General Election 2011 is here!!!

The showdown will happen on 7th May 2011....
How the market react before and after will be interesting... So far it has been quite bullish :)

Check out the General Election 2011 at www.ge.sg

 

Fall of the USD and how it will impact you!

This week, we see how the market trashed USD to the bin, forcing it to drop beyond the last swing low on the USDX index. This event is significant for all investors and traders because USD has been the default world reserve currency. With VIX at its extreme low and USD at its extreme descend, we should be worried about the consequences. So let's touch on the fall of the Reserve currency today and how it will impact you (i.e. standard of living) and your portfolio.

Living standards
Since most of the essential thing is priced in USD terms (i.e. crude oil, commodities, metals etc), producers will price their goods and services higher to account for weaken purchasing power of the fiat currency. As wages growth can no longer accommodate the rate of inflation, majority of the people will feel 'poorer' since a dollar today cannot purchase the same goods/services yesterday. Take the case of a cup of Kopi from local coffee-shop. I realize it is now 90cents a cup from the stall uncle, up10cents just a few weeks back. This represents a 12.5% price hike!!! Don't think that 10cents is just pocket change because all comparison must be apple to apple. Think in percentage terms... How about a typical bowl of delicious Meepok, from $2.50 to $3? That is a whopping 20%!!! You can't blame the stall holders! The real culprit is the Fed who has been printing money since QE1, QE lite, QE2, and now maybe QE3, causing an unstoppable inflow of easy liquidity into US denominated asset class like commodities, equities, real estate. You might think things are still quite manageable in Singapore because SGD is appreciating against the USD... But wait a moment because there is a limit how much the government can allow SGD to appreciate without hurting the economy, bearing in mind that Singapore is an export oriented country... So much on the macro level; what about our 2.5% interest bearing CPF money in OA? With retirement age pushing towards 65 and beyond, inflation will seriously erode any purchasing power.

Portfolio
What happens if you have equity priced in USD? Like the recent Hutchison IPO which is still underwater. Every time USD falls, you are losing money and any gain must be account for foreign exchange loss. Of course it does not mean you can't invest in US market/stock, but vigilance must be exercised since you have the currency exchange going against you whenever a trade is opened. If portfolio growth is less than 5%, it is losing money in real term.

What can you do?
While there is little we can do to stop inflation, there are always things that we can do to lessen its impact. Here are some things you may consider; not a lot, but something to think through:

1. Ask for a pay raise from your boss
2. Change to a better paying job
3. Find a second income stream on top of your day job
4. Invest some good stock (go reitdata.com to research on dividend paying stocks)
5. Own hard tangible asset (e.g. properties, physical metal etc)
6. Build up your knowledge

Happy profiting!
* Fed is speaking next week!!! Watch for his stand on QE! From this week USD movement, I guess the market big players are already positioned to capitalize any profits.

www.finviz.com

Battle of commodity giant: Olam, Wilmar, Noble, Golden Agri

A rapidly depreciating US dollars coupled with rising inflation is a sound storyline for commodity related counters to appreciate. There are 4 of these counters that make up the STI index, namely: Olam, Wilmar, Noble and Golden-Agri. Not looking* at fundamental aspect of these counters for the moment, which one of them looks more attractive from the chart?

Rank 4: Wilmar International
Wilmar's long term moving average is sloping downwards. Downtrend is clearly insight with lower low and lower high. Trend has building momentum since last year Nov.

Rank 3: Olam International
Olam break down from its base formation in mid Feb at ~3.00. Current price is below the long term moving average and is approaching the breakdown turn resistance zone. This may signal the continuation of downtrend.

Rank 2: Golden Agri-Resource
Golden Agri fails to take out the resistance at ~0.715. Momentum is clearing stalling. Long term moving average is flattening.

Rank 1: Noble Group
Noble group last trading price is now sitting on strong support 2.10-2.15. Long term moving average is sloping upwards.

Happy profiting everyone!!
* Always check company fundamental data to back technical analysis.

STI Index Update 2

Just two other piece of information which makes Wed bullish candle interesting...
Wow, that is a huge volume bar :)

What Does Exchange-Traded Fund - ETF Mean?
A security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange. ETFs experience price changes throughout the day as they are bought and sold.

http://www.investopedia.com

 

STI Index update...

Today market action deserves some attention... we may be seeing a new baby bull!
No further explanation, picture speaks a thousand words!!!

Singapore Post... Battle of Email and Snailmail

Something weird is happening to Singapore Post! It is losing momentum at a rapid rate and looks like on the verge of collapsing below the support line @1.14 that is holding it... There are lots of reason to explain the price. My thought is money is moving away from defensive stock and into riskier assets; in other words risk appetite is growing! Further, I'm wondering if the business model can sustain as more stuff are going electronic nowadays! Just my 2 cents...

On the chart, price is forming a descending triangle pattern. For the last 2 trading days, there are heavy volume and the base support seems to give way to this selling assault! And price is below the long term moving average and inner momentum is weakening. For short, it is wise to play conservatively because STI seems to be on a bull run. When overall market is strong, the odds of going in the opposite direction drops even though the counter may be weak. Be cautious...

Happy profiting!!!

S-chips China Fashion, Jiutian Chemical and Reyphon on spotlight.... Another Gaoxian??

This a mail from my broker that issues warning on 3 China Counters...
It is always better to be safe than sorry for capital preservation. Attached the charts for the 3 counters. It is not very impressive as trading has been sporadic, with little or no volume. Given the low liquidity, price movement can be highly volatile due to news and price manipulation by big players. Look at the frequent price gap in these counters... Don't get caught without a stop loss in place!!!

Auditors warns on another 3 S-Chips S-Chips China Fashion Holdings (CFH SP; S$0.075; Not Rated) and Jiutian Chemical (JIUC SP; S$0.05: Not Rated) auditors warned that their current liabilities exceed current assets, suggesting going concern issues. China Fashion is in negative equity position while Jiutians 2010 loss was widened from Rmb 126m to Rmb 160m due to more impairment losses needed for its property plant and equipment. Auditors of Reyphon (REY SP, S$0.115, Not Rated) have also qualified their opinion on the company.

 

  

China Fishery Group Limited... Conspiracy or Manipulation??

Huge volatility appears in this counter today.... Imagine a 30% drop from the yesterday last closing price of $2.00 to $1.40 during the trading day and then closing at $1.85 (-7.5%)!!! Can your heart take the roller coaster ride similar to the flash crash of US equity index last year May? It is something that everyone must master. While long term investors have the benefit of holding power to ride the volatility, traders don't. For those traders with long position and stop loss order in place, most will probably be out with a loss as the price spike has pierced 4 critical support level on the chart: 1.97, 1.85, 1.75, 1.40 (approximation). But having said this, it is still critical to have a stop in place as no one knows how low price will go.

Now to the chart... Price has made a substantial re-bounce since the Japan crisis and crosses the swing high made on 9th Mar. But critical resistance zone is hit last Friday and from there onwards, price retreats. Momentum follows to drop drastically for the last three days while STI continues to climb higher and break new resistance. This is the big warning sign that something may be happening but no one knows the reason yet. Remember that retail investor/traders are always last on the news food chain. Focus on price action instead as this will always reflects the collective sentiment of traders and investors.

Another useful piece of information comes from my broker CIMB. This is the volume transacted plot against value per transaction. I focus on the activity of those big sellers/buyers to gauge the general sentiment for the counter I'm interested before sending in the order. For example in the case of China Fishery, the size of the sellers overwhelmed the buyers. And look at the seller activity in the last 1.5 hours... Tremendous!! I wonder how price will react tomorrow...Let's see.

Happy profit!!!

Life and Market... taking stock of life!!!

This is a post I created in my other blog many months back.... I feel it is interesting and re-post it here. For your reading pleasure!! Check out more here for those interested: http://randomdraw.wordpress.com/

Here you go!!!

I’ll show you a chart. A chart about you and me… Prepare to buy this stock as it is seriously undervalued (no one actually pay attention to it)!!!

Trading fact:
First, this stock is listed in worldwide stock exchange. Counter name: URLIFE
-         Daily trading volume is around current world population
-         Long term trend is upwards (+0.98 correlations to living standard)
-         Infinite amount of asset (everything your mind can conceive)
-         No dividend (No free lunch)
-         High P/E (Usually take things for granted)

The Cyan channel
Your life is governed by strict rules and regulation in society/environment. Attempts to break free will usually fail, i.e. false breakout. Watch out!

The Green bold line
In general, if you have been performing to normal expectation, your living standard should improve. This is a normal trend!

The Purple line
During life journey, you will encounter ups and downs. They are intermediate cycles and you should not fear.

The Red bold line
For those of you who prefer to do it your way and ignore everything, you have the choice. Everyone will hate you (market crash)! Bear in mind

The Orange oval
Once you make up your mind, never step back to comfort zone again (spike to test trendline).

An intro to increase your odds in the $market$

Let's talk about risk appetite today...With this information on hand, investor/trader can increase their edge/timing to profit in the market!! So how does one have a rough gauge on the risk appetite in the market? Here you go!!!

First and foremost, price movement is caused by the movement of funds from low yield to high yield investment vehicles. Everyone wants to make their money work hard for them, isn't it? The currency market offers an excellent channel through carry trades. Basically, it means selling a low interest rate currency and buying a high interest rate currency. By leveraging into this interest bearing position, the profit can be quite substantial!! Taking a look at the currency interest, the lowest among them are: JPY (0.05%), CHF (0.25%) and USD (0.25%). Paired with a high interest rate currency like AUD (4.75%), taking a long position on AUDUSD gives a net interest rate of 4.50%. Wow! This is much better than any fixed saving rates in our local banks!

Now, how does this information relates to risk appetite? I would say we can use it as a proxy for risk appetite. If AUDUSD or any high net interest currency pair (i.e. generally xx/JPY, xx/USD, xx/CHF) is going higher, it means that more traders are taking on more risk. This will help push global equities and other riskier asset classes like real estates etc. Quite a good inter-market indicator to put in your trading arsenal!! Take a look at the chart below and this will be clearer I promise!!! :)

Happy profit!!!

CWT... New kid on the Commodity Block?

Just before we introduce this counter, let's take a look at the STI index! Last Friday US employment data gave global equities a confidence boast... Today STI managed to close above the 6 months support-turned-resistance zone that was mentioned in the last post on April fool! The price action for the next few days should be closed monitored as this may be the start of a new bull. Breadth is turning healthy, as more component stocks gained traction and move above their long term moving average. Coupled with rising global risk appetite*, probability of STI holding above the zone is quite feasible provided there is no surprise announcement (i.e. European debt, Middle East situation, and Japan nuclear plant radioactive leakage). Isn't it weird everyone can just forget about these issues now when just a few weeks back everyone are crazily selling? Human nature...

Back to CWT. The company has plan to venture into commodity trading and this sparks huge interest in the local investment community. As commodity is staging a spectacular rally now, this move seems very profitable. However, do note that CWT has always been in the logistics business and this is a significant shift in focus. Are the management and staff ready? Further, we have no idea how long the commodity rally will go. Even though price is now rallying due to heightened future expectations, just be careful not to be caught unexpectedly by rosy scenarios in analyst reports.

On the technical, while there is a lot of research reports covering this counter, do note that price is now very close to the peak make in 2007 September @1.36. Momentum and price are going strong, but volume has been going down. This is called bearish divergence in technical term (note: price can continue to go higher even though divergence is spotted. Never never trade using divergence only). Some cautious over here... Remember buy the rumors sell on news principle. I guess most big players are already vested in the breakout and spike up from consolidating range back early this year Jan. A more conservative approach is to trade the retracement to the breakout from all time high 1.36 if this proves to be a gem.

Happy profit!!!
* to touch on in the next post

STI Alert... Keep an eye

Wow, the STI index has been rising steadily for the past few trading days!!! Well, it has now come to a critical location which attracts my attention. I have marked some observation on the chart below... Just look at the confluence of technical factors! That itself says something!!!

Happy April fool day... Don't get fooled :p