Category Archives: Others

Sentiment Analysis: Trend Changed to Bearish

Today is the first time in 2014 we see more than 500 losers in our local bourse as the sentiment took a dive after a few days of rally among a number of small caps and pennies. Looking at the Sentiment Analysis Trend Indicator, it is clear that the sentiment is expected to worsen in the coming days. The Sentiment Trend shifted from bearish to bullish (meaning the overall environment is condusive for trading and the probability of winning is much higher) on the 31st of December 2013 as it created a higher high and today it shifted back to bearish (lower low detected). At this period of time, it is highly advisable to stay out of the market or at the very least, reduce your position in the market. Regardless of how good your analysis is, share price could hardly rise when the sentiment is bad.

Sentiment Chart
[What is Sentiment Analysis?] Technical analysts trade based on probability. When we say a method under Technical Analysis (TA) has a success rate of 80%, it implies that there are time when such method perform better than its average (probably as high as 90% or more)  and there are also time when using it doesn’t give you a distinct advantage (probability of winning could be 60% or even 50-50). Wouldn’t it be good if we can identify the time period when TA works at its best so that we could choose to trade during this period only, or take larger position during this time? Sentiment analysis does just that. It helps in identifying good or bad time to trade in our local market.

The Latest BTS2 System: How the Stock Quotes Work

I notice that a lot of people are still confused with the way the Theoretical Opening Price (TOP) and Theoretical Closing Price (TCP) are determined under the new Bursa Trade Securities 2 (BTS2) platform, so here’s an article explaining in detail how the new system works.

The way TOP/ TCP is determined remains the same, actually; what has changed is the way the orders submitted by every market participants are displayed on the screen. Overseas trading platform has been using the new display format for years and our local exchange is merely catching up with the developed markets. Let’s look at a hypothetical scenario so that you could better understand the quotes displayed under the new BTS2 platform.

Time to Rest? NO!

The sentiment was extremely bad today with the CI continuing its losing streak.

Are you stressed-out already? Wanna take a break? No, you shouldn’t. This is part and parcel of trading. Don’t avoid it. Face it and learn how to deal with the emotional stress. No, Im not telling you to keep trading, but instead open your eyes wide and observe every single stage of the downtrend to familiarize yourself with a bear market. Spend more time on doing research now and try to identify shares that are beaten down not because of deteriorating fundamentals but due to panic selling, so that you are ahead of the others and can take immediate action once prices have stabilized.

Apart from that, now is also a good time to ask yourself some serious questions. You need to know yourself better in order to strive in this industry. You need to know why is it that you succeed or failed, so that you can duplicate your successes and reduce your mistakes in the future. Here are some of the questions that you may want to ask yourself:-

KLCI: A Change in Free-float Methodology

Our KLCI sank deeper today after news of EU leaders taxing bank deposits in order to part-fund the bailout of Cyprus created renewed worries among investors worldwide. This came after a huge sell-down on the last 10 minutes of the trading session on Friday, believing to be due to portfolio rebalancing by funds that track the performance of our index as the methodology used in calculating the weightings of the index constituents will be changed effectively on the 18th of March. The shocking moves by EU leaders, coupled with the election fear that has been lingering since late January, is expected to send our CI lower to test the 1600 psychological support again. While our index is moving into the oversold territory and today’s candlestick is forming a long tail, indicating a possible reversal, we should be mindful that the sentiment is weak currently and any release of unfavourable news might bring our index to a lower low. Do trade cautiously.