Tuesday, December 8, 2009

Lear Corp - a stock you should avoid

Wanted to know who's the most "talented" management? The answer is Lear Corp... a stock "LEA" listed in NYSE. Not long ago, someone bought a share of LEA on JUN with cost of USD0.50, if he check the stock now... it trade at USD60 per share now!! (history share price)

The truth is, today's LEA is not the same as LEA bought on JUN. The management was actually wiped out holders of previous class common stock and created a new share! The share bought before the co. restructure became null. Yes, LEA is newly restructured but under the same old management team...


(To read more on the story of how "creative" the management to reorganize ...)

Sunday, November 22, 2009

Different between gambling and investing


As an experience investor, if you can predict the future, it's like having a crystal ball who know how a stock going to perform tomorrow. Hence, it's very important to select a good company with predictable earning, say in next 3 to 5 years, else, it would be no different like gambling in casino.

We may need to have a proper plan before making any investment decision. Once the plan is drafted, we would have a very clear target on what's we going to achieve in next 3 or 5 years. At least a solid company that can generate profit, not a small profit, but big one, at least 100 million! A stable profit margin with good dividend yield would be an added advantage.

Investment decision is actually not about doing something that is right, but not to do something that is wrong! As incorrect decision will cost you thousand of dollar. Beside the predictable future earning, we need to consider the entry price as well. If there is no more room for the stock price to surge, we have no reason to buy the stock immediately.

Sunday, October 4, 2009

Trader's Technical Analysis


Below are the summaries of a course that I attended in one of the workshop.

What are the 5 common mistake done by trader?
1. Buy Cheap
A trader need to know what's the current trend for a stock, be it up tread, down trend or side way. A trader will do better if trade in the same direction as intermediate and longer terms trends. Do not simply buy cheap, as tomorrow can become cheaper. One of the example is
Flag Formation break up, then it good tendency the stock will go up.

2. Holding onto hope
This is another mistake done by trader, even he already plan when to cut loss, but when the stock price move down, he just can not follow the plan and hope one day it will rebound again. No body know when it will rebound and in this case, a trader will lost the opportunity to find another potential stock and lock the capital in one stock.

3. Ignoring about Risk Management
If a trader trade without a strategy, then he will not able to control the risk and emotion. When the sell signal appear, he may not know when to cut loss and protect the capital.

4. Ignoring about Floor and Ceiling
Some trader forgot about support and resistance levels - The best place to buy a market is near the support levels and the best place to sell a market is near the resistance levels. However in bull market, once the resistance levels have been broken, it will usually provide a support on subsequent pullbacks.

5. Loss unnecessarily
Beware of double bottom "W" or triple bottom, sometimes it's a descending triangle.



What are the 5 strategy trader can use?


1. Trend Trading

By identifying higher high and higher low, one can know when is the start of up trend. Similarly, one can catch the reversal by identifying Lower Low and Lower High. The other thing is follow the moving average, a combination of two moving average is the most popular way of finding trading signal. Look for reversal signal by two popular indicator, RSI and Stochastics.

2. Buying at Low
A good sample can be used by identifying Bullish Harami or Morning Star.




3. Sell at High

Normally if Shooting Star or Bearish Harami are good signal for selling.













4. Support and Resistance breakout
Tried to identify breakout price early, it's better follow by volume. However, if you miss the early signal, do not worry, wait for a retest. Market correction up or down usually retrace the previous trend. You can measure the correction in an existing trend in simple percentage. A minimum retracement is usually one third of prior trend, the max retracement is usually two thirds. Fibonacci retracement of 38% and 62% are also worth watching.

5. Chart Formation Breakout
Say for a stock with 20 days moving average, each time it touch a 20 days moving average, it start to rebound. However, if one day it break down the 20 MA, then sell immediately.


Saturday, October 3, 2009

Why you want to buy a stock now?

When you heard about Dow fell 203 point, would you rush in to buy?

If most people think the answer is yes, then you will noticed the Dow index close higher on October, especially the first two days. However, this is not the case, it's probably good time for those trader to log in some profit right now and wait for one to two weeks for more clearer direction.

For those who want to buy a stock for investment now, may be you need to ask a question why you want to buy a particular stock. A proper plan need to develop, don't wait until its price goes up or down to think about it. Many investor not sure why they bough a stock, so when the price down suddenly, they are not sure what to do next.

Every investor and every stock present different indicator or reason, one need to carefully consider before open the position. Just ask yourself if now the stock fairly value? What's the price would you want to sell and the reason is due to stop loss or the company report lower quarterly profit?

In weeks to come, perhaps we will find a stock used to trade at 50 now drop to 40. Is it a good buy now? May be yes or no. Buying stock that look cheap maybe is not a good idea, as usually we tend to catch a falling knife. It's always better do nothing and let it going down until it touch the floor, let the price stable and start to rebound, then buy it with proper trading strategy plan in place.


Sunday, September 13, 2009

How to be a trader who can maximize profit in Stock Market


Now we know that for Dow Jones index, at least there's another months for market to sustain with current trend, when more countries claimed that recession is over. Hence the world stock markets will not having the reverse impact for now, unless there's unexpected bad news happen. Today we going to see how trader maximize profit in stock market.

To answer the question, first we need to know how to calculate the chances or percentage of winning. From random survey result, most traders are making 55 winning trade out of 100 trade involved.
The most common mistake for a trader is putting too much fund in one single trade. Due to the big amount involved, we tend to have the pressure and caused miss appropriate decision making. Many new traders enter the position and hope to gain big amount in one day. However the experience traders know that in a short term trading, the more frequent buy and sell with large amount tend to eat all the principal amount with a few time of big trading mistake.

The trader who survive are those who trade with certain percentage in any single transaction. If you do not have a lot of principal, the common used method would be cut loss in a very tight range. They may even consider 1 to 5 minutes' graph to minimized the loses incurred.

Over confident is a big risk for trader, the same pattern can happen in last several times, but not necessary the next will happen in same way, if one think that he can predict the next move, he already done a very serious mistake. The trading system can point out if “X” happen, then “Y” will follow, but not for every cases. The trading system only increase your chances of win in long run but not a guarantee!

All the traders will have a good days and bad days. Some days you will earn, but others you may lose. Each month one or two days you may earn a big profit, this is what the trader will earn, not nine to five kind of living. The problem is you never know when the “big” profit going to come, it could be the day when you never follow trader's method is the winning day.

Once you have tested with your trading system, then we need to follow it without any exception. The point is making fewer mistakes and making mistakes that are less severe.

Wednesday, August 12, 2009

How to protect your fund when market down?


Usually when stock rally, those who bought at low or almost bottom low would feel very happy as they realized now the asset become more in terms of value. But the only worry is how to protect those fund from being hint by sudden market down turn?

There are many strategy can be used, one of them is switch the fund to some other asset type which could provide some protection against market down turn. For instant, say initially one have investment portfolio of 100K and he started to buy at some where near the market bottom. (Though we may not know exactly the market bottom, but with certain tools or chart, we can catch some good fish in the calm water near the bottom) Since we have caught the fish near the bottom, usually market will start to move up in next few months. We will notice our portfolio value increase with paper gain, say 130K or 150K.... Since now market already up for 2 or 3 months, we may want to think of the way to protect our fund from sudden market swift down. In the same time, we do not want to lost opportunity to enjoy the rally or bull run, then we can consider to maintain the original value of our portfolio of 100K by selling some holdings. Say now the value of investment portfolio is 150K, then we may consider to sell 50K and let the original 100K to remain the equity market.

One common mistake done by investor, they try to invest the additional 50K in equity market again by searching for others stock to buy. This is not the correct way, since the purpose is to protect our fund from market sudden down trend, if we invest in some other stock, then our portfolio is going to move down as well if something unexpected happen. We would suggest to swift the fund to some other investment class which we foresee will go up or at least maintain the value when equity market move down. The are many choice available in the market, such as Gold, Money market fund, bond fund or fix deposit.

For those Malaysians, they are very lucky, since there is one Malaysian (1Malaysia) fund available where the NTA is always 1, at any time, no matter market up or down. (you can not find any fund else where in the world) Another added advantage, there's no up front charge involved. Hence, if you foresee there's a need to buy an insurance to protect additional gain, then this fund could be a right choice for you to part it for the time being. When the market down again, one can consider sell the fund and invest in equity market again. In the worst case, if we are wrong and market continuously to go higher, we still have the original 100K of investment plus 50K of the fund size which will provide reasonable return!

Monday, August 3, 2009

How to earn money when Dow made new record?


Many readers would like to ask, is now a start of bull market or a bear market rally? They want to know, what to do now.

To answer the question, first we need to find out what's our opinion with current market stage, be it bear or bull? From the news paper, many expert pointed out that the current market up trend is a bear market rally and advised investor be more careful. If we think this is a bear market rally or a false bull, the we will sell and stay away form the market.

The question, is now consider bull market or not? To a serious investor, the answer to this question worth million dollar. To enter the market at a small bull and sell when bull turn mature, it's very easy to double your asset. If one invest 500 thousand and double or triple the money in next 2 or 3 months, he can become a millionaire, hence we say this is million dollar worth answer to the question.

Still remember on Oct 2008, when Dow continuously down for 7 days and make us confirm the forming of bear market? In fact, before October 2008, the market had down for at least four months. If using the three months theory, we can confident to say, that was a bear market. Every one started to predict the future and advised worse would follow. Yes, we had experienced worst market crash in the history, Dow went south till March 2009, before start to rally. On earlier Jul 2009, technical chat form Head and Shoulder, but Dow index able to break through the resistant level and go higher.

On Jul 20, 2009, we experienced Dow continuously up for 6 days. If the indication of bull market is true, we should have at least 3 months for this strong rally (or you can call it bull run) to end, which I estimate till earlier or mid October 2009. Only time will tell if what we think now is true or not.

Monday, July 27, 2009

A lesson for those Greed and Fear in Stock Market

Stanford was a guy living in 70 century, he used to work as government servent cum tempolary actor. He feel the life was plain with no achievement. In one of the holiday season, he visited his uncle, who was a fund manager. He always heard his uncle's discussion with clients about which stock to buy or sell and how much they have earned. Since then, he had fall in love with stock market with believing that he can become a millionaire by investing in stock market.

After Stanford returned to New York, he managed to save for 10 thousand and he decided to buy Public Film holding at USD10. In 1974, Standford very happy with this transaction as he knew from his uncle's conversation with their clients, Public Film Holding had a very good business prospect with good future earning. He also feel that the buying timing was correct as the stock already fall from 30 plus to 10 USD now, it must be a very good opportunity to buy at this price.

One month later, Public Film Holding stock price drop till USD8, Stanford feel it's must be bottom now, rebound will happen very soon. So, he decided to buy more stock by borrowing USD20,000 personal loan from a bank. However, it caught him by surprise, as the Public Film Holding's stock keep on dropping till USD5. At that time, he calculated and noticed paper lost of USD twenty over thousand already incurred. He had lost all his saving and own a bank more that 10 thousands. He was now in a cross road pending deciding to sell or not to sell the stock. More bad news coming, the stock price now fell further to USD4 and the bank had sent out notice to chase for his loan payment. Stanford feel very up set and think of ending his life. He kept on drinking day after day till one day accidentally drop to a drain, broke this leg and admitted to hospital.

His uncle came to visit him in hospital and try to understand what was actually the problem.
Since Standford was his only relative, his uncle help him to settle the bank's borrowing. His uncle gave him an advise, TRADING IN STOCK NEED "PATIENT". DO NOT GREED, DO NOT BUY IN ONE TIME, WHEN THE CONDITION UNCLEAR, DO NOT TRADE... Stanford lost faith with stock market now, he told his uncle he want to sell all his stock and do not want to touch the stock market anymore. His uncle laught again and told him, DON'T NEED TO AFRAID WITH STOCK MARKET, SELLING NEED "PATIENT" AS WELL, when the stock price near bottom, should not sell just for reason of avoid loses. Even if you sell now, not much money you will can recover. Since you do not want to touch the stock anymore, just treat you have through away the stock. His uncle want him to promise this and send him a greeting card every Christmas to inform him that the Public Firm Holding's stock not yet sell.

Years after years, Standford follow what he had promised, send his uncle a greeting card every year, with wishing "Merry Christmas! Public Film Holding yet to sell!" His uncle will return a greeting card, written on "Merry Christmas... forget about Public Film Holding stock". Nine years later, as usual, Standford sent his uncle a greeting card, but this time his uncle return with an unusual wording, "Go and Sell the Public Film Holding now! It would be your most surprise Christmas gift!" On next day, Standford noticed from the dealer that Public Film Holding stock price had rose from US4.50 to USD74, about 17 times, compare to 9 years ago. This had never include the dividend that was paid on yearly basis. He sold all the stock and take back more than 900 thousand! Think of what's a silly action he may take 9 years ago... now he really understand what his uncle mean by "TRADING IN STOCK NEED "PATIENT".

Wednesday, July 8, 2009

Dow Jones - Head and Shoulders


Recent and today's trading indicate the market turn week now, especially for Dow Jones Industrial Average. First it formed left shoulder, follow by head and last Friday right shoulder. Today's trading seem to touch support level and potential down side already formed. The chances are very high for market to go south and confirm this round of Bull run / rebound near "The End" of story.

Sunday, June 28, 2009

How to avoid Potential Loss?


Dealing with investment, one of the challenge questions always raise by investor, how to avoid potential lost in your investment portfolio? How can anyone predict that Lemon Brother going to collapse in 2006? There are many example people buying a stock that seem with very good performance, but turn bad after 1 or 2 years holding. It’s really hard for one to predict the market, especially on individual stock. However, there are several precautious steps we can take, in order to minimize the potential risk.

There is no free lunch in the world, especially in journey of investment. Some home work need to be done below getting involved to buy a stock. This include go through the last 5 year’s financial reports to ensure the company actually having the stable income and strong balance sheet. The hypothesis question, what will happen if financial turn bad, need to keep in mind of investors. What would be the main income to sustain the company’s operation in the worst case scenarios?

Even we find a good company to invest, do not invest all in one basket. The better solution here is trying to diversify into several different sector, each sector only select the best. Ideally, do not put more than 10% of the overall fund into one sector or stock. At least this will help to mitigate and drive to prevent huge potential lose that will incur should we over confident with our imagination on chasing high investment return.

Related link:

1. Lesson from Warren Buffet
2. The Purpose Of Investment

Thursday, June 25, 2009

Warren Buffer Power Lunch

Want to have a great lunch together with Warren Buffer, now can go to eBay and bid for it, at the time of writting, the bid is worth USD300,500. Great, maybe we can not affort to bid for this one, but we can still learn from him through his past experience.

Warren say he had yet to see the light in the tunnel, many of the stock bought by his company Berkshire Hattaway still remain around or below entry price. Those who follow Buffer's buying pattern, could be still suffer a big lost right now.

The ConocoPhilips bought by Berkshire Hathaway with average price of USD82.55. Now the price around USD41.

For Johnson & Johnson, the average brought price was USD62, now the market price is around USD55.

He also invested Kraft Foods with average price of USD33, now the price is USD25.

Of course, there are many others prefer stocks we may not have the chance to buy, but the above stocks are good enough for a layman to set a good example as investment portfolio should we ask if now is too late for one to buy a stock after the strong rally since Mar 2009. After all, we are trading with Mr Market, since the rally, some of stock may not look cheap anymore, so be carefull with the bid price offer by Mr Market, just ignore him if the price too expensive.

Tuesday, June 16, 2009

S Reit - Worth a look


Below base on closing price on Jun 12, 2009:

Starhill Gbl (P4OU)
DY:10.1%,Closing price:S$0.71,NTA: S$1.43。

CapitaComm 嘉康信托(C61U)
DY:11.1%,PE:3.8,Closing price:S$0.91,NTA: S$2.94。

CapitaMall 嘉茂商产信托(C38U)
DY:10.0%,PE:4.3,Closing price:S$1.43,NTA: S$2.44。

SuntecReit 新达信托(T82U)
DY:12.9%,PE:--,Closing price:S$0.975,NTA: S$2.001。

SaizenREIT 最善房产信托(DZ8U)
DY:40.5%,PE:--,Closeing price:S$0.135,NTA: S$0.85。

Cambridge 剑桥工业信托(J91U)
DY:16.7%,PE:8.6,Closing price:S$0.36,NTA: S$0.73。

CDL HTrust 城市酒店信托(J85)
DY:13.9%,PE:--,Closing price:S$0.765,NTA: S$1.39。

MapletreeLog 丰树物流信托(M44U)
DY:12.3%,PE:7.1,Closing price:S$0.59,NTA: S$0.90。

LippoMapleT 力宝-丰树印尼零售信托(D5IU)
DY:15.8%,PE:--,Closing price:S$0.355,NTA : S$0.727。

MacCooklReit 麦卡特库克工业房地产(BU5U)
DY:25.9%,PE:--,Closing price:S$0.345,NTA : S$1.09。

AscottREIT 雅诗阁公寓信托(A68U)
DY:12.8%,PE:--,Closing price:S$0.69,NTA: S$1.51。

K-REIT K信托亚洲(K71U)
DY:13%,PE:23.8,Closing price:S$1.00,NTA: S$2.22。

First REIT 先锋医疗产业信托(AW9U)
DY:12.2%,PE:7.4,Closing price:S$0.625,NTA: S$0.93。

Currently, most of the Singapore REIT are trading around DY of 11% or more. Some of the counters are traded below 50% of the NTA. This is a good investment opportunity, just consider one can receive 11% dividend with potential capital return in next 5 years.

The reason why REITs trade at the discount of NTA was due to glommy economy especially those properties located in US and Europe. Due to the aggressive buying of new asset in past two years, some company actually borrow too much. Some of companies actually not able to pay the dividend as they need to generate or retain more cash. Couples of companies are considering right issue to pay for the debt or raise the capital to meet the comfortable level.

When more shares issues and circulate in the market, it will further damper the market price. Hence, one need to consider carefully before invest in REITs, not only the return on dividend rate and NTA alone. REITs is different from typical stock, it's depend on the rental to generate the cash flow and income, hence as long as they have the well diversified portfolio, be it in industrial or office building, we should have a very good return of more than 10%. The current under appreciated price provide an opportunities for one to enter this field with low cost.

Related link: Housing Investment

Monday, June 8, 2009

Dow Jones - Rally Sustainable


As caught many investors in suprised, US market continue to break through 200 days moving average. Many traders will start to use this as indicator to enter the market as long term buying sign, at least for the next one week, more technical traders will start to move into market.

Wednesday, May 27, 2009

Housing Investment- how good is return rate?


Singaporeans are obsessed with housing as an investment. Considering the large number of people scrambling to buy a house even during such times are telling signs that you can know nothing about equities, forex, commodities and derivatives, but you can never miss out on properties.

“Land is scarce, so property is a sure win bet here” are one of the main reasons why the HDB auntie next door and the lawyer opposite are saving hard to fund their next property.

I rarely hear people asking how much they will be yielding on their housing investment if you buy and rent for 20 years.

Many are simply just interested in the absolute gain. The absolute monetary gain (if any), is likely to be large as housing like derivatives are leveraged products!

Before I comment further, let’s do some maths here to see if it is really worth our while to buy a 2nd property for investment.

Assumptions:

35 year old Mr. Tan just bought a new 99 year leasehold, 1000 square feet property beside Kovan MRT station, for $620,000 that will TOP in June 2011.

He intends to rent it out in 2011 and has started paying the monthly installment of his home yesterday (2009 May).

He intends to hold the property for 20 years (till 2029), before selling it away. Note that the property will have a remaining lease of 77 years when he sells it away in 20 years.

His has opted a 3% fixed interest rate for a 20 year loan, at 80% cost of the property which is $496,000.

He will need to pay $2,750.80 monthly to the bank for 240 months. Total amount paid is $660,193. Hence, the property actually costs Mr. Tan $124,000 (20% downpayment) + $660,193 (interest and principal payments) = $784,193.

He estimates that he will collect an annual rent of $30,000 per year (4.8% yield based on $620,000), after factoring all expenses, including property tax (10% of rent), repairs, fittings and furnishing, maintenance fees (estimated to be $300 monthly), and property agent fees of the apartment. (Take note that your tenant do not need to pay the monthly maintenance fees as they are part of the rent. You need to fork it out for them!)

Mr. Tan is making conservative estimate that for the first 10 years, net rental income will be $30,000 per year. The next 8 years (since rent only starts coming in on 2011), net rental income will be $40,000 (net of expenses) yearly. He is conservative because he is aware that there are times his property might not have tenants (like during sars and now) and if he needs to renovate the house, there will also be no rental income for 1-2 months. Besides, when his property is 15 years old, he might not be able to rent it out at a premium as there may be more and newer apartments around his neighbourhood for rent, depressing his rental. The rental will be used to pay for his monthly installment to the bank as Mr. Tan’s CPF is currently used to service his HDB flat. Total rental income from the Kovan apartment is estimated to be $620,000 for the 20 years of investment.
Effectively, Mr. Tan got his Kovan apartment for “free” after renting out for 18 years! Sounds good! His payback period for this investment is 20 years.

Mr. Tan feels that it is reasonable to assume that his $620,000 property will appreciate at 4% per year when he bought it this month. Hence at the end of 20 years, he will be able to sell it for $1,358,000.

What is the annual yield of Mr. Tan’s investment after 20 years?

Answer:

Total cost: $784,193

Total gain: $620,000 (rental income)+$1,358,000= $ 1,978,000

Net gain: $1,193,807

Annual yield (using financial calculator, N=20, PV= 620,000, FV= 1,978,000)= 3.33%

I know my assumptions are not perfect. The rent collected over the years could be higher, the property being sold at 2019 could be much lower. However given the information I have at hand, I do feel that my assumptions and projections are rather realistic.

Personally I feel that buying a property in Singapore for investment shouldn’t be a long term affair, and Mr. Tan should sell his property if there are offers of $720,000 in 2011. His yield will be roughly 7% per year if he can sell it at that price.

On top of that, Mr. Tan has to handle tenants complains, difficult tenants, chase them for rents, handle repairs and renovation, be at mercy of disappearing tenants, be saddled with a large mortgage loan and be afraid to change his job for fear of lower pay and possible underperformance which might lead to retrenchment. That’s stressful!

All that for 3.33%?

However, on the other hand, Mr. Tan can retire comfortably after selling his Kovan property in 2019. With a large sum at hand, he can invest $1m in large companies’ preference shares yielding 4.5% (rather ironic) per year with semi annual payments. He will earn $45,000 yearly and together with his CPF monthly payouts, retirement life should be a breeze for him.

Life will be easy for him after that.

Not that bad afterall!

Well, so if you really want to invest in that property, make sure you can get it at a bargain price, so that your yield on both rental and capital appreciation can be much higher, even if you have to hold it for the long term.

Most importantly, do your sums right!

Supposed Mr. Tan does not invest in an apartment. Instead, he invest his downpayment of $124,000 and 2 years worth housing installment of $66, 0192 into a diversified portfolio of stocks, with an investment horizon of 20 years. I am assuming here that he has prudently set aside about $190,000 before purchasing the apartment.

In the earlier example, Mr. Tan obtained a gain of $1,193,807 at the end of 20 years. Hence, to be equally wealthy at the end of 20 years, what is the return of his stocks portfolio he must achieve (compounded annually) before he can be indifferent in purchasing the property or investing in the portfolio of stocks?

Using a financial calculator, (PV= $190,000, N=20, FV= 1,383,807), the required return of the portfolio is 10.44%.

Hence, if Mr. Tan is not confident that his stock portfolio can give a return of 10.44% annually, he will be much better off if he invests in the property and earn 3.33% return annually.

In fact, even if Mr. Tan can only sell his property for $700,000 at the end of 20 years, his stock portfolio must return an annualized gain of 6.93% for him to be equally well off.

The above (and below) example shows why it is so much “easier” to earn a higher quantum of monetary gain in the property market, compared to buying securities. Property is also physical and hence emotionally more “logical” (adage of everyone needs a roof over their heads) investment for most people. It is less prone to nasty shocks like your property losing 50% of value in a month, compared to commodities. Worse case scenario, you can stay in it but you cannot live on stocks!

The 2 examples are not to determine a better investment asset but rather to show the difference of return between 2 different asset classes. Properties being leveraged product will return a lower return on percentage terms but higher returns on absolute monetary terms.

In this case, it pays to be in debt!

I do not include buying stocks on margin as the interest rates are exorbitant and people do not buy stocks on margin for 20 years.

If you are Mr. Tan with $190,000 on hand, which would you choose? Apartment or stocks?

For myself, I am on a lookout for a freehold property of about 800-1000 sq feet in the prime district near a MRT station selling for $650,000. I believe that the property market will have some more way to go down till 2011 as large waves of TOP apartments will flood the market then, bringing down the rental and price of private apartments.

Hopefully I can be as rich as Mr. Tan in 22 years time!

Monday, May 18, 2009

Dow - Consolidation before the Bull run start


Last week, seem US Dow has put the brakes on the recent rally after nearby 200 days moving averages. Many now wondering if this pause in upward momemtum is the end of the rally or a short break before the bull start again.

The oppinion we gathered from most of traders suggest that its more toward the bull side, meaning after short while of pause, Dow could move toward the resistance level of 9000 points. Let see what the result in next few days.

Monday, May 4, 2009

NASDAQ break through 200 Day M.A.


Here is more comforting information that the US bull run may not be over so soon. Many analysts consider a stock moving above its 200-DMA to be a buy signal. Furthermore, it is also said that a bull market can be defined as one where major market averages are trending up above their 200-DMA. Through most of this bear market, we haven't seen many stocks or ETFs anywhere close to their 200-DMA. Now, that seems to be changing. Thanks to the advent of ETFs in the US, it is easier to track movements in sectors. The sector ETFs are composed of many stocks, and that lends more credibility to the moving averages. There are a number of sector ETFs as well as the NASDAQ 100 have moved above their 200-DMA recently.
  • Technology iShares
  • Network iShares
  • Semiconductor iShares
  • Consumer Discretionary iShares
In addition, the NASDAQ Composite is a hair away from crossing over its 200-DMA and the Telecom iShares. Materials and Industrials ETFs are also only a few points away their 200-DMA. Looking farther afield, the iShares FTSE/Xinhua China ETF crossed above and now seems to be consolidating at a level above its 200-DMA. Other major market averages such as the Russell 2000 are only a few points away from their 200-DMA. Will they be rejected or will they power through and confirm something stronger than a bear market rally is underway? Comments: It was the best month’s performance in the market since March 2000. Though we have negative news dominated the headlines, i.e. contracting of manufacturing orders, pandemic concern over the new “swine flu” virus, lower level of auto sales in 30 years, all these fail to stop investors from buying into the market. The next question is whether the momentum can continue in May or if the markets are getting ready to stage a pullback. From technical perspective, upside could be limited from here on, as the relative strength index are nearing overbought territory. The main catalyst to watch in this week will be the bank stress tests, which due out on May 7.

Friday, April 24, 2009

Stock Market - Dow Jones will up all the way?

After many months of waiting, finally seem market have found the bottom at somewhere around 7000 points.
Who care the recession is coming? As long as we can continue to make money when the upward cycle form. I want to congraturate those who able to make some money in this bear market, but don’t forget about the worst market that we experience few months ago. If the resistant level of 8000 for Dow Index is not able to break through, then reversal could happen any time.
One important lesson learn from this bear market is “When to Buy”. There is only one simple rule – when the down turn form, do not catch the falling knife. Wait till the knife fall down – wait for the day where stock is not making lower low, monitor for 4 or 5 days of trading session. Then this would be very save for one to buy into a stock and wait for up trend!!

Sunday, February 22, 2009

Dow Jones - Oh No - the Bear is winning


After few months never write about stock market, now we have clear direction that down trend already form. From daily chart or weekly chart, we can see the same story not changed, each attempted rally has ended once the price approached the resistant. The bull consistently failed to send the price above the nearby trend line, which suggests that this will continue to be stronger level of resistance than many traders are hoping for.

Back to the figure, Dow Jones closed last week at 7365, almost near all time low of recent year. Similar to past economy down tread few years ago, Gold also become popular this time, in fact, it's one of the investment that can be long for now. As of Feb 23, 2009, Gold price closed at USD994, almost all time high in the year. Since last few years, Gold not only for decoration and saving anymore, but has became one of the popular investment tools.

If the situation not improving, we can expect Gold price continue the up tread due to most Government continue to print money to support their economy. More private company or even some Government body will think of using Gold as trading tools if currency continues to go south. It’s not surprise if Gold price increase 100% in next one or two years time.