5	111.26
Year 5	3.53	135.33
Year 6	5.07	43.62

Assuming an EPS growth of 15% for the next 5 years,

	Projected EPS at yr end
End year 1	5.83
End year 2	6.70
End year 3	7.710
End year 4	8.86
End year 5	10.19

EPS at the end of next 5 years will be 10.19 cents.

If we use a PE of 10, the price of the stock in 5 years should be $1.02

Using dividend price valuations, we first find out what the dividend payout ratio is for the past few years.

	Dividend	EPS	Dividend payout ratio
2002	0.1	1.22	8.19
2003	0.25	0.53	47.16
2004	0.75	0.71	105.63
2005	1.1	1.5	73.33
2006	2.4	3.53	67.98
2007	3.5	5.07	69.03

A very impressive dividend payout ratio! However this is including the special dividends paid out. But it is worthwhile to note that they frequently pay out special dividends. In fact I did not include the 13 cents capital distribution they gave out last year.

Total EPS for next 5 years based on EPS growth of 15% is 39.31 cents. Assuming a modest 20% dividend payout ratio, the total dividend paid out over next 5 years is 7.86 cents.

Current price is $0.425. So price in 5 years based on dividends is $0.50

	Present price to pay for stock
Year 5	0.480
Year 4	0.462
Year 3	0.444
Year 2	0.427
Year 1	0.410

Hence discounted over the 5 years, if I buy the stock at 0.41 today, I will get a dividend yield of 4% over the next 5 years.

Current price of stock	0.425
Current EPS	0.0507
Current PE ratio	8.382642998

FJ Benjamin looks more like a dividend play. They have a strong cash position but their business does not seem to be very profitable. Strange combination.......

China Milk price valuations projections

2008-05-30T19:54:00.000-07:00

Due to my upcoming holiday trip (flying off Wednesday 4 June) I had been taking a back seat in terms of trading. Hence I took the opportunity to read up on value investing. In future I will look to combine both value calculations and TA in my stock picks and decision making.

I've done some calculations for China Milk which I feel is a good company with a good business.

Return of Equity (ROE) = Net Income/Equity

	ROE	ROE growth
2008	26.42	-5.53
2007	27.973	1.00
2006	27.69

China Milk was listed on 13 March 2006. Hence the equity figures had increased after that resulting in a drop in ROE. However ROE rose to 16.6% from 2007. It is hard to look at the ROE at this stage due to the lack of a track record for the company after listing.

Net Profit Margin (NPM) Net income/Revenue

	NPM	NPM growth
2008	87.89	2.85
2007	85.46	-5.64
2006	90.57	2.23
2005	88.59

Net profit margin however is unaffected by listing. It is an extremely high NPM business!

Liquidity

	Current ratio
2008	14.9
2007	9.78
2006	24.8
2005	6.75

China Milk is extremely solvent. No liquidity problems definitely.

Solvency

	LT Debt/Equity Ratio
2008	52.4168215
2007	70.9722985
2006

On 5 January 2007, the Company issued a zero coupon convertible bonds due 2012 with an aggregate principal amount of uS$150,000,000. the convertible bonds were issued with a conversion price of S$2 per share and will mature on 5 January 2012. The yield for the bonds was 5.25%. How the management uses this money is important. The interest yield does not seem very high and if the money is invested well, this is good for the company despite the debt to equity ratio being relatively high.

Free Cash Flow

	Free Cash Flow(FCF)	FCF/Revenue
2008	94,228	17.2
2007	150,552	33.99
2006	160,004	53.15
2005	141,969	58.26

China Milk's FCF is good. FCF as revenue shows how much of the revenue is generated as cash and China Milk excels in this area. 2008's FCF was lower because management used the cash to invest in the milk processing plant for future growth.

Price valuation projection

EPS Data	EPS	EPS growth
2005	0.33
2006	0.41	24.24
2007	0.51	24.39
2008	0.58	13.72

Looking at the EPS growth, I would assume a 10% EPS growth over the next 5 years using current EPS of 0.58 RMB

	Projected EPS at yr end
End year 1	0.63
End year 2	0.70
End year 3	0.77
End year 4	0.84
End year 5	0.93

Currently 1SGD=5.1RMB

Hence projected EPS at end of next 5 years = SGD$0.18

Current price of stock is SGD$0.725
Latest EPS = SGD$0.11
P/E ratio = 6.6

Using a projected P/E ratio of 10, we would expect China Milk to be trading at $1.80 in 5 years time.

Price calculation based on dividend payout

Total EPS projected over next 5 years = SGD$0.76
Dividend payout ratio over past 4 years is about 9%
Hence dividend expected to be paid out over next 5 years = SGD$0.07
Future price in 5 years time based on dividend payout = $0.795

Assume dividend payout to keep up with inflation, use 5% desired return.

	Present price to pay for stock
Year 5	0.757
Year 4	0.721
Year 3	0.686
Year 2	0.654
Year 1	0.622

Desired price to buy China Milk would be SGD$0.622

At the current price of SGD$0.725 we would get a return of about 2% on projected dividend over the next 5 years

	Present price to pay for stock
Year 5	0.779
Year 4	0.764
Year 3	0.749
Year 2	0.734
Year 1	0.720

Overall the analysis from the figures show that China Milk is a profitable company with good ROE and excellent NPM.

I will read into the business itself in more detail but this is just a breakdown of the numbers which look quite good.

Review of trades in week 12-16 May 2008

2008-05-18T18:41:00.000-07:00

2) Singtel (Bought on 9th May 2008)

Long
Entry price 3.66
30 day ATR 0.09
1.5X ATR30 0.135
Cut loss stop on 1.5ATR30 3.525
Recommended cut loss 3.57
Loss on recommended cut loss -231.2547714
Target price 3.89
Profit on target price 406.476691
Reward/risk ratio 1.757700775

Last done price 3.71
Paper profit = $40

2) COSCO
BOUGHT 2 lots 15 May 2008

Long
Entry price 3.51
30 day ATR 0.2
1.5X ATR30 0.3
Cut loss stop on 1.5ATR30 3.21
Recommended cut loss 3.23
Loss on recommended cut loss -607.7810732

Target price 3.89
Profit on target price 707.540068

Reward/risk ratio 1.164136396

Last done price = $3.56
Paper profit = $42

COSCO broke out of a 7 day channel and also above the downward trend line from 2 April 2008.

I will be leaving for a holiday on 4 June 2008 and will return on 19 June 2008. As a result I am not too keen to enter into trades where I am not familiar with the stock fundamentals. I also have a preference for defensive counters at this time due to this as well as the uncertainty of the markets.

June 25 will be the FOMC announcement and I would prefer to wait till then before deciding what my next move will be. Position sizing will be the key after 25 June 2008. So my trading record will be a lot quieter for the next two weeks. I am looking to buy Starhub at around 2.80. Defensive counters.

But I think the shipping sector looks to be strong.

Update on Mermaid Maritime 19 May 2008

2008-05-18T18:37:00.001-07:00

Mermaid closed at the 38.2% fibonacci retracement level. It does look like it had formed a cup bottom.

25 and 50 day moving averages are pointing up and crossed over at 0.99 (support level)

Possible to go up to 1.75? (61.8% fibonacci retracement level)

Looks like shipping stocks are doing well. That is until the BDI starts to correct. But doesn't look like it is going to be anytime soon going by the strong demand for commodities.

Futhermore a drop in oil prices will only improve sentiment for shipping stocks.

The Saudis co-operate!

2008-05-16T20:19:00.000-07:00

Last week I wrote an article titled "Is the global economic world order changing?" towards the end I also commented on the global oil situation.

Here's what I had written :

"The USA has big problems domestically. Falling housing prices being a major problem. Are consumers in USA tightening their belts? Very likely. But what are the reasons? Rising oil prices would be one of them.

But you see, these are the problems the US has. But what about Asia? Asia has only one problem. Inflation. Oil and food prices. And this is common to the USA. What should the US do to tackle inflation? Slow the economy? Well it's already in recession according to most people! Yet oil prices are at a record! Where's the demand? Answer Asia.

So either the USA sabotages the rest of the world and causes a massive global economic slowdown by deciding to let the US go into a long and severe recession thus causing a massive crash in oil prices or OPEC gives in and do their part to keep inflation under control thus allowing everyone to prosper together.

If you were Saudi Arabia and you were faced with these two options which would you choose?

I believe the world is more linked these days and willing to work in concert to solve problems."

Yesterday after a meeting between President Bush and Saudi King Abdullah, the oil producing nation announced that they will raise output by 300,000 barrels a day, or 3.3 percent, to 9.45 million barrels a day in June.

Exactly as I had envisioned.

I would like to analyze a bit more into certain key points in the report from bloomberg :

``I don't think there is a need for more oil'' from OPEC, Qatari Oil Minister Abdullah al-Attiyah said in a telephone interview. ``My customers aren't asking for more oil.''

The Qatari minister said recent reports from the International Energy Agency have shown reductions in demand forecasts and added that there is ``no need'' for OPEC to meet before its next scheduled conference on Sept. 9.

There is indeed no need for more oil at this point in time. It's not a matter of an oil shortage. But it's just that oil prices are just too high at the moment. Although customers aren't asking for more oil, if the oil prices continue to be this high, global economic growth will slow tremendously and in the future not only will customers not be asking for more oil, they might be asking for less!

He declined to comment on Saudi Arabia's statement, saying it was a ``sovereign'' decision.

``This is good news for world oil markets and good news for President Bush, who appears to have used his personal relationship with King Abdullah to overcome Saudi reluctance to raise oil production and put downward pressure on world oil prices,'' said Jim Phillips, a Middle East analyst at the Heritage Foundation in Washington.

Saudi Arabia leads the way and President Bush has accomplished his mission.

Saudi Arabia plans to boost oil production capacity to 12.5 million barrels a day by 2009, Naimi said, reiterating previous comments.

With yesterday's announcement, oil production in Saudi Arabia will be 9.45 million barrels a day from June 2008. If they hold true to their word, an increase to 12.5 million barrels a day by 2009 represents an increase of 32% from the levels in June 2008.

Goldman Sachs sees oil trading between US$107 to US$141 in the 2nd half of 2008. I personally see this as Goldman Sachs endorsement that the global economy will be robust enough to sustain oil prices above US$100. This bodes well for the markets in general.

Update on US and Asian Indices 11 May 2008

2008-05-11T07:19:00.000-07:00

Dow Jones Industrial Index

The Dow closed at the level where the downward trend line from Oct 2007 cuts the upward trend line from the March 2008 low. This level coincides with the 25 day moving average.

This is a support level and we shall see how the Dow goes on Monday. From the USO chart it looks like oil might have topped out on Friday. How will stocks move if oil prices retreat on Monday given that the latest focus and “reason” for the fall in the Dow last week was due to high oil prices?

It is still possible that this drop might be more of a correction than the continuation of a bear trend. One good point supporting this is that the falls in the markets recently have been due to rising oil prices rather than credit crunch and recession fears. This is not exactly new type of bad news and I think that the oil price rise will be dealt with very soon. The USD$ has strengthen quite a bit, hence that is no longer a reason for higher oil prices. Supplies have been hit by events around the world but I get the feeling speculators and traders have been the ones driving oil prices up.

No shorting for me just yet.

S&P 500

The S&P 500 similarly closed at the level where the downward trend line from Oct 2007 cuts the upward trend line from the March 2008 low.

I would like to see more confirmatory signals before calling for shorts at this point in time.

It feels like this might be a correction of the recent rally rather than the continuation of a bear trend.

However all this would change come Monday.

NASDAQ Composite Index

The NASDAQ has been a lot stronger than the Dow and the broader S&P 500. Are investors taking some money off the table from energy and agricultural counters and putting them in technology stocks?

If broad markets were to fall, it looks like technology counters would be the ones with a lot more meat to short.

Straits Times Index

The STI closed on the 25 day moving average. There is however bearish divergence between the index and RSI peaks. Confirmation would be a close below the Friday lows. Support tipped at 50 day moving average and 3000 level (necktie of 25 and 50 MA).

However we must wait for confirmation on both the STI as well as the Dow before shorting. It could very well also be the STI taking a breather before making an attempt to test the 200 day moving average for the first time since the start of the decline since Oct 2007.

Hang Seng Index

The HIS closed on the 25 day moving average similar to the STI. The key psychological level however is the 25000 level. And the HIS managed to eke out a close above it still.

25 and 200 MA are very close together. A rise in markets on Monday (due to a fall in oil?) would have them crossover forming a key area of support/resistance at 25000. Hence not only as a round number psychological level, but also a technical one.

In the event of a fall 23400 would be a support level.

Shanghai Stock Exchange

The SSE has been trading in a range with the 50 MA as the resistance. We will have to watch how the SSE performs over the next week.

Nikkei 225

The Nikkei closed below the upward trendline. Support tipped at the 25 day moving average.

Update on Singtel 10 May 2008

2008-05-10T01:44:00.000-07:00

Singtel has had some news this week that caused the stock to fall.

On 5 May 2008, India’s largest cellular service provider Bharti Airtel and South Africa’s telecom market leader MTN Group confirmed talks over a possible deal. Ending weeks of speculation, Johannesburg-based $9.68 billion MTN Group said, “The discussions are exploratory in nature and may or may not lead to any transaction.

SingTel owns 30.5 percent of Bharti Airtel.

The issue however is that the funding for this deal will have to be worked out and it does appear that there is division between market analysts as to whether this is positive or negative for Bharti Airtel and Singtel.

Perhaps the most balanced report that I have read thus far with some form of detail rather than pure speculation on how the financing will be done is that Bharti had tabled a bid for MTN at 165 rand per share and had secured $12 billion from banks to finance the deal, which would make Bharti a top player in emerging markets telecoms. The FT said Goldman Sachs and Standard Chartered had each pledged to underwrite $6 billion of the amount Bharti needed to purchase the controlling stake, citing people close to the situation. Bharti would fund the balance by issuing equity.

From the looks of it this deal is going through and it will be positive for Bharti.

The other piece of news that caused Singtel stock to fall is the Indonesian district court ruling on the anti-monopoly issue. This is more of a political issue and hopefully it will be resolved. In any case the court gave Temasek the option of either selling its stake in one of the Indonesian operators or reduce its holdings in both companies by half within 12 months.

Temasek owns 56% of SingTel, which has a 35% stake in Telkomsel. And Singapore Technologies Telemedia, which Temasek fully owns, controls 75% of Asia Mobile Holdings (AMH). AMH in turn owns 40% of Indosat.

Hence if Temasek was really forced to sell, and they chose to divest the ST Telemedia stake instead of the Singtel one then Singtel stock will be unaffected or minimally affected directly. However if Temasek were to choose to halve their holding in both companies then that spells trouble for Singtel.

On the plus side, Singtel is announcing results on Wednesday 14 May 2008. And we do expect dividend. In fact as bearish as Citigroup analysts are lately, they still made these comments :

"Why Hold and Not Sell? (1) 4.0% yield coming up – we see 15.6cents as total
DPS with FY08 results (May 14th); (2) Management credibility affords safe
haven status; (3) Limited downside – our bear-to-bull range is S$3.51- S$4.20."

In terms of the technicals,

Singtel has been trading in a tight channel from around $3.60 - $4.05 since Oct 2007 despite the big drop in the broader market. A show of strength in this "defensive" stock.

Looking at the current price of $3.71 (last close) and intraday low of $3.65 we are close to the $3.60 support level. RSI is in the oversold region and looking at the historical data, Singtel seldom spends too long in the oversold region. With results and likely dividend being announced, the share price is likely to be supported once again.

However should Singtel choose not to give out dividend and instead announce cash injection to be a joint party with Bharti to buy South Africa's MTN. Then the stock might drop below the $3.50 $3.60 support level.

Analysis of trades over past 10 weeks

2008-05-09T21:08:00.000-07:00

I started trading about 10 weeks ago. The market was still in a downtrend and I started with shorting stocks in the first week. The very next week I switched to a long position on most stocks. And now it appears the trend has changed again for the short term.

Hence I felt it was a good time to take stock and analyse my trading performance.

Here are the stats below

By % gain/loss

<-10%	-5 to –9.9%	-0 to 4.9%	+0 to 4.9%	+5 to 9.9%
Ferrochina $7200 5 lots buy $1.44 sell 1.30 loss $755 Loss 10.4%	Shorted Wilmar $10470 3 lots Sell 3.49 Buy 3.80 Loss $1048 Loss 9.15%	Sembcorp $8320 2 lots buy 4.16 sell 4.17 Loss $47 Loss 0.5%	Shorted Golden Agri $8400 10 lots Sell 0.84 Buy 0.80 Gain : $310 Gain 3.86%	YZJ $4250 5 lots buy 0.85 sell 0.90 profit $218 gain 5%
			COSCO $7480 2lots short 3.74 buy 3.65 profit $91 Gain 1.6%	First Resources $10300 10 lots buy 1.03 sell 1.10 profit $613 Gain 5.9%
			Fibrechem $8050 10 lots buy 0.805 sell 0.815 profit $30 Gain 0.4%
			COSCO $6220 2 lots buy 3.11 sell 3.29 profit $300 Gain 4.9%

Quantum of gains/losses

	Gains		Losses
	$310		$47
	$91		$1,048
	$30		$755
	$300
	$218
	$613
	$1,602
	$929
	$912

Total	$5,005	%	$1,850	%
N	9	75	3	25
Average	$556.11		$616.67

Net Profit	$3,155

Dollar Grouping

Gains		Losses

Range	Number	Range	Number
Scratch under $100	2	Scratch under $100	1
$200-$300	3	$200-$300	0
$400 - $600	1	$400-$600	0
$700-$900	2	$700-$900	1
$1,000	0	$1,000	1
$1,600	1

Trading analysis

Using multiples of $100

	Gains				Losses
Payoff		Probability	Positive Expectancy	Payoff		Probability	Negative Expectancy

1 to 1	3	0.333333333	0.333333333	1 to 1	0	0	0
2 to 1	1	0.111111111	0.222222222	2 to 1	0	0	0
4 to 1	1	0.111111111	0.444444444	4 to 1	0	0	0
8 to 1	1	0.111111111	0.888888889	8 to 1	1	0.111111111	0.888888889
10 to 1	0	0	0	10 to 1	1	0.111111111	1.111111111
16 to 1	1	0.111111111	1.777777778	16 to 1	0	0	0

Total			3.666666667				2

Net Expectancy	1.666666667




	Cyke's System
Expectancy	Opportunities over 10 weeks	Total
$1.67	9	$15.03

In summary

Trading analysis for Cyke over past 10 weeks
Expectancy = $1.67
Opportunities over 10 weeks = 9
Total = $15.03

Average gain per trade = $556.11
Average loss per trade = $616.67

% return on trading capital used over 10 weeks = 9.8%
% return on total trading capital available over 10 weeks = 6.87%

Review of trades this week (5-9 May 2008)

2008-05-09T19:44:00.000-07:00

1) COSCO Entry price	3.11
30 day ATR	0.22
1.5X ATR30	0.33
Cut loss stop on 1.5ATR30	2.78
Recommended cut loss	0.355
Loss on recommended cut loss	-701.7552702

Target price	3.92
Profit on target price	1570.163065

Reward/risk ratio	2.237479548

COSCO hit my trailing stop of 3.29.

Sold COSCO 3.29
Profit = $300

2) First Resources (bought 17 April 2008))

Long
Entry price 1.03
30 day ATR 0.09
1.5X ATR30 0.135
Cut loss stop on 1.5ATR30 0.895
Recommended cut loss 0.885
Loss on recommended cut loss -1517.878899

Target price 1.38
Profit on target price 3414.575381

Reward/risk ratio 2.249570361

First resources as expected rose after oil prices made their rally. However I was a bit uneasy with this rise for a few reasons.

1) Oil prices have risen way too fast and too steeply ( a correction looks to be coming)
2) USD$ was supposed to drop after the Fed rate cut and hence lead to oil prices going up. USD$ has actually strengthened while oil rose. This leads me to believe the high oil prices are due to traders' actions and speculation on certain news driving prices beyond their true demand/supply chain value.
3) First Resources increase was not due to any share buy back. Which leads me to admit I was wrong in my assumption that First Resources wanted to increase their share price. Looks more likely they will be there to lend support to the stock price counter to the downside rather than supporting it on the upside.
4) Global focus is now on oil prices, food prices and inflation which will soon be tackled.

Hence I decided to set a profit protection level of 5.9% when the rally in First Resources reached above those levels. As a result I sold at 1.10 when they retreated slightly. On hindsight I could have added another 5% return if I had just waited for another hour for the crude palm oil futures to trade a bit more.

In any case I'm happy with the 5.9% return.

Sold on 8th May 2008 at 1.10
Profit $613

2) Singtel (Bought on 9th May 2008)

Long
Entry price	3.66
30 day ATR	0.09
1.5X ATR30	0.135
Cut loss stop on 1.5ATR30	3.525
Recommended cut loss	3.57
Loss on recommended cut loss	-231.2547714

Target price	3.89
Profit on target price	406.476691

Reward/risk ratio	1.757700775

Knowing that the market might be taking a downturn after hitting resistance levels, but not totally sure, I was looking at going into the defensive stock options.

Namely, Singtel, SPH and Starhub. These 3 stocks have been trading in distinct channels even during the Oct 2007 to March 2008 drop in the broader markets. Use of RSI to trade along with the levels within the channels looked to be a possible trading idea.

An analysis of the 3 stocks in terms of PE ratios and P/NAV ratio showed the following

SPH :
PER = 16.7
P/NAV = 3.48
PER x P/NAV = 58

Starhub:
PER = 16
P/NAV = 4
PER x P/NAV = 64

Singtel:
PER = 15.3
P/NAV = 2.875
PER x P/NAV = 44

Do note that Singtel's figures are not based on latest figures as they will be announcing results on 14 May 2008. However between the 3 stocks it looks like Singtel's valuations are still the most attractive.

Chart wise the support levels for Starhub were at 2.96 and 2.75, SPH at around 4.25 and for Singtel 3.60. Hence the price levels showed that Singtel was much closer to the support level. All 3 were in oversold RSI region.

Hence decision was made to queue for Singtel at 3.66 based on the ATR30 and market depth support levels.

I managed to get my limit order filled at 3.66 around 4pm.

However news about the Indonesian district court ruling plus a drop on wall street will cause the stock to fall further on Monday. It is possible that I may have to cut losses. A decision will have to be made whether to do that versus holding the defensive stock. I will have to research further on this over the weekend.

Bought Singtel 3.66
Last done price 3.71
Unrealised profit = $40

Total to date trade summary :

Up to date realized profit/loss = $2242 + $300 + $613 +$280 (dividend for COSCO) = $3435

Unrealized profit/loss = $40

Is the global economic world order changing?

2008-05-09T18:29:00.000-07:00

I read this interesting article by Howard Gold amid the current gloom and doom this week.

With regards to the Dow's 17% drop versus other Asian bourses one could argue that the slide in the USD$ adds a further negative contribution to the drop in the Index levels.

However the claims about Disney's theme park sales and Berkshire Hathaway's Nebraska furniture store sales lends more weight to the author's view.

Personally I think the current drop in the markets we are seeing is due to the high oil prices rather than recession fears and credit crunch fears which have been waning.

I also agree that the oil prices will be retreating later on. The oil price surge has all the hallmarks of a 5th Elliot wave impulse, where there is excessive exuberance building.

But do note that I do not see oil prices retreating within the next week, it's not going to be so soon. Perhaps around the end of June . The key dates would be 25 June 2008 when the FOMC announcement is made as well as the New Home Sales figures and EIA Petroleum Inventory levels are released. 25 June 2008 is going to be a HUGE day. Also 26 June 2008 when the 2Q US GDP numbers are released. Hence we will see a huge move (whether up or down) on 25 June 2008 and 26 June will be the follow up continuation of that move.

If the numbers show that the US had escaped a recession and the Fed is holding or even comfortable enough to raise rates, this would send oil prices tumbling. We probably won't see oil prices tumble by US$100 as the demand for oil will still be high in a growing global economy, but there will certainly be a correction from whatever record price it goes up to.

As I write this, I also understand that the stock market is a forward looking indicator for all of these things. And at present it does look like the equities are falling after hitting resistance levels. However the reason seems to be the rising energy costs that businesses are fearing going into the 2nd half of 2008.

This as we know can and will be tackled by governments and politicians. OPEC can do something about it. Will they and why would they? I will talk about this later.

Last year I noticed that whenever oil fears struck the markets would retreat. However it tends to be temporary. Oil prices just like stocks cannot go up in a straight line forever. Also people forget about oil prices when other good news about the economy and business growth comes in.

Hence the eye is now all on oil because it is about the only "new" bad news coming out. AIG's losses were expected. Citigroup's plan to sell US$400B in non core assets is actually a positive show of strength.

The market will be falling next week. How far and how steep it falls would be a good indicator of things to come in June.

If the market drops steeply and tests the lows in March, that would be a bad signal to me and I would expect the GDP numbers to be bad and markets will probably go lower than March's lows. However if we see the Dow hold above 12200 that may bode well for the June numbers.

Also I would be looking to see how Asian markets perform in the next 2 months or so. Do we see decoupling?

Notice that the latest report last night showed that the US trade deficit narrowed more than expected.

Why did the trade deficit narrow? Here are several quotes from that article above with comments from myself in bold:

"Imports dropped the most in six years as purchases of furniture, cars and telecommunications gear fell, reflecting the weakest growth since 2001 and a falling dollar that makes overseas goods more costly."

"Total exports fell 1.7 percent to $148.5 billion, driven by a decline in sales of commercial aircraft, autos and petroleum products. Even with the drop, the first since February 2007, exports were still the second-highest on record."

Imports to the US dropped and US exports also fell. Yet the trade deficit narrowed. This means that the drop in exports was much less than the drop in imports. As we can see from the above, the imports dropped the most in 6 years while the exports were the 2nd highest on record! What does that tell you? The global economic world order might be starting to change. The world's obsession with the US domestic consumption being the most important factor for economic growth might be changing. The US imports less now but is starting to export more. No doubt the US will remain a huge consumer market relative to the rest of the world. But if the US had been exporting more lately, who have they been exporting to? Which market is consuming more such that the US can export more? The answer lies below :

"Receding demand for goods from China helped narrow the trade gap with that nation to $16.1 billion, the smallest in two years. At the same time, exports to China were the second-highest ever."

It would be interesting to see when was the highest ever exports from the US. But it certainly looks like China's rise in the global economic world has contributed to the possible changes we are seeing today. Previously I had written that we needed to see the 1Q 2008 results for China companies to determine if China's consumption was one of true domestic consumption or was it "repackaged" for export to USA. Most Chinese companies reported good earnings. And on top of that US companies with businesses in China reported fairly good results despite the US economic slowdown. And now we have these trade deficit, export, import figures that confirm the theory that China's domestic consumption growth is indeed real enough to make an impact on the global stage.

Decoupling? Personally I'm betting on it now. But there are the usual problems of inflation which I mentioned before. While I may have been wrong thinking that the USA would have to rely on cheap Chinese goods to keep local inflation figures down as an incentive to help tackle inflation, it appears the US might have their own incentives to do so now; US inflation might really be a result of record oil prices. There's so much talk about consumers in US tightening their belts because of inflation. I bet it's the same everywhere. Slowly we are seeing less talk about consumers tightening because of credit crunches and job losses. That's a good sign. Tackle inflation (namely get those oil prices down and we will be on our way)

"Demand for American goods from the European Union and from South and Central America set records in March."

Again it's not only China but the EU and South and Central America are also buying more from the USA. Is this good for the US economy? You tell me.

"Cisco Systems Inc., the world's biggest maker of networking equipment, is among the companies benefiting from gains abroad. The San Jose, California-based company posted sales growth of 10 percent in the third quarter, even as U.S. sales grew only 5 percent.

``Asia-Pacific was very strong,'' Cisco's Chief Executive Officer John Chambers said in a Bloomberg Television interview May 7. ``China and India are on fire.''

Amazing figures from CISCO! The rest of the world contributed almost as much sales growth as the USA itself. And John Chambers mentioned Asia. Asia's rise is real and sustained despite the USA economic slowdown. We always thought that Asian economies were dependent on US demand and consumption. We produce they consume. They slow consumption we lose out. But despite the US slowdown, Asia's consumption actually helped US companies!

Still, record exports alone won't prevent the economy from shrinking. Harvard University economist Martin Feldstein, a member of the committee that determines when contractions begin and end, said May 6 in an interview with Bloomberg Television that the U.S. economy is ``sliding into a recession.''

The USA has big problems domestically. Falling housing prices being a major problem. Are consumers in USA tightening their belts? Very likely. But what are the reasons? Rising oil prices would be one of them.

But you see, these are the problems the US has. But what about Asia? Asia has only one problem. Inflation. Oil and food prices. And this is common to the USA. What should the US do to tackle inflation? Slow the economy? Well it's already in recession according to most people! Yet oil prices are at a record! Where's the demand? Answer Asia.

So either the USA sabotages the rest of the world and causes a massive global economic slowdown by deciding to let the US go into a long and severe recession thus causing a massive crash in oil prices or OPEC gives in and do their part to keep inflation under control thus allowing everyone to prosper together.

If you were Saudi Arabia and you were faced with these two options which would you choose?

I believe the world is more linked these days and willing to work in concert to solve problems.

Barring any unforeseen problems eg a war or a terrorist attack, or a global viral pandemic I am bullish for the global economy in particular Asia going into 2009.

Trend following

2008-05-07T03:09:00.001-07:00

Just did a bit of a review over the past 8 weeks.

Found that I did better buying near bottoms or breakouts near bottoms than on breakouts at highs.

Was talking to a few traders and they highlighted to me a few things.

Hence some additions to the trading rules for myself

1) Look at the 200 day moving average. If it is sloping down, long term trend is down. If it is sloping up, long term trend is up. When buying or shorting breakouts near highs or lows respectively it must have the 200 MA in the same direction.

2) Look at the 25 and 50 day moving average for short to intermediate term trends. Trade according to this shorter term trend direction. However if the 200 MA direction is opposite to the 50 MA, then do not trade on breakouts up or down. Instead buy or short on dips or rebounds respectively.

3) As the 25 and 50 MA start to move in the opposite direction to the 200 MA and are starting to converge, use of RSI is sensible.

Orchard Parade

2008-05-03T08:28:00.000-07:00

Orchard Parade has stopped its downtrend and started consolidating. Support level at $1.11 is strong.

A breakout of the $1.28 level will have resistance at the 200 day moving average as well as the horizontal consolidation region at $1.54.

Using the SMA/EMA crossover trend change system of trading, it could be considered that a 2nd crossover occurred on 21 April 2008. According to the system we look for the next candle that forms a lower low and lower high compared to the previous trading day after the crossover. This would have occurred on 29 April 2008.

Buy the stock if it breaks above the high of 29 April 2008, which in this case is $1.28

Personally I don't think that will happen so soon.

Update on Asian Market Indices 3 May 2008

2008-05-03T06:57:00.000-07:00

Straits Times Index

The Straits Times Index has confirmed the double bottom chart pattern. It closed above the 3170 resistance level strongly on Friday 2 May 2008.

Moving in an uptrend. RSI is however getting close to overbought levels. This might be hit come Monday. I will be expecting a throwback soon as well.

Support levels are 3170 and 3000.

SMA/EMA crossover shows uptrend and the SMA and EMA lines are more or less parallel. Still has upside potential but prepare for a pullback once the lines diverge.

Hang Seng Index

The HSI has been trading above the 200 MA for several days now. Also in uptrend. RSI in overbought territory.

Expect a throwback towards the 200 MA.

SMA/EMA crossover shows uptrend. Lines are more or less parallel like for the STI.

Shanghai Stock Exchange

The SSE gapped up and is trading between the 25 and 50 day moving averages. Expect the 25 and 50 MA to be support and resistance respectively.

RSI not yet in overbought territory. More upside noted.

SMA/EMA crossover has not indicated a trend change yet. However the lines appear to be starting to turn upwards.

Nikkei 225

The Nikkei is in an uptrend. But it has not broken above the highs of Feb 2008. RSI in overbought territory. A throwback is to be expected.

SMA/EMA crossover shows upward trend. 10 SMA is starting to diverge a bit more from the EMAs. Still some upside but throwback to follow shortly.

Update on Dow, S&P500 and NASDAQ 3 May 2008

2008-05-03T06:33:00.001-07:00

Dow Jones Industrial Index

The Dow broke past the 200 day moving average and closed above it on Friday 3 May 2008. Some people view this as a very bullish sign. Coupled with the fundamental news of the less than expected job losses in the US economy, some even say this is the beginning of a new bull run as the US economy recovers.

My time frame tends to be week to week these days so I'm not sure about that.

Obviously the bullish close is a positive point.

However there are several factors that point against this being a sustained breakout. Firstly the volume of trade done was relatively low. Secondly the RSI is deep in the overbought region. It is highly likely that the Dow is due for a throwback soon.

Support levels could be at 12765 and 12265. What I would be more interested in is to see what type of bad news cause this throwback. It is in my opinion that unless we see a new type of bad news hit the market, it is unlikely that the throwback will be too severe to even get close to the March lows.

Hence my strategy would be to let profits run at this point in time and buy on dips or oversold RSI levels.

On the SMA/EMA crossover trend change system, the uptrend is certainly still intact, however the 25 SMA is diverging quite a bit from the EMAs. Hence a throwback is on the cards soon, probably next week.

S&P 500

The S&P 500 mirrors the Dow except that it isn't the 200 MA that was broken but the downward trendline.

RSI is similarly overbought. Supports will be at 1400 and 1340.

SMA/EMA crossover trend change system also shows upward trend crossover.

NASDAQ Composite

The NASDAQ mirrors the S&P 500. Support at 2420 and 2300

Uptrend but 10 SMA is diverging and a throwback is likely soon.

Review of trades in week 28 April - 2 May 2008

2008-05-02T20:30:00.000-07:00

I am left with 2 counters that I am actively trading at the moment.

1) First Resources (bought 17 April 2008))

Long
Entry price 1.03
30 day ATR 0.09
1.5X ATR30 0.135
Cut loss stop on 1.5ATR30 0.895
Recommended cut loss 0.885
Loss on recommended cut loss -1517.878899

Target price 1.38
Profit on target price 3414.575381

Reward/risk ratio 2.249570361

The Board of Directors of First Resources Limited ("the Company") are pleased to announce that at the Annual General Meeting (“AGM”) and Extraordinary General Meeting (“EGM”) of the Company held on 29 April 2008, all resolutions relating to matters set out in the Notices of the AGM and EGM were duly passed.

So the share buy back mandate resolution in the EGM was also passed. So far there have been no announcements from First Resources about any share buy back action. However I suspect that with this resolution in place the stock may have some support.

Many market watchers are talking about the rise in the USD$ and also the retreat in oil prices as well as commodities. Most are waiting to dump their commodity based investments.

Personally I do not see a crash in commodities going forward. A correction might be in place at the moment but as long as macroeconomic conditions remain the way they are with the US in a mild or no recession, China still growing at around 10% and no global widespread economic downturn, then the demand for commodities will remain high. A rising USD$ might slow the rate of increase for commodity prices but probably not cause a crash in prices.

Shorter term however I expect to see the USD$ to pullback along with the US stock markets. Oil will once again have another rally when that happens.

First Resources was never really a Technical Analysis play. My considerations for buying a commodity counter was based on fundamentals of economic outlook, supply and demand. I agree with Jim Rogers.

I did however choose to buy First Resources over GoldenAgri, and Indoagri based on the chart. Also the entry price was based on what I thought might be a breakout at that time.

My exit levels will also be based on the chart. But frankly from the macroeconomics I am quite confident I will make a good profit on this stock perhaps later this month.

The 25 day moving average has been flat for a while. The support appears to be at 0.96. A break below the 25 MA would put us looking at the 0.88 support level.

RSI is still in uptrend but looks like it may break below in the coming week. Hard to say at this stage. Interestingly I wonder when is First Resources announcing their 1Q 2008 results? That may be a catalyst for a move up as well.

If we look at the SMA/EMA crossover trend change indicator there is some suggestion that the trend might be changing for First Resources since the big selldown when they had the scandal court case.

Personally I still think First Resources is trading at a discount compared to its peers in the palm oil industry due to that sell off in the scandal.

Macquarie Research had a 32 page report on First Resources released on 25 April 2008 and it looks like First Resources is still a good business overall to invest in. Below is the summary of their recommendation :

Outperform with a target price of S$1.60 We initiate coverage of First Resources (FR SP, Mkt cap: US$1bn), a pure upstream palm oil play, with an Outperform rating. Our DCF-based target price is S$1.60 (using WACC of 13.1%), representing 58% potential upside. This implies a forward FY08E PER of 16x. The shares are trading at an attractive 10x FY08E PER and 8x FY09E, with Indo plantation plays at an average 9x FY09E PER, and a huge disparity compared with the Malaysian plantation plays’ average at 15x FY09E PER.

Last done closing price = $1
Unrealised loss = -$382

2) COSCO

Long
Entry price 2.84
30 day ATR 0.24
1.5X ATR30 0.36
Cut loss stop on 1.5ATR30 2.48
Recommended cut loss 2.78
Loss on recommended cut loss -159.8411916

Target price 3.2
Profit on target price 677.1813528

Reward/risk ratio 4.236588491

Sold on 28 April 2008
Profit = $929

I sold COSCO on Monday 28 April 2008 when it hit my trailing stop of 3.34. Realized a profit of $929.

COSCO was sold off in anticipation of bad earnings for 1Q 2008. It was hard for me to understand or believe that the earnings would be poor looking at Yangzijiang's good earnings that came out on the same day.

However COSCO was indeed sold off quite severely once again because I believe shortists got into the action.

I decided to take a punt however and bought COSCO back at 3.11 on 29 April 2008, the day before the 1Q 2008 earnings were to be released.

I have posted an entry on COSCO after the results were announced. At the moment my stop for COSCO is 3.29.

From the chart

The 25 and 50 day moving averages look like they might cross soon. This would be the first crossover since the last one in Dec 2007. If so the crossover necktie might form a solid support level for the stock. I suspect it may be the 3.40 level. For this to happen we need COSCO to move up above 3.40 in the coming week and have a strong close above 3.40.

I am betting that this will happen and COSCO will move higher than that. However in line with overall markets I do see a pullback coming. And 3.40 may be a good entry point for this stock during that pullback.

There are several possible catalysts going ahead for this stock, in particular possible announcement of the 9 new vessels ordered by China COSCO Holdings Ltd (awaiting deposits) and an increase in stake in COSCO Shipyard Group Ltd from 51% currently to 80%.

Looking at the SMA/EMA trend change indicator, once again COSCO is attempting a trend change after the failed one in early April 2008. Will it be 2nd time lucky? We shall see.

Long (29 April 2008)
Entry price	3.11
30 day ATR	0.22
1.5X ATR30	0.33
Cut loss stop on 1.5ATR30	2.78
Recommended cut loss	0.355
Loss on recommended cut loss	-701.7552702

Target price	3.92
Profit on target price	1570.163065

Reward/risk ratio	2.237479548

Last done closing price = $3.37
Unrealised profit = $467

Total trade summary:

Up to date realized profit/loss = $1313 + $929 = $2242

Unrealized profit/loss = $467 - $382 = $85

Update on COSCO 1 May 2008

2008-04-30T18:34:00.000-07:00

COSCO announced their 1Q 2008 earnings yesterday.

Points in brief

1) Turnover and net profit doubled
................................Q1 FY2008 ...........Q1 FY2007 .........Chg
....................................S$’000 ...............S$’000
Turnover .....................717,656.............. 355,786........ +102%
Gross profit................. 200,622................ 92,490 ........+117%
Pre-tax profit ...............148,660 ................67,450........ +120%
Net profit .....................127,555 ................60,818 .......+110%
Net profit attributable ......83,884 ................41,954....... +100%
to equity holders
EPS fully diluted (cents) .....3.73.................. 1.88 ............+98%
................................31 Mar 2008 ...............31 Dec 2007
NAV (cents) ......................45.26................ 42.00 ............+8%

2) However the net profit for the three months ended Mar. 31 of S$84 million from S$42 million a year earlier fell short of the S$117 million forecast by a Dow Jones Newswires poll of analysts

3) COSCO also said that it has received down payments totaling US$280 million for seven ships that had been outstanding earlier in April.

"We have got down payment for all of our order book and in the future we will announce and book orders only after we receive down payments from our customers," Cosco President Ji Hai Sheng told reporters.

4) Gross Profit Margins increased and are better than peers listed in SGX.

.........................GPM....... Reporting period
Cosco ...............28%................1Q2008
YZJ....................20.9%.............1Q2008
Kepel O & M........9.9%...............1Q2008
Sembmarine........9.1%...............FY2007**

** 1Q 2008 results not out yet....

5) China COSCO Holdings Company Limited yesterday announced that they were going to order nine 57,000 DWT dry bulk vessels worth US$348.9 million from COSCO Shipyard Group Co., Ltd
which COSCO Corp owns 51%. This order is however subject to the approval of a general meeting of shareholders.

2 reasons why COSCO Corp did not announce this yesterday is because the order still needs approval from China COSCO shareholders as well as COSCO's new policy of announcing new orders only after they have received the initial payments. But I am sure this announcement will be coming out in the coming weeks.

In terms of the technicals......

COSCO was sold off going into earnings. The original event that caused the sell off down to 2.79 was due to worries about cancellations of orders and not collecting any deposit. This has been resolved by the management as they have collected the initial payments from all their clients now.

COSCO's sell off going into earnings was probably because COSCO fell short of extremely high expectations on earnings. Is this sell off overdone?

From the chart the price closed below the downward trendline on 29 April 2008 but closed above it again on 30 April 2008. It also closed above the 61.8% fibonacci retracement level.

There is actually bullish divergence between the price and RSI trends.

COSCO has found it hard to break above the 50 day moving average in the past 2 attempts.

What will be (if any) the catalyst that could cause it to do so? Most likely new earnings or new announcements. Over the next few days this does not seem to be likely.

From the techinicals however, I would want to see whether COSCO can keep it's price closing above the downward trendline over the next few days. Hopefully it can consolidate and form a triple bottom formation for which to build the next rally from.

Global Macroeconomic situation as of 1 May 2008

2008-04-30T18:06:00.000-07:00

Last week I made a post about whether China is decoupling from the USA.

Among my wishlist were the following :

So my wish list is as follows :

1) China companies continue to report good 1Q 2008 earnings. Proving the might of China's domestic market.

Here's a report from REUTERS

April 30, 2008, 5.54 pm (Singapore time)
China earnings outlook regains some lustre after Q1

SHANGHAI - Earnings prospects for China's 1,500-plus listed companies have brightened after they posted better-than-forecast profits in the first quarter, bolstered by unexpectedly brisk economic growth.

Six fund managers and securities analysts surveyed by Reuters on Wednesday predicted median profit growth for listed Chinese firms of 25 per cent in 2008, up from a forecast of 20 per cent about a month ago.

A pick-up in the stock market and a likely slowing in yuan appreciation were among other supportive factors they cited for the earnings outlook.

The forecast suggests China will maintain the first-quarter pace of year-on-year earnings growth, calculated at more than 23 per cent by the official Shanghai Securities News, for the rest of the year.

While impressive on a global scale - US first quarter earnings, for example, are down by about a fifth - the growth is still less than half the gains made during 2007.

A major boost came from China's economy growing at an annual rate of 10.6 per cent in the first quarter, achieved despite the worst snow storms of the decade in many areas of the country and slower export growth as the US credit crisis hit the global economy.

'We raise our forecast for 2008 corporate earnings (to 25 per cent) from 15-20 per cent a month ago, partly due to a stronger-than-expected economy in the first quarter,' said senior stock analyst Cao Xuefeng at West China Securities in Chengdu.

But first-quarter earnings growth slowed sharply after growing by about half in 2007, according to the Shanghai Securities News.

That in turn was below analysts' forecasts late last year of a 50 to 60 per cent rise for 2007. Earnings rose by about two-thirds in the first three quarters of 2007 alone.

Shares slide
First quarter earnings were hit particularly hard by the plunge of more than a third in the benchmark Shanghai Composite Index's . That eroded the investment income of index heavyweights such as top insurer China Life Insurance, which posted a 61 per cent drop in first-quarter profit.

The bottom line of export-oriented companies was also hurt by faster appreciation of the yuan, which gained 4.2 per cent in value against the US dollar in the first quarter - its quickest quarterly appreciation since 1993.

'The first-quarter earnings indicated a strong polarisation of listed companies' performance, with banks outperforming the overall market while refineries were hit by surging oil prices,' said Yan Zhenghua, chief strategist at China Asset Management.

'The trend is likely to continue for all of 2008,' he added.

Among 15 listed Chinese banks, most reported a more than doubling of first-quarter profit, partly due to an income tax cut for Chinese companies to 25 per cent from 33 per cent this year.

The reduction will boost overall corporate earnings by an estimated 10 per cent this year and will benefit banks the most, partly because of their huge turnover.

Banks, which account for about 30 per cent of all listed firms' earnings, are under pressure from official economic cooling steps such as a new loan quota system, but analysts now believe their total profits will grow at least 40 to 50 per cent for in 2008, an upgrade from a forecast about a month ago for a 30 per cent rise.

Oil giant PetroChina, however, posted a disappointing 32 per cent fall in net profit for the first quarter and Sinopec Corp, Asia's largest oil refiner, suffered a 69 per cent dive, as soaring crude oil prices pushed their refining business into a deep loss.

The two account for about 20 per cent of domestically listed firms' total earnings.

Resilient economy
But a resilient economy is likely to keep earnings buoyant.

For 2008, analysts forecast economic growth around 10 per cent. An easing in consumer price inflation, which reached an 11 year high of 8.7 per cent in February before falling back to 8.3 per cent in March, would also help companies facing higher input costs.

China has also slowed the appreciation of the yuan, which is nearly unchanged against the US dollar in April, as the government, which guides the market through the central bank's daily mid-points, appears to be responding to exporters' complaints.

That could combine with a possible stabilizing in the US economy to boost business for small exporters such as toy maker Haixin Group, which posted a loss of 5.88 million yuan (US$840,000) in the first quarter.

Earnings will also get a boost from a steadier stock market. The main index has rebounded 23 per cent from a 13 month low last week after the government stepped in with supportive measures, including a cut in the stock trading duty.

Stock investments accounted for about 15 per cent of listed firms' net profit in 2007.

The average price-to-earnings (PE) ratio of China's listed firms has dropped to about 27 times 2007 profit, from a peak of 46 times late last year. Many analysts said that was unsustainably high but profit growth around 25 per cent this year should bring PE ratios down further, to about 22 times. -- REUTERS

The question is whether to trust these analysts in their forecasts? What we do know is that everyone was thinking that the US slowdown will impact China badly in 1Q 2008 as well. But clearly that did not happen.

2) 2Q 2008 US GDP numbers come in showing no recession or a mild recession

So far the 1Q 2008 US GDP numbers came in showing expansion of 0.6%. This was slightly above forecasts. The big question going forward would be the 2Q 2008 figures. But certainly the numbers for 1Q 2008 has not caused any panic, which I still view as positive.

3) US Federal reserve indicates confidence in US economy and signals the cycle of rate cuts is coming to an end, and the Fed will be focusing on tackling inflation next. (The WORLD will be focusing on tackling inflation)

The Fed cut rates by 25 basis points overnight. This was expected. However the key was what the Fed would say giving a clue going forward. Well the Fed just about said the same things except that the central bank removed the following language form the current statement: "downside risks to growth remain."

While the Fed did not say that they had confidence in the US economy (guess I was getting ahead of myself there), the omission of that statement is a step forward.

Which is why the market sold off subsequently because they realized the Fed might be coming to an end of its rate cuts cycle.

The Fed will be starting to watch inflation now more so than the economy if my guess is right.

4) Commodity prices fall, cost of raw materials drops for China and they continue with powerful growth figures.

This will take time. The USD will have to strengthen for this to happen. The Fed cutting rates overnight will cause the USD to fall again in the short term. Oil and commodities might have one last rally. But I would expect things to change going into 4Q 2008.

Hence overall I still expect China to be stable and strong going into 2H 2008. How strong that's the big question. As for the USA, I'd be optimistic to say that they manage to avoid recession. Most likely they will have a mild recession. Long or short? It may not matter as much for us in Asia as much as it matter to them in USA!

I expect the markets to be indecisive in 3Q 2008. It should be a bumpy ride. But hopefully things will improve from 4Q 2008 and a sustained rally towards the end of the year.

Next I'll be looking at COSCO Corp's earnings......

Review of trades in week 21-25 April 2008

2008-04-25T18:39:00.000-07:00

1) Fibrechem

Long
Entry price 0.805
30 day ATR 0.06
1.5X ATR30 0.09
Cut loss stop on 1.5ATR30 0.715
Recommended cut loss 0.705
Loss on recommended cut loss -1053.523309

Target price 0.95
Profit on target price 1387.792446

China reduced the stamp tax duty on stock market from 0.3% to 0.1% this week. SSE rallied 9.29% on Thursday.

Fibrechem went to a high of 0.86 on Thursday. I sensed that this might be a knee jerk reaction but was not sure if it could carry on to the next day. Hence I decided to set a stop limit at breakeven level. Personally I did not expect Fibrechem to retrace that much. But it did.

Hence sold Fibrechem at 0.815.

Profit/Loss = +$30

One might say that why not take profit when it was 0.86? On hindsight we are all geniuses. I'm trying to learn to let my profits run and limit my losses. So this is still a lesson in progress.

1) First Resources

Long
Entry price 1.03
30 day ATR 0.09
1.5X ATR30 0.135
Cut loss stop on 1.5ATR30 0.895
Recommended cut loss 0.885
Loss on recommended cut loss -1517.878899

Target price 1.38
Profit on target price 3414.575381

Reward/risk ratio 2.249570361

I said that First Resources would start to move up this week in view of the coming EGM to vote for the 10% share buy back mandate. First Resources had several big lots buy ups. But there was also selling later on.

Well 29 April 2008 is next Tuesday. So I'll just hang on. I believe this counter has very good potential.

Chart wise First Resources has been testing the downward trendline for the past 2 days but has been unable to close above it.

We'll see if the share buy back becomes the catalyst for a mean revert for this stock.

Last closing price 0.995
Paper loss = -$432

2) COSCO

Long
Entry price 2.84
30 day ATR 0.24
1.5X ATR30 0.36
Cut loss stop on 1.5ATR30 2.48
Recommended cut loss 2.78
Loss on recommended cut loss -159.8411916

Target price 3.2
Profit on target price 677.1813528

Reward/risk ratio 4.236588491

COSCO broke past my target price this week. And I let my profits run. So while letting profits run plan failed on Fibrechem, it succeeded for COSCO. My stop for COSCO on Friday was 3.34. It came close but not close enough.

China COSCO reported good earnings for FY2007 on 23 April and that gave COSCO Corp a boost here in Singapore.

COSCO had 2 bottoms around 2.80. If it closes above 3.92 it will confirm this as a double bottom. Current price of 3.40+ means we are still 20% away from confirming it. Means more upside at least till that psychological resistance.

50 day MA is not so much of a concern because it has already tested it twice.

RSI is not overbought range.

Plus COSCO has broken above the downward trendline from Nov 2007.

Fundamentals

1) CHINA COSCO did well and the shipping business is growing. JV with Indonesia on the Coal ships orders will likely go to COSCO Corp.

2) China shipping and shipyards as a whole are supported by Beijing and growing and aiming to overtake South Korea as world number one. Lots of room for expansion for COSCO.

3) COSCO forays into shipbuilding and repair represents different market share compared to Kepcorp and Sembmarine. Plus China exposure also means the demand is better.

4) COSCO Corp VP Mr Ji stated in an interview dated 27 March 2008 that they were going to make a decision soon on whether to increase their stake in the shipyard from 51% to 80%. When will this decision be made known?

So looking at it, this stock has a lot of things going for it. Plus the drop in price 2 weeks ago represents the correction has been factored in already. If not for that drop how much would COSCO be priced at today?

We will see what happens on 30 April 2008 when China COSCO and COSCO Corp both release their 1Q 2008 results. Incidentally the USA FOMC Announcement will be on the same day. 1 May 2008 is a Public Holiday in Singapore though. So markets will be closed.

Last closing price 3.47
Paper profit = $1208

Up to date realized profit/loss = $1283 +$30 = $1313

Unrealized profit/loss = $776

Update on Dow 26 April 2008

2008-04-25T18:03:00.000-07:00

The Dow closed above the downward trendline from Oct 2007 for the first time early this morning.

The Dow has now confirmed the double bottom and (weaker) reverse head and shoulders patterns for 6 days.

With this close above the trendline, the chart patterns looks bullish.

I have yet to check on the indicators.

More to follow later.....

Is China decoupled from the US?

2008-04-25T15:01:00.000-07:00

Last week I was mulling over the prospect of seeing US corporate earnings reflecting a weakness in Financials and companies with predominant US domestic business while a resilience and even growth in US companies who have strong business in Asia and China.

I was hoping to see this and thought that if this played out, it would show that China's domestic demand had something going for it. This would lend more weight to the decoupling theory many economists scoff at.

My thoughts were that if indeed there was decoupling, then the US by the very nature of their many MNCs with businesses in China could avoid a recession overall (domestic recession but overseas contributions bolster overall). The Fed's aggressive rate cuts and cash injections would look to have worked to ease the credit crunch.

If indeed the 2Q 2008 US GDP numbers came in with good numbers then the Fed could concentrate on tackling inflation (oil and food price hikes) in the 2H of 2008. Much of this rise in oil is the result of the USD$ weakening some part because of the Fed's rate cuts. Another part is traders speculating and driving the oil prices higher.

If the Fed signals a change in policy both indicating US economic stability and an end to rate cuts, the USD$ will strengthen and oil traders will start to become anxious. As it is this scenario is playing out already. And oil traders are attempting a final push on oil prices.

I still believe Bernanke will be cautious and cut rates by 25bp at most next Wednesday. It is still not too rosy to hold rates or even raise it. The market strangely would probably not like this.

Lastly I was eagerly awaiting the 1Q 2008 results of China companies.

The China companies posted good full year 2007 results despite a supposed slow down in the US from August 2007. Already some talk was going on that despite the US slowing down, the companies did well. Is it because the China domestic consumption was real and not "repackaged" for US exports?

So good results in 1Q 2008 would clearly send the message that the decoupling theory is true.

Sino env posted very good results. And so did Ferrochina. It certainly looks like decoupling might be true.

So my wish list is as follows :

1) China companies continue to report good 1Q 2008 earnings. Proving the might of China's domestic market.

2) 2Q 2008 US GDP numbers come in showing no recession or a mild recession

3) US Federal reserve indicates confidence in US economy and signals the cycle of rate cuts is coming to an end, and the Fed will be focusing on tackling inflation next. (The WORLD will be focusing on tackling inflation)

4) Commodity prices fall, cost of raw materials drops for China and they continue with powerful growth figures.

Review of trades in week 14-18 April 2008

2008-04-19T01:46:00.000-07:00

1) First Resources

Long
Entry price 1.03
30 day ATR 0.09
1.5X ATR30 0.135
Cut loss stop on 1.5ATR30 0.895
Recommended cut loss 0.885
Loss on recommended cut loss -1517.878899

Target price 1.38
Profit on target price 3414.575381

Reward/risk ratio 2.249570361

Oil has been hitting record highs. Commodity plays will be in focus over the coming weeks. I do not envision a drop in commodity prices in the near term at least until the FOMC announcement on 30 April 2008. Looking at the charts of Golden Agri, IndoAgri and Wilmar I compared them with First Resources and found that First Resources is likely to recover back to its mean price of around 1.30.

First Resources is having their AGM on 29 April 2008 and are having a resolution to have share buy back schemes during the EGM to be held also on 29 April 2008. I believe this will be the catalyst for a move up this week.

Hence decision was made to enter FR. It looked possible for a break out by TA on 17 April 2008. However it was not to be. In any case my cut loss is below the low of 0.89. TA wise it looks like First Resources will break out soon.

Entered 10 lots at 1.03
Last closing price 0.98
Paper loss = -$581

Trades from last week

1) Fibrechem

Stop loss of 0.705 was not triggered this week. Fibrechem is having their AGM on 29 April 2008. China stocks have been weak because of China's talk about cooling the economy and tackling inflation. It is a good point to note that while QDII was the talk of the town 2 weeks ago, China stocks are now avoided by and large.

Long
Entry price 0.805
30 day ATR 0.06
1.5X ATR30 0.09
Cut loss stop on 1.5ATR30 0.715
Recommended cut loss 0.705
Loss on recommended cut loss -1053.523309

Target price 0.95
Profit on target price 1387.792446

Reward/risk ratio 1.317286892

Last closing price 0.73

Paper loss = -$812

2) COSCO

COSCO recovered from it's lows early in the week to close above $3. It was close to my stop limit on Monday but it did not trigger thanks to correct use of the stop limit from last week's error on Ferrochina (lesson learnt!). Intend to hold this till the results announcement on 30 April 2008.

Long
Entry price 2.84
30 day ATR 0.24
1.5X ATR30 0.36
Cut loss stop on 1.5ATR30 2.48
Recommended cut loss 2.78
Loss on recommended cut loss -159.8411916

Target price 3.2
Profit on target price 677.1813528

Reward/risk ratio 4.236588491

Last closing price 3.02
Paper profit = $312

Up to date realized profit/loss = $1283

Unrealized profit/loss = -$1081

Update on Dow, S&P500 and NASDAQ 19 April 2008

2008-04-18T20:32:00.000-07:00

Dow Jones Industrial Index

The Dow broke and closed above the confirmation level for double bottom and head and shoulders bottom formation on Friday. It tested but did not break the downward trendline from the peak in Oct 2007. This is a bullish sign. The downward trendline (12850) and the 200 day moving average (13100) will be the immediate resistance levels. See the previous post on US economic calendar and companies earnings reporting schedule to see if you think the results and economic data will be good for the US next week.

The trend change indicators from the moving averages crossover now looks a lot more defined. The Dow is on an uptrend clearly.

S&P 500

The S&P 500 tested the conformation line for double bottom but did not break it. It is very close to the downward trendline from the Oct 2007 peak. Looking bullish indeed.

Similarly to the Dow, the downward trendline and the 200 day moving average will be the resistances to aim for.

Trend change wise it is not so well defined for the S&P 500 but is still on uptrend.

NASDAQ
The NASDAQ gapped up on Google's massive results but did not break the resistance line at 2420. The NADAQ drop from January was pretty steep and severe. If the fears that caused that drop turned out to be unfounded going by the results of the major tech companies, I would expect the recover to be just as steep as the drop was.

Trend change wise, I would like to see the NASDAQ continue to rise powerfully to define the trend change much better.

US economic calendar cum key companies earnings reporting schedules for Week 21 - 25 April 2008

2008-04-18T20:13:00.002-07:00

US economic calendar cum key companies earnings reporting schedules

Earnings Announcements for Monday, April 21

Company EPS Estimate Time

Bank of America Corporation (Dow Comp) 0.41

Eli Lilly 0.96

Halliburton Company 0.64

Hasbro, Inc. 0.14 Before Market Open

Mattel 0.01 Before Market Open

Merck & Co., Inc.(Dow Comp) 0.86

Novartis Corporation 0.89 Before Market Open

Texas Instruments 0.43 4.30pm ET

Washington Trust Bancorp, Inc. 0.42 Before Market Open

Earnings Announcements for Tuesday, April 22

Company EPS Estimate Time

AT&T (Dow Comp) 0.74 Before Market Open

DuPont (Dow Comp) 1.26 Before Market Open

McDonald's Corporation (Dow Comp) 0.7 Before Market Open

PepsiAmericas 0.18 Before Market Open

Wyeth 0.9 Before Market Open

Yahoo, Inc. 0.09 After Market Close

Yum! Brands, Inc. 0.4 After Market Close

Date/Time Economic StatisticFor Market Expects

Apr 22/10:00 AM Existing Home SalesMar 4.95M

Earnings Announcements for Wednesday, April 23

Company EPS Estimate Time

Amazon.com, Inc. 0.32

Apple Inc. 1.06 After Market Close

GlaxoSmithKline N/A

Schering-Plough 0.37 Before Market Open

The Boeing Company (Dow Comp) 1.35 Before Market Open

UNITED PARCEL SERVICE INC 0.87 07:45 am ET

Earnings Announcements for Thursday, April 24

Company EPS Estimate Time

3M Company (Dow Comp) 1.35 Before Market Open

American Express Company (Dow Comp) 0.81 After Market Close

AstraZeneca PLC 1.19 Before Market Open

Baidu 0.6 After Market Close

Bristol-Myers Squibb 0.41

ConocoPhillips 2.4 Before Market Open

Microsoft (Dow Comp) 0.44 After market close

Motorola Inc. -0.07 Before Market Open

PepsiCo 0.7 Before Market Open

Date/Time Economic StatisticFor Market Expects

Apr 24/8:30 AM Durable OrdersMar 0.1%

Apr 24/8:30 AM Initial Claims 375K

Apr 24/10:00 AM New Home SalesMar 585K

Earnings Announcements for Friday, April 25

CompanySymbol EPS Estimate Time

Wendy's International 0.17

Date/Time Economic StatisticFor Market Expects

Apr 25/10:00 AM Mich Sentiment-Rev.Apr 64.2

Mermaid Maritime

2008-04-16T04:55:00.001-07:00

Yap asked me about Mermaid Maritime. From the chart looks like trading in a down channel. A breakout above the top trendline would be bullish. I would think that short term resistance would be 1.15 (high on 11 April 2008)

25 and 50 day moving average crossover is at 1.72 another resistance level.

Closing today is sitting on the 50 day moving average. RSI is overbought. Hard to say whether this will turn down or breakout. But those are the levels to watch.

Looking at possibility of trend change. The EMA/SMA crossover shows possibly a trend change that has just happened. Will have to see how this stock moves over the next few days.

Thanks to yap for highlighting this to me. I will watch this stock as well.

Update on Kepcorp 12 April 2008

2008-04-12T07:50:00.001-07:00

Kepcorp tested the 25 day moving average but closed strongly above the 50 day moving average on Friday. It formed a bullish engulfing candlestick in the process which was very bullish. Volume was also very good.

However the Dow closed down 2% on Friday.

I hope to be able to get the chance to buy Kepcorp on Monday at $10. I think the $10 support will be strong.

Kepcorp is giving $0.10 + $0.45 (special dividend) dividend ex-dividend on 29 April 2008.

Kepcorp is announcing results on 24 April 2008.

Last chance to buy some?

Looking at the SMA/EMA crossovers it looks like a trend change to the upside has just started.

One trading method states that you wait for the first trading day to make lower lows and lower highs after the crossover point and you mark that day's range. Then you wait for price to go above the high of that marked day's high and that would be the entry signal.

If on Monday Kepcorp has a lower low and lower high than on Friday, that would be the "mark day". A price move above the mark day would be an entry point.

I think looking at the $0.55 dividend buffer plus the added results reporting coming on 24 April I'll be a bit more aggressive and buy in at the 25 day moving average support level.

Update on Dow, S&P500 and NASDAQ 12 April 2008

2008-04-11T21:45:00.000-07:00

DJIA

The Dow closed right at the 25 day moving average support level. I would tip the next support level at 12170 which is also where the old downtrendline is. A drop below 12170 would represent shorting opportunities to test the Jan and March lows.

It is entirely possible that the Dow may shake off the GE news just like that. Reason being that everyone forgot that GE has a financial arm in GE Money. Why should GE Money be any different from other financial companies? The CEO also has to blame for making empty promises.

In any case people may digest this and look forward. Next week is when the US reporting season kicks into high gear.

The GE results have also lowered the bar substantially. So the market is expecting very bad news. Any good news will bring relief to the market. We'll have to see how Monday goes.

From the SMA/EMA crossovers we can see that there is a signal for change to uptrend. But the 10 SMA has pulled too far from the EMAs hence a pullback was to be expected. Negative signal is that the price dropped below the 20 and 30 EMA.

S&P 500

Similar pattern to the Dow. 1312 support.

Also similar to the Dow.

NASDAQ
NASDAQ 2260 support as well.

Update on STI 12 April 2008

2008-04-11T21:17:00.001-07:00

On Monday 7th April 2008, the STI closed above the 3170 level "confirming" the double bottom based on chart pattern. However it must be noted that volume was light on that day and candlestick wise it had formed a "hanging man". These 2 features pointed towards tiring momentum and a possible reversal point rather than a true confirmation of a bullish double bottom reversal pattern.

True enough, the subsequent days confirmed the bearish "Hanging man" reversal candlestick. As my friend so eloquently put it : "Yesterday we hanged the man, and today we bury him."

It is interesting to note however that the candlesticks of the last 3 days (ie 9-11 April 2008) form a "morning star" pattern. This can be viewed as a bullish reversal sign. The Candlestick on 11th April is also a "bullish belt hold". Signs were pointing towards a good run on Monday. However the US market folded on Friday night! Which is rather frustrating because sometimes you wonder if reading STI charts are worth anything at all if they are just going to follow the US market movements?

Note the break in trend line for the RSI levels. The more gradual upward trendline though is still far away.

Key support level would be 3000. Likely where the 25 and 50 day moving averages will crossover. If 3000 gives way, it will represent a shorting opportunity where the STI will cover all those gaps made 2 weeks ago and probably test the 2745 lows made in Jan and March 2008.

Key resistance would be 3170. However a strong high volume break and close above 3170 would most likely see STI rally to 3300 (most likely where the 200 day moving average will be)

I will correlate this on a time based factor later when I analyze the US charts.

I have started to use an additional tool to look for major trend changes. This is the crossover points of the 10 SMA , 20 EMA and 30 EMA I had previously mentioned on a blog entry this week.

If you look at the above chart you can see that the moving averages had indeed crossed over recently. This signifies a mid term trend change to the upside. However as the lines move further apart, it usually signals that the momentum of the trend is weakening and there might be pullbacks or even reversals of the trend.

We can see that on the STI the 10 SMA has pulled too far away from the 20 EMA and 30 EMA. Hence I do expect a pull back coming.

Conclusion : Expect STI to fall on Monday and test 3000 level. Expect 3000 level to hold.

Review of trades this week (7-11 April 2008)

2008-04-11T20:36:00.000-07:00

1) Ferrochina

On 7th April, bought 5 lots at 1.44 on breakout of symmetrical triangle and previous high of 1.43 on 2 April 2008.

Long
Entry price 1.44
30 day ATR 0.1
1.5X ATR30 0.15
Cut loss stop on 1.5ATR30 1.29
Recommended cut loss 1.29
Loss on recommended cut loss -798.3836535

Target price 1.66
Profit on target price 1045.058855

Reward/risk ratio 1.308968252

I started learning how to use POEMS Pro Trader this week. And successfully used it to buy Ferrochina using the Stop Limit function.

Ferrochina was sold when it hit 1.30 on 10 April 2008. I had placed the stop at 1.30 and the limit at 1.29 although the actual intended cut loss was 1.29! Learning point noted that for stop limits the appropriate way to set it would have been Stop = 1.29 Limit = 1.28 or having the stop and limits the SAME. However having them the same would mean if there was a gap my order would not go through.

Profit/Loss = -$755

Learning point : Stop should be the actual cut loss price and limit is 1 bid below it when using Stop Limit function on POEMS Pro Trader.

2) Fibrechem

On 7th April bought 10 lots of Fibrechem at 0.805. This was an aggressive buy which should not have been made on hindsight. Must learn to be more patient and disciplined in timing entries. I had missed some entries on Friday and was ruing those misses hence went in on this trade based on breakout of 3 day previous high of 0.79.

Long
Entry price	0.805
30 day ATR	0.06
1.5X ATR30	0.09
Cut loss stop on 1.5ATR30	0.715
Recommended cut loss	0.705
Loss on recommended cut loss	-1053.523309

Target price	0.95
Profit on target price	1387.792446

Reward/risk ratio	1.317286892

Last closing price 0.76

Paper loss = -$513

Learning points : MUST BE PATIENT AND TIME ENTRIES PROPERLY. Need more work on this aspect.

3) COSCO

On 10th April 2008, bought 2 lots of COSCO at 2.84. This is a punt. 2.81 was the previous 9 month low made in March. Hence a punt at 2.84. Price had dropped due to COSCO announcing that they had ONE contract cancelled. COSCO Vice President insisted that the cancellation was due to COSCO being unable to meet the clients change in requirements rather than a credit problem. However the manner in which they made the announcement as a subparagraph in their announcement of securing new contracts suggest they were trying to cover something. Further more the work was supposed to have been started in June 2007, so why wait till now to announce this change? Analysts fear that COSCO will have more cancellations and as a result Citigroup lowered COSCO's target price to 2.70.

It is yet to be known whether this would be an over reaction by sellers/shortists or whether it is indeed true that COSCO has many problems ahead.

2 factors that make me feel it is an over reaction are as follows :

1) While COSCO did announce the cancellation, they did secure new contracts

2) COSCO directors had bought the shares from the open market 2 weeks ago. And they continued to buy this week

Finally, COSCO will be having their AGM on 15th April 2008 (Tuesday) where they will announce their results. I am sure there will be clarification on this issue by then.

Long
Entry price	2.84
30 day ATR	0.24
1.5X ATR30	0.36
Cut loss stop on 1.5ATR30	2.48
Recommended cut loss	2.78
Loss on recommended cut loss	-159.8411916

Target price	3.2
Profit on target price	677.1813528

Reward/risk ratio	4.236588491

I have yet to decide if I will keep these 2 lots or cut it fast and swift. It looks like on Monday there will be a big sell down in Asia after what happened on Wall Street on Friday. However the AGM on Tuesday might clear up many things (which I am expecting it will).

Last closing price : $2.93

Paper profit = $133.

Up to date balance of realized profit/loss = $2038 - $755 = $1283

Update on Dow 8 April 2008

2008-04-08T19:58:00.000-07:00

The Dow closed down 36 points last night.

However when I saw this in the morning I was quite relieved.

The reason why everyone was so edgy yesterday is because on Tuesday, the Dow tested the previous highs but later closed down near the lows forming a doji or almost a "gravestone" doji. This was a bearish signal based on candlestick charting. Psychologically it meant that the bulls were on the run but later lost control and prices closed where they began or near the lows.

Usually for candlestick charting confirmation has to be made with subsequent candlesticks.

So if last night the Dow had closed down strongly it would have more or less confirmed the bearish doji and hence a change in direction. However the Dow did not close down too strongly.

In fact it tested the 12525 level and it held. This is called a tweezer bottom as compared to the lows last Friday and on Monday. Will this be a support?

Secondly looking at the bigger picture, the consolidation from last Thursday up to yesterday still looks like a flag continuation pattern. The problem though is that within this flag are mostly high waves or rickshawmen and a bearish looking doji! These usually signal turns in candlestick charting. Although we know it is not that accurate.

There are views from other technical analysts that would prefer a drop back to the 50 day MA ie 12360 to give the flag a more downward sloping appearance before the next rally.

Nevertheless things are still looking very edgy. A drop below 12525 would certainly result in a drop down closer to 12360. Hopefully that level holds and rebound subsequently or else it would mean confirmation of the Doji formed on Tuesday!

We are not out of the woods yet. But last night's Dow close did not confirm anything bearish either.

Dow Trend Change?

Just for interest as I was just reading about this in an old issue of the Trader's Journal, there is this method to look for trend changes. Take the 10 day simple moving average (10 SMA), 20 day exponential moving average (20 EMA), and 30 day exponential moving average (30 EMA) and apply to the chart. In an uptrend move the 10 SMA>20EMA>30EMA. And in downtrend moves the 30EMA>20EMA>10SMA.

There are bowtie crossovers of these moving averages signals a change in trend.

If you look at the chart above those arrows drawn all point to bowtie crossovers. We have just had one not too long ago for the Dow. But then again these crossovers can be rather close together as seen by the 2 crossovers in the month of Dec alone.

Elliot Wave Analysis for STI 7th April 2008

2008-04-06T19:47:00.000-07:00

Hi, I was wondering if I could get Elliot Wave technicians to come here to discuss Elliot Wave counts for the STI corrective phase?

Well let's start with the view Ritesh Menon at OCBC as well as some other EWT technicians have about the STI:

View number ONE : Wave A in 5 impulses but flat or Diagonal Wave B and C?

In this pattern we are now in the wave a of Wave B. 5 wave impulse pattern on Wave A is clear. The view seems to be thought that Wave C will not be as steep as Wave A. From what I have read though, if Wave A is a 5 wave impulse then it is likely to be a Zig Zag steep decline where Wave B is short and small and Wave C is a powerful extended steep decline in 5 waves.

That would mean it will look more like this :

View number TWO :Zig Zag 5-3-5 Corrective Phase

The STI would most likely drop below 2000 in that case!!!!

The last view I can think of is that we are in a 3-3-5 Flat corrective wave :

View number THREE :Flat 3-3-5 corrective wave

This would be an in between view I suppose. In Flat patterns the Wave B can even go as high as the beginning of Wave A. This would be more positive for investors.

So which pattern would you choose? And why?

I think the key thing right now is to look at the fundamentals and correlate.

Is the USA going to have a very severe recession? If so then I think view number TWO would be the correct one.

Or has the Fed's actions and government stimulus package done enough to stave off a severe recession? Then perhaps views ONE and THREE would be correct.

Lastly, is Asia' growth strong enough to prop up the global economy? If so then view number THREE would be the case and we have indeed reached a bottom (although we will test it again).

From a fundamental point of view it seems that View Number ONE might be the right one. However I am not too comfortable with the Elliot Wave counts for View number ONE.

Update on COSCO 5 April 2008

2008-04-05T07:55:00.000-07:00

COSCO hit a high of 3.92 on 2 April 2008. This was very close to the 50 day MA. Subsequently retracing and consolidating.

Looking at the time frames and angles it appears that COSCO might be retracing back to $3.40? That's where the 25 day MA is as well as it being somewhere between 50% and 38.2% fibonacci retracement levels.

From symmetry of the waves it might happen on Monday or Tuesday?

Nevertheless I will be aiming to buy COSCO back at 3.40 or below.

Review of trade this week (31 March - 4 April 2008)

2008-04-05T07:15:00.000-07:00

1) COSCO sold 4 lots at 3.83 (buy 3.40)

Rationale :

"Hit" 50 day MA on first try during downtrend and likely to retrace further to fibonacci retracement levels.

Learning points : To observe because the price levels did not actually touch the 50 day MA! Nevertheless planning to buy back again at 3.40 at a later date?

Profit : $1602

2) Sembcorp sold 2 lots 4.17 (buy 4.16)

Rationale : Sembcorp's news about the water plant in China seemed to disinterest the market. Thought that might retrace after hitting the 25 day MA.

Learning points : 25 day MA not the same as 50 day MA!!! Plus forgot to note that the stock has already hit the 50 day MA once. Have added this checklist into trading system.

Loss : -$47

3) YZJ sold 5 lots 1.04 (buy 0.85)

Rationale : Already hit target price at 1.05. Looking at 50 day MA can see that it is dropping below the 2nd gap target at 1.15. Hence unlikely to get there. Decision made to take profit.

Profit : $912

4) COSCO sold 2 lots 3.74 (buy 3.4)

Rationale : Tried something new and attempted to use Elliot Wave theory to do intraday trade.

Learning points : Wave 2 can retrace all of wave 1. So instead of shorting at the start of wave 2 I should have waited for the full retracement! (COSCO opened at 3.81 that day, dropped to 3.73 then retraced back to 3.81 before finally dropping to 3.65 at end of Wave 5 impulse later in the day).

Profit : $91

Total profit/loss for this week : $2558

Total profit/loss to date = $2558 - $520 = $2038.

Update on Kepland 5 April 2008

2008-04-04T22:01:00.000-07:00

Kepland broke out upwards from its downtrending channel this week. $5.80 is the 50 day MA and looks to be the support. However note that this is the first move above the 50 day MA starting from the downtrend. So it is likely this will retrace back down.

Fibonacci levels are as shown. The 200 day MA caps at the 61.8% fibonacci retracement level.

Update on Kepcorp 5 April 2008

2008-04-04T21:44:00.000-07:00

I am quite keen on Kepcorp. On Friday it broke above the downtrend line. It has also cleared the 50 day MA on the 2nd attempt (1st attempt was in Jan 2008 look at the drop!)

$10.36 which is the 50 day MA should be the support for now.

$11.30 is a very likely target. But I would be gunning for the gap at $11.94-$11.86.

$12.63 is the crossover of the 200, 25 and 50 day MA and will be the resistance cap.

Update on Sembmarine 5 April 2008

2008-04-04T20:18:00.000-07:00

Sembmarine continues to be hampered by the crossover of the 200 and 25 day moving average level at 3.90.

There is also a HCR from 4.00 - 4.20 which will be another resistance level.

It would take some pretty strong news or development to break these levels.

Volume of trading has been constant for some time now. Will watch for any days if increased volume.

A break above the $4.00-$4.20 barrier would likely send the stock back up to $5.10. However I am skeptical that this will happen in the near term. But still something to watch out for as the gain would be still good on that move.

Update on Sembcorp 5 April 2008

2008-04-04T19:43:00.000-07:00

Sembcorp broke above the 1 week high of 4.24 on 3rd of April 2008. Volume was high and it reached a high of 4.43 intraday (hitting the 50 day moving average) before retracing to close at 4.24. 4 April close was 4.29 on lower volume.

From what I understand when stock prices are on a downtrend and hit the 50 day moving average from below, they tend to bounce off quite strongly more often than not. Unless there is very strong sentiment, the 50 day MA usually holds.

This can be seen in the decline in February after prices cut above the 50 day MA, look at the drop!

At the moment it seems that the USA might be in a recession. However the US markets have held firm. Psychologically investors are still bullish.

How Sembcorp cuts the 50 day MA would be something to look out for. Correlate with general market sentiments and movements.

Looking at the fibonacci retracement levels, 4.65 is the 61.8% level and a move beyond that to 4.71 (gap cover) is possible if market conditions are very bullish.

UniAsia

2008-04-04T00:21:00.000-07:00

Someone from CNA forums asked me about Uniasia.

Looking at the chart doesn't seem like there is very much to say. All time low is at 0.49. The stock is trading in a downward triangle. Trend is very obviously down.

A breakout of the top trendline would probably be bullish but I don't really see that happening. With the recent rally in stocks, this counter is STILL trending down. That's bad news.

If one wants to trade this one then perhaps using RSI would be useful. Sell when overbought (RSI 70). I dunno about buying though.

0.675 (low of previous 3 days) would be a level I would definitely cut at.

STX PO

2008-04-03T21:50:00.000-07:00

STX PO has a consolidation descending triangle pattern. Breakout at 2.90 (trendline) which occurred today. However it did not breach the 2.96 high of the consolidation pattern.

It is currently retracing as well.

Target is 3.34, the high on 7 March.

Entry 2.97, target 3.34.

The cut loss level is tricky. 2.80 seems a strong support level for this stock with the necktie of the 200 and 25 day and maybe even 50 day MA crossing at that price level.

A 2.80 cut loss would give this counter a reward/risk ratio of 1.82. But the 30 day average true range is 0.19. Hence the danger of being cut out on a whipsaw is very much higher. The safer stop on my system would be 2.63 based on low of 27 March and volatility (2.97 - [1.5x0.19])= 2.69. However that would put this stock's reward/risk ratio at 0.96 (<1) and hence would fail my criteria for entering on the stock.

Just a note that most counters have run up quite a bit over the past few days and the upside is not very much in my opinion. Downside risks are much higher.

Might be more prudent to wait for the shorting opportunities to arise when the markets drop back again.

Of course......I HOPE I AM WRONG. :D

MIDAS

2008-04-03T21:46:00.000-07:00

MIDAS has a flag consolidation pattern. Breakout of flag at 1.08 (trendline) and 1.11 (highest flag).

This occurred today. But it is retracing at the moment intraday.

Target would be 1.22 or 1.29. I would prefer 1.29 for obvious reasons. However points to watch are that 61.8% fibonacci retracement level is at 1.22. Also the 50 day MA is also around there. However this would be the 2nd attempt to cross the 50 day MA which is usually successful.

I am queuing at 1.07 to buy MIDAS. Target 1.29. Cut loss 0.985. Reward risk ratio 2.29.

CapitaComm

2008-04-03T03:04:00.000-07:00

I thought I'd help post an analysis of this chart since someone asked about it over at Mike's blog.

CapitaComm looks like a breakout of a triangle formation. There are HCRs from $2.20 to $2.45. This reduces the likelihood of large moves up in short term. As you can see the past few trading days since the breakout on 28 March shows that it keeps getting stuck in that $2.20-$2.30 band and then comes back down to $2.20+.

Moving average crossovers at $2.66 and $2.73. Support at $2.00 and $1.95

Dow fibonacci retracement?

2008-03-30T09:11:00.000-07:00

Was just reading about midtrend entry and pyramiding and one of the strategies was to use fibonacci retracement levels to enter the market again.

I had a though at decided to see how the Dow chart looks with a fibonacci retracement level drawn in.

The big move started in mid July 2006 and ended in Oct 2007.

Looking at the fibo levels, 12000 is the 61.8% level. Usually strong moves beyond this level would mean big trend reversals than retracements. From the chart, we can see that the Dow is currently flirting with the 12000 level.

In fact it breached the 12000 level in Jan and March but could not follow through. 12000 is definitely the inflection point for the Dow.

Similarly for the STI, 2900 is the 61.8% fibonacci retracement level which was breached in Jan and March.

Update on NOL 30 March 2008

2008-03-30T05:56:00.001-07:00

A friend of mine highlighted to me why he bought NOL on Friday 29 March 2008. NOL has a triangle formation. Breakout on 27 March 2008, followed by high volume push up the next day (7.6M vs 5.7M which is the average volume for past 30 days). High volume breakouts (above 30 day average) do better (average 35% vs 24% for weak volume rise).

Height of formation is 37.6% (tall >14.48%) and width is 37 days (narrow <42 day median) signaling better performance of breakout.

Throwbacks for symmetrical triangles occur 54% of the time. So there might be a 2nd chance to enter.

NOL's breakout is within a third of yearly lows signaling better performance.

NOL thus has a very nice chart set up.

Special thanks to Kenneth for pointing out NOL to me! :)

Update on Asian Market Indices

2008-03-29T12:47:00.000-07:00

STI

The Straits Times Index is strong. Strong uptrendline holding. Close above the 50 day MA. Very close to confirming double bottom pattern with close above 3170.

Fundamental news wise the Singapore's investment banking fees for the first quarter this year rose 39 per cent year on year to US$203.6 million, the highest first-quarter fee volume on record. This is despite a fall in the total number of deals managed in the first quarter to 124 from 172 in last year's first quarter. The rise in investment banking fees also contrasts with a 5.4 per cent year-on-year slump in investment banking fees generated in Asia Pacific ex-Japan over the same period, data from Thomson Financial shows.

Looks like the Singapore banks are going to rally on Monday! STI will shoot up!

NIKKEI 225
The Nikkei 225 is trading in a descending broadening wedge pattern. It attemtped to test the 25 day moving average. It already tested the 50 day MA once. 2nd time lucky?

SSE
The Shanghai Stock Exchange has a bullish engulfing candle. Is this the reversal? News out that although China's consumer price inflation hit an 11-year high of 8.7 per cent in February, the central bank was prepared to ease monetary policy if necessary to prevent a slowing global economy from cutting Chinese growth sharply later this year.

HSI
The Hang Seng Index broke out of the descending triangle on Friday. Going to test the 50 day MA? Note the possible double bottom formation as well.

KOSPI
The KOSPI has broken out of a descending triangle pattern. It also looks very close to confirming a double bottom pattern. A close above 222 would confirm it.

Overall it looks like the Asian bourses are all looking bullish from the charts as well as the news over the weekend. Is there going to be a major rally next week? Let's wait and see!

Update on Dow 29 March 2008

2008-03-29T11:15:00.000-07:00

The Dow suffered declines over the past 3 days. I was originally thinking that it would rally on Friday. And I was initially quite disappointed that it closed below the downward trendline it had broken this week <12300.

However looking at the chart formation again, it looks like a rally might be coming over the next few days.

This move back from the recent rally is a throwback. After an upward breakout occurs, the price declines to or comes very close to the breakout price or the chart pattern trendline within 30 days. There must be white space between the hooking price action of the throwback and the breakout price.

Looking at the chart, the breakout upwards probably happened on 18 March 2008. Friday's Dow close was back to around those price levels. And there is certainly white space. (see the shaded oval)

The selloff for the past 3 days was also on low volume. Which doesn't seem to suggest strength in the down move.

Also notice MACD divergence with the downward price movement.

It all seems to be setting up for a good rally next few days!

On the downside watch 11950 and 11640 as support levels. If these give way then we're headed much lower.

But the chart is all setting up for a rally next week on Wall Street.

Update on UOB 29 March 2008

2008-03-29T11:12:00.000-07:00

UOB is a strong stock. $17.90 strong support. Currently trading above 25 day MA and looking to test 50 day MA soon.

Expect stock to test $20 next week. Likely strong resistance at $21.20 - $21.50.

Update on DBS 29 March 2008

2008-03-29T11:09:00.001-07:00

Confirmed double bottom on 27 March 2008 with close above $18.46!

HCR noted from 18.80 to 19.50. Broke 25 and 50 day MA. Bullish chart pattern. Likely to consolidate though, from the declining volumes. Wait till it gets past the HCR.

Update on YangZiJiang 29 March 2008

2008-03-29T11:06:00.000-07:00

YangZiJiang

YZJ made a bottom of 0.78 on 20 March 2008. The next trading day on 24 March 2008 it closed bullishly at its high of 0.83.

YZJ has gaps at 0.925-0.92, 1.05-1.04 and 1.15-1.14. HCR is 1.20-1.40. Fibonacci levels are as seen on the chart.

YZJ has breached the 25 day moving average and the 1.15 target is right at the 50 day moving average so this target is not out of reach.

For the next few days I would be watching the 1.00 resistance level (round number resistance and downwards sloping trendline resistance). A strong break of this level would be a bullish signal.

On the fundamentals front, on 28 March after market close, YZJ announced that they had entered into an agreement to acquire a stake in Jiangsu New YangZi Shipbuilding company.

Update on COSCO 29 March 2008

2008-03-29T11:05:00.000-07:00

Looking at it now, gap at $4.02 - $3.90. Coincides with 61.8% Fibonacci retracement level. $4.02 is thus the target.

COSCO closed above the 25 day moving average on 28 March 2008, mirroring YZJ's move. And similarly the 50 day moving average level would be at 4.02. So the target is within reach. Amazing how similar the 2 ship related counters moved and closed according to their charts.

On the fundamentals front, COSCO's Vice President had said in a bloomberg interview that they had plans to increase their stake in COSCO Shipyard Group by 19.1%. Several directors had also bought COSCO shares from the open market at prices between 3.32-3.418 this week.

COSCO was also planning road shows for QDII funds.

Update on Capitaland 29 March 2008

2008-03-29T11:01:00.000-07:00

Consolidating once again like other property counters. 6.60 is breakout level. 7.35-7.25 gap noted. Likely target.

No change in volumes recently.

Update on Citydev 29 March 2008

2008-03-29T10:57:00.000-07:00

Trading within descending broadening wedge pattern. Also trading between 25 and 50 day MA. Already hit the 50 day MA once. 2nd hit might be the breakout.

Gap noted 11.82 - 11.58. Might gap cover. As with most property counters, volume was not very high.

Update on Kepcorp 29 March 2008

2008-03-29T10:52:00.001-07:00

Still trading in consolidation channel. A move and close above $10.14 would be a breakout on upside. Gaps noted at 10.58-10.48, 11.94-11.86. These might be targets for the stock.

No spike of volume for this counter in past week.

Watch for $10.14 level.

Update on Kepland 29 March 2008

2008-03-29T10:45:00.000-07:00

Still trading in a downward channel. But it seems like it may have bottomed at $4.85 on 27 March 2008.

Breakout on Monday? $5.70 would be breakout level. Immediate target is $5.83 (5.83-5.69 gap cover) followed by $7.12 (7.12-7.08 gap cover).

The problem is that I haven't seen broad based moves across property counters nor any news to suggest improved sentiments for property developers.

Update on Starhub 29 March 2008

2008-03-29T10:42:00.001-07:00

Chartwise status quo for Starhub. But noted that the CEO sold quite a lot of shares past few days. But prices have held firm. Very low volumes traded in any case.

Update on OCBC 29 March 2008

2008-03-29T10:37:00.000-07:00

Confirmation of double bottom this week. $8.70 target? Will it consolidate? $7.60 support level.

update on NOL 29 March 2008

2008-03-29T10:35:00.000-07:00

A trader friend of mine bought NOL. Puzzles me why. Is this a double bottom formation? Triangle?

I don't really see anything exciting about this chart at all.

Any comments out there?

Update on Noble 29 March 2008

2008-03-29T10:28:00.000-07:00

Talk about getting whipsawed! 2 Busted patterns! Chart set up seems to be bullish trying to attempt another break of the trendline joining the double tops. However volume traded wasn't very high.

On top of that it has wide ranging days. Stay away as trades!

Update on Olam 29 March 2008

2008-03-29T10:23:00.000-07:00

Olam is a stock in focus. Recent downgrade by Merril Lynch. Friday halted, followed by announcement of rights issue.

Where will this go? Anybody's guess man. I kinda think Olam will drop next week. Moving averages trending down. Will they be resistance levels? HCR noted at 2.50-2.70

Update on SIA 29 March 2008

2008-03-29T10:14:00.000-07:00

SIA broke out of the descending broadening wedge formation this week. Statistically, breakouts upwards rise 33% on average. Breakeven failure rate is 6%. Change after trend ends is -33%. 53% have throwbacks.

A 33% rise from breakout of $14.90 would give a target of $19.82. I think that is too high.

$18.45 would be a resistance level (necktie of 200, 50 and 25 day MA). It all depends on the global markets.

More likely we will see a throwback to $14.50 which might give investors a 2nd chance to buy if indeed markets have bottomed.

Update on SIA Engg 29 March 2008

2008-03-29T10:12:00.001-07:00

SIA Engg is another stock that has several wide ranging days meaning this is an unpredictable stock. Not for traders.

Necktie crossover of 25 and 50 day MA at $3.90 forming support/resistance level.

Low volume of trades.

Update on SGX 29 March 2008

2008-03-29T10:06:00.000-07:00

SGX broke out of consolidation channel this week. Closed above the 25 day moving average at last closing. Gap noted at $9.76 - $9.65. Higher volumes noted in past 2 weeks.

Will this consolidate or push higher next week? Expect 50 day MA to be a key level to watch.

Update on Sembmarine 29 March 2008

2008-03-29T09:58:00.000-07:00

Sembmarine is trading above the 25 and 50 day moving averages and broken out of the symmetrical triangle. $3.50 necktie crossover of 25 and 50 day MA looks to be a support level (apex of triangle also).

Likely to consolidate and trade within the range of $3.50 and $3.90 (200 day MA crossover). Note HCR from $4.00 to $4.18 Trading has been low volume for several months now. Watch for price movements with large volumes signalling a change in sentiment/fundamentals.

Update on ST Engg 29 March 2008

2008-03-29T09:54:00.001-07:00

ST Engg made a bullish crossover of the 50 day moving average on Friday 28 March 2008. This stock has many wide ranging days. Hence highly unpredictable. Would like to see some consolidation around the 50 day MA forming a flag or pennant. A breakout would then see a target at $3.59 (gap $3.59-$3.55).

Strong resistance at $3.69-$3.72 ( 200 day MA crossovers and HCR)

Update on SPH 29 March 2008

2008-03-29T09:50:00.001-07:00

SPH is trading in the upper end of its trading range. Look for a break above 4.62. I would only buy at a break above $4.82 on strong volume, sentiment and news.

RSI is in overbought range.

Update on Sembcorp 29 March 2008

2008-03-29T09:45:00.000-07:00

Sembcorp had been consolidating for the early part of the week and testing the 4.15 breakout level. Notice the spike in volume on 25 March 2008. Someone knew something we didn't know obviously. It confirmed breakout on 28 March 2008 with close of 4.20. There is a gap from 4.71-4.60 and from 4.98-4.97. Necktie crossover of 25, 50 and 200 day moving averages corresponds to the HCR.

Immediate resistance is likely to be 4.35 (corresponds to 25 day moving average.

Targets 4.71 and 4.98.

Fundamentals wise, SCI has a new water treatment deal in China. Wonder how the market will react to that news.

Update on Singtel 29 March 2008

2008-03-29T09:37:00.001-07:00

Singtel is still trading in its channel. Watch for any breaks above 4.05. I would probably only buy on a break of 4.22 if the market has indeed turned bull across worlwide indices!

In any case RSI is in overbought range for this counter. One trading idea would be to short when it hits around $4 and market indices show weakness and resumption of bear trends. But then again I just remembered one of my trading rules is NOT to short blue chips.

Update on Yanlord 29 March 2008

2008-03-29T09:27:00.000-07:00

What a move by Yanlord! I wasn't paying attention to this stock because it is a property counter and I thought property counters were gone cases! What a miss!

In any case the move may be at an end for Yanlord. Already broken the 25 day MA and will likely get limited by the 50 day MA which also corresponds to the 61.8% (point of reversal not retracement if breached) fibonacci level at $2.40-$2.45

HCR is $2.58-$2.85

Nevertheless this shows the broad based strength of the S-shares during this week's rally.

Review of trades this week (24-28 March 2008)

2008-03-28T23:38:00.000-07:00

SEMBCORP
Sembcorp had been consolidating for the early part of the week and testing the 4.15 breakout level. There is a gap from 4.71-4.60 and from 4.98-4.97. Necktie crossover of 25, 50 and 200 day moving averages corresponds to the HCR.

Immediate resistance is likely to be 4.35 (corresponds to 25 day moving average.

I made an aggressive entry at 4.16 on 27 March 2008 when it broke the 4.15 high of the consolidation phase.

The close on 28 March 2008 was 4.20.

Rationale :

Entry price : 4.16 (breakout of consolidation)
Cut loss price : 3.80 (15 month low) (ATR = 0.22. 1.5XATR = 0.33. 4.16- 0.33 = 4.83)
Cut loss per 1 lot = -$388 (-9.2%)
Target price : 4.71
Reward per 1 lot = $518 (12.4%)
Reward/risk ratio = 1.33
Number of lots bought : 2
Current paper profit = $12

Interestingly on the fundamentals front, on 28 March, SCI announced that they had signed a joint venture agreement with Zhangbao Industries Co today to build, own and operate an industrial water recycling facility in the Zhangjiagang Free Trade Zone in Jiangsu Province, China. TA tells you when. FA tells you why after the price has already moved.

YangZiJiang

YZJ made a bottom of 0.78 on 20 March 2008. The next trading day on 24 March 2008 it closed bullishly at its high of 0.83. COSCO also made good moves up on 24 March and thus attention was drawn to YZJ which has a similar chart pattern. The plan was to enter at 0.85 which would be the high of the 3 day channel prior.

YZJ has gaps at 0.925-0.92, 1.05-1.04 and 1.15-1.14. HCR is 1.20-1.40. Fibonacci levels are as seen on the chart.

I entered YZJ on 25 March 2008 at 0.85 as planned. The closing price on 28 March 2008 was 0.985. I sold half of my trade at 0.90 on 26 March 2008 to take some profit. Immediate target is 1.05 but I will reconsider and see if 1.15 can be reached based on the momentum when it hits 1.05.

YZJ has breached the 25 day moving average and the 1.15 target is right at the 50 day moving average so this target is not out of reach.

For the next few days I would be watching the 1.00 resistance level (round number resistance and downwards sloping trendline resistance). A strong break of this level would be a bullish signal.

On the fundamentals front, on 28 March after market close, YZJ announced that they had entered into an agreement to acquire a stake in Jiangsu New YangZi Shipbuilding company.

Rationale :

Entry price : 0.85 (breakout of prior 3 day channel, just off the all time historical low of 0.78)
Cut loss price : 0.78 (all time low) (ATR = 0.07. 1.5XATR = 0.105. 0.85-0.105 = 0.745 -->choose all time low good enough)
Cut loss price per 10 lots = -$757 (-8.9%)
Target price : 1.05
Reward per 10 lots = $1932 (22.7%)
Reward/risk ratio = 2.56
Number of lots bought : 10
Sold 5 lots on 25 March 2008 at 0.90 --> profit = $219
Number of lots left : 5
Last closing price : 0.985
Current paper profit = $642

Realised profit/loss for week 24 - 28 March 2008 = $218

Up to date realised profit/loss = $218 - $738 (last week) = -$520

COSCO

COSCO is a stock I bought at $3.40 about 2 weeks ago when I didn't know TA. I knew about how gaps are usually covered but knew nothing else.

Looking at it now, gap at $4.02 - $3.90. Coincides with 61.8% Fibonacci retracement level. $4.02 is thus the target.

COSCO closed above the 25 day moving average on 28 March 2008, mirroring YZJ's move. And similarly the 50 day moving average level would be at 4.02. So the target is within reach. Amazing how similar the 2 ship related counters moved and closed according to their charts.

On the fundamentals front, COSCO's Vice President had said in a bloomberg interview that they had plans to increase their stake in COSCO Shipyard Group by 19.1%. Several directors had also bought COSCO shares from the open market at prices between 3.32-3.418 this week.

COSCO was also planning road shows for QDII funds.

Rationale :

Entry price : $3.40 (old buy 2 weeks ago)
Number of lots : 6
Target price : $4.02
Profit at target price : $3538
Last close : $3.73
Current paper profit = $1805

Update on Dow chart

2008-03-26T22:10:00.000-07:00

The Dow is still on track for confirming a double bottom reversal pattern. Note the nice W pattern being formed? We've got the 2 bottoms. And the right side of the W is being finalised.

Note that in some W pattern reversals there is a A pattern whereby there is a throwback before finally making a strong assault on the confirmation levels.

It is however too early to say how things will go. I will wait for confirmation signals. To be safe a chart confirmation (ie close above 12765) plus a 5 day time confirmation (ie after 5 days of first breakout of 12765 still closing above 12765)

Other bullish signals currently are the 3 days of closes above the downward trendline. The Dow yesterday managed to close above that trendline despite the very very bad news out on financials, durable goods order and housing starts. The Dow has also been trading above the 50 day moving average. Notice the 50 day MA? The first hit of the 50 day MA is usually followed by a strong bounce down. This is what is seen on the chart. The second assault on the 50day MA proved to be a breakthrough and the Dow has been trading above it ever since. Will it hold?

If the Dow does recover today it looks like 12300 would be a necktie crossover of the 25 and 50 day moving averages and would be a near term support to watch.

All eyes on the US GDP results and Jobless claims tonight at 830pm (local time).

It will also be interesting to see how the Dow closes if the news is bad.

I am generally bullish looking at the chart. Of course for charts they don't tell you why but more when.

A close above 12600 would be bullish for me because that's a close above the trendline joining the peaks of Dec 2007 and the one on Monday. Certainly not impossible if you consider that is +178 points away from yesterday's closing and right now it seems the market reacts more strongly on the upside to ANY good news compared to yesterday's -100 to extremely horrible news.

A close below 12300 would be a bearish signal to me and I'd probably consider taking whatever profits I have right away.

But somehow I think we might be surprised on the upside tonight.

Good luck to everyone! :)

Update on Sembcorp

2008-03-25T15:22:00.000-07:00

Sembcorp has a flag pattern. It tried to break it on the upside yesterday but did not close above. Yesterday's market was very good on the upside across most stocks. So Sembcorp may be a laggard. A move above 4.15 would be a good entry point. Similar chart patterns would be that of SGX.

Target would be to fill the gap 4.71-4.6

Cut loss level would be 3.80.

This gives a reward/risk ratio of 1.30.

Update on AllcoReit

2008-03-25T06:54:00.001-07:00

Allco Reit today closed to confirm a busted descending triangle breakout downwards pattern. The close was above the downsloping trendline today. This after there was a breakout downwards of the base of the triangle last week which was <10%.

There was low volume before these breakouts.

Measured target is 0.905 but note the HCR from 0.865 - 0.915.

It is interesting to note that statistically busted descending triangle patters give a rise of 60%. Using 0.80 as the breakout price the statistical target is 1.28! DBSVickers just had a report with a TP of $1.23.

There is a necktie of the 25 and 50 day moving averages at 0.805. Support levels will thus be 0.805 and 0.775.

With the news of the loan refinancing done, there isn't much bad news on this counter for the time being. If the market continues to rally this will follow.

Yanlord

2008-03-24T05:42:00.000-07:00

Yanlord is a STI component? Well anyways the chart looks like prices are starting to consolidate. Channel has formed. Necktie at 3.14

Singtel

2008-03-24T05:36:00.000-07:00

Singtel is sideways trading channel between $3.60 - $4.00. RSI is currently overbought. Prices still above 200 day moving average. Singtel is very resilient.

Sembcorp

2008-03-24T05:33:00.001-07:00

Recent consolidation flag noted. Breakout at $4.14? necktie at $5.58. Noted gap from 4.71 - 4.60

SPH

2008-03-24T05:30:00.001-07:00

Sideways trading channel $4.28 - $4.62. RSI currently in overbought region.