Category Archives: Trading/Services

Top Performing Sector(s) in 2016

The easiest way to make money in the stock market is definitely by riding the strongest trend. By buying the strongest stock in the strongest sector of the year, one could make enormous gain with minimal risk. Hence, the biggest task for every investor/trader at the start of the year is to identify which sector(s) would outperform the market for the year. My best guess for year 2016 would be the FINANCE and PLANTATION sector. Here’s why.

Stocks to Watch: Instaco [0069], MYEG [0138], MAA [1198]

First and foremost, I apologize for being absent for so long as I was busy with the preparation of a trading software that is expected to launch in November. Let’s discuss briefly 3 shares that I think will make a move in this coming week.

instaco

Instaco [0069], a technology company that got beaten down after its bonus issue of warrant, is expected to move higher in the near term. Lows are getting higher and higher, indicating that the break above the ascending triangle should be around the corner. The average accumulation price by the smart money is at RM0.29, estimated using my proprietary Relative Volume Density (RVD). RHB Investment Bank gives this company a target price of RM0.46 per share.

Stocks to Watch: Airasia [5099], CMSB [2852], AZRB [7078]

Last week was an exciting week as it was the first week after weeks of net selling by the foreign funds our local institutions and retailers turned from net buyers to net sellers. Index managed to move higher but volume wasn’t encouraging. There are several shares that are worth keeping an eye on as the sentiment shifted in favor of the bulls. We shall start with Airasia [5099].

airasia

KLCI: The Big Crash

CRASH!!! 32.94 points down for our local bourse as foreign funds continue to liquidate their investment in Malaysia, creating panic among the local investment comunities. This massive selldown did not come without any signal. If you are sensitive enough, you would have notice that from the beginning of August, despite gainers outnumbered losers for 9 consecutive days (This is considered extremely bullish as a winning streak of more than 6 days is very rare in Malaysia), the market merely rallied by about 30 points, which was about 3.33 points a day on average. The lack of strength in buying tells us that the sentiment was actually pretty weak. There was no follow through buying. On the 7th of August, divergence in the true sentiment of the market (under Sentiment Analysis) indicated that the uptrend is about to end. Also, since last Tuesday, penny stocks have been dominating the top volume list. As was mentioned in the facebook fanpage, when it’s not the year of pennies and yet they dominate the top volume list, it’s an indication that the market is overheated. Any uptrend is bound to end soon.

klci (6)

Stock To Watch: Alam [5115]

Alam, one of the most popular small-cap oil and gas company, had recently formed a beautiful pattern which traders like a lot. After consolidating for around 2 months, price broke above the huge triangle on the 16th of July with substantial volume. The momentum continued for another day, where we see the share price of Alam broke the 1-year high at ease and closed at RM1.58 before it retraced to lower price levels on subsequent days. By joining the highs and lows for the past few days, we could see an obvious triangle. Price never close below the RM1.52 support line during the formation of the triangle and the lows were moving higher each day, indicating that the bull were in-charge. Once the share price moves above the upper line of the triangle, it’s a buy. Traders could also see Alam as forming a pennant (a combination of the 2 up days and the triangle), of which the buy decision would be the same as the triangle pattern. The relatively low volume during the formation of the triangle compared to the 2 up days means that it is very likely that the share will break above the upper line.

alam

Do trade cautiously as the market is getting weaker.

Stock to Watch: MHB [5186]

Before we perform a thorough analysis on the price development of MHB [5186], lets take a brief look on the general market movement. As can be seen from the chart below, the index is still moving within the sideway channel (or in a rectangle). Market was weak in the morning, dragged by the poor performance of the regional market, but began to recover in the afternoon session and managed to close just below its opening, thereby forming a doji. With buyers coming in everytime the market touches the 1766 support level, it is hard to tell at this point whether the bull or the bear will triumph in the coming weeks. We need to watch the upper and lower boundaries of the sideway channel closely.

klci (4) (1)

Stock to Watch: Pantech [5125]

Looking at the chart of our local index, we can see that the index is now consolidating within a 28 points range (Resistance of 1793; Support of 1765). A spinning top was formed on Thursday with slightly greater volume than the previous days, signalling a possible reversal. In fact, with both the Hang Seng (Hong Kong index) and Nikkei (Japan index) forming long lower-tail spinning top with high volume, the possible reversal of these two leading market in Asia could potentially pull our index up on Monday, thereby creating a better sentiment for shares to reverse/ move higher.

klci (3) (1)
Having said that, there are still plenty of oppportunities for us to tap on and among them is the popular oil and gas small-cap, Pantech, which would be the focus of today’s discussion. While the expected better sentiment on Monday could turn the share price around, thereby taking away the opportunity to profit, it would be best if we could get ourselves ready in the event that the expected better sentiment does not materialize (Possible since at the time of this writing, US index is falling).

KLCI: The Inevitable Correction


klci (2) (1)

At last, after more than a week of bullishness, the market formed a bearish engulfing pattern yesterday (as indicated by the red arrow) and today our local index lost 16.31 points, with the number of losers outnumbered the gainers greatly. KLCI was dragged mainly by three of the heavyweights – Maybank [1155], Genting [3182] and IOICorp [1961]. Moving on, we need to watch a few support levels closely (1752 and 1743) as there is a high chance that the index will rebound at these levels. A break of the 1743 support will send our composite index down to the resistance-turned support of 1718, which is an ultra-strong support level. Let’s take a brief look at the two “culprits” that caused the fall of our index today and see whether there’s any profit opportunity. We start with our Gaming giant, Genting [3182].

Stock to Watch: Maybulk [5077]

Our focus today is on Maybulk, a share which had moved by more than 30% since January. With the uptrend becoming clearer and steeper, is there any more opportunity ahead or is the correction about to come soon? We shall answer these questions by looking at the chart from both the bull’s and the bear’s perspective.

maybulk1
After forming a minor double bottom in December, price started to move higher and had successfully created a few higher highs. This, coupled with the lower lows formed in months prior to the formation of the double bottom, had made the rounding bottom formation clear. The down-wave that occurred in mid-March after the successful creation of the rounding bottom could be treated as the “handle” of the cup-and-handle pattern, which is essential for share price to climb to higher grounds. After breaking above the right edge of the “cup” 2 days ago (bullish), the share price is currently “resting” at its major resistance-turned support of RM1.64, providing traders a good opportunity to accumulate. As long as the share price stays above its uptrend line, we would expect the bull to continue to dominate in the near future, bringing Maybulk’s share price higher.

Genting [3182], GENM [4715]: Trading the Swings

Genting and Genting Malaysia (GENM) are two KLCI constituents that are famous for their volatility. The recent fall in their share prices had created more opportunities for us to profit from the swings. Let’s start our analysis by looking at the price development of GENM’s share.

GENM
It is obvious from the day chart that the share price is heading south. The creation of lower highs over the past few weeks, coupled with the fact that it breached the uptrend line connecting the 4 obvious lows just few days ago, supports the argument that this share is in a downtrend and thus market participants should avoid trading this share. Such an interpretation is technically correct but fail to take into account the big picture. If we look at the price movement of this share over the past two years (see chart below), we will realize that the share price is trading within a wide range (RM3.20 – RM3.93. We do not use RM4.12 as the upper limit of the trading range because the price did not stay above RM3.93 for long. It is better to consider it as a false breakout) and the trading range is narrowing slowly over the years and has been concentrating at around RM3.30 to RM3.77 for close to a year. In the middle of this trading range we have the RM3.52 level which has been tested as supports or resistances (S/R) for close to 10 times. This strong S/R level can be seen as separating the trading range of this company’s share price into 2 smaller trading ranges (RM3.30 – RM3.52, and RM3.52 – RM3.77).