KLCI Monthly Market Performance Update

To invest wisely and securely, it is always important to know the latest performance of the global versus KLCI market performance, Malaysia economy situation, as well as price per earning for KLCI.

Below is the KLCI monthly market performance update for your perusal.

Note: Please click on the table if it is not clear.

Malaysia GDP has be forecasted to grow at 3.5% this year, with the inflation increasing at 1.6% and fixed deposit retains at 2.5%. These numbers look positive under recovery. The P/E on 2010 earnings running at 16.63 on 15 Jan 2010, there is still room to go up further.

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KLCI Continue to Tumble?

Today is the 5th consecutive day of KLCI index tumbled, due to the investors worry of China recent credit tightening move and Obama's speech recently. And, it is the longest bearish rally with largest drop of 43 points since mid of March on last year.

From the look at it, almost all shares are affected, banking sector facing the worst drop among the blue chips. As for other industry, rubber glove sector is the worst as most of shares retrace at least 50% since 15 Jan 2010. And last 2 days are the worst as rubber glove sector were downgraded by MIDF Research from 'Overweight' to 'Neutral'. They downgraded this sector due to concerns over sustainability of global glove demand growth, earning margin sustainability and expected excess glove production capacity.

After KLCI index has discounted for 43 points, overall the entire company share prices should look cheaper. There are two say. If you are using technical analysis, all indicators, breaking of 50 days moving average, and technical signals are indicating you to quit immediately after the fall of 17 points on yesterday.

From the fundamental analysis, this falls is just a normal correction or pullback, as most analyst and fund houses believe there is still upside for the local stock market. Right, the long bull rally needs some rests isn't it? We still can see many companies are turning loss into profits, getting higher profits, and the GDP & export statistics are improving.

So what do you say then?

I personally invest fully based on fundamental analysis, where I only use lightweight technical analysis (without any technical indicator) as my entry and exit guideline.

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Malaysia 1Q10 Interest Rate

Our Bank Negara announced the Overnight Policy Rate remains unchanged at 2% today. The meeting committee claimed that the monetary policy will remain accommodative to ensure the economic recovery is well entrenched.

Even though Malaysia economy is expected to expand further in 2010 and the growth being supported by strengthening domestic demand, the change largely reflects the lapse of the impact from the adjustment to retail fuel prices in 2008, as well as the absence of further price revisions and external influences.

Anyway, they will need to ensure the stance of monetary policy is appropriate to prevent the build up of financial imbalances by keeping the same interest rates. I'm expecting the interest rate to be upgraded of 25 points by 2Q or 3Q10, depends on the economy situation.

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Phil Town New Book

Sad to see US market plummet 1-2% again on past Friday. Let's keep our fingers cross and see how KLSE performs on tomorrow.

If you are a fundamental investor, I believe you have read Phil Town's "Rule #1" book before. I feel quite excited today, because Phil Town will be officially released his second new book, "Payback Time: Making Money is the Best Revenge" in coming 2nd March.

Here's the excerpt from Phil Town.

"PAYBACK TIME is the first book to spell out for you exactly how to do long term, buy and hold, stick it away forever investing. It is about how the best long term investors in the world go about making those gigantic long term 20 year compounded rates of return of 30% to 50% per year. This is how we do it step by step so simple that everyone can do this. It ain't rocket science, guys, its just knowing two things: Is it a wonderful business? Is it on sale? Wonderful and cheap. That's it. Simple. Easy. Wonderful is pretty easy. And knowing its on sale? Well, lets just say that Payback Time is not just about revenge. Its also a term we use when we buy a private company to get an idea of how long it will be before earnings let us get our money out of the deal.

So why read it now? Because now we are back in an investors stock market. Back in the 60' - 80's the market had massive ups and downs that added up over 20 years to a zero rate of return. But in exactly that sort of market investors like Warren Buffett just killed it. That's when he made his billions on billions. And if you follow what I taught you in PAYBACK TIME, you can just kill it, too. I will tell you why in the book. And I'll tell you exactly how."

May be they are sound just marketing words. I will definitely obtain one anyway. What do you think?

Share Markets Plummet Thanks to Obama

Thanks to Obama bank limit plans, we have the opportunity to buy some shares with lower price. With Obama unveiled plans to limit the size and scope of US banks and finance firms, it made the highest tumble of US stock this month. I believe US stock market will be weaken for a couple of days before it re-bulls again. We just be patient for the moment.

Okay, let's have a quick look at Rubber glove and Steel sectors. Both of them dropped and rebound after lunch time. The rubber glove stocks were triggered stronger after Ruberex released the 4Q09 financial result, which is positive. Hartalega will be releasing it's tentatively by next Thursday. It will be good that we hook it up now at a lower price. For Steel sector, I'm still looking good at Lionind, because of it's super low PE and I expecting it's coming positive earning release which can reflect further it's share price.

Have you 'potong'?

For finance sector, perhaps we can omit about Hlbank and Eoncap at the moment, while Pbbank will be distributing lower dividends this quarter, buy or not, you decide yourself. I think it might not be a good deal, because we always hope for better one. Well, perhaps we can focus on those undervalue and lower PE companies under this sector for a higher profit. I heard rumors that Rcecap is going to rise anytime, and I see strong support at certain price, any clue?

I'm glad that I'm not working today, so I have some time to monitor the market today. Among the stocks I spotted in my earlier post, I have entered 3 of them today before they rebounded.

Happy trading.

Short Listed Companies

Hi folks, the market was trying to flush some amateur traders out from the game under rubber glove industry this morning. It was suffering. I hope you don't get flush these few days, as these rubber glove companies outlook are really bright. If you managed to pick them up at the low price today, congratulations. However, I just don't understand IRCB is acting like the leader today, I really salute it.

Well, a lot of traders picking up cheaper price shares these 2 days, I wonder I should take part too, but I'm sure my mentors won't agree me to do so. Since I still have leftover some investment capital, what's next for me? Have a glance of view on today's price action, I spotted 6 companies under my watch list and I intend to own some of their shares by this week.

(1) PARKSON

(2) COASTAL

(3) SUCCESS

(4) WASEONG

(5) RHBCAP

(6) KNM

Well, surprisingly 50% of them are Oil & Gas companies. That mean's the next hot industry may be them? Let's see what US market open later.

Happy trading.

The End of Bullish for Glove & Steel?

Wow, look at what the market done to rubber glove and steel manufacturer companies today. The strong sellers dominated them! As I've told you before, the buyers are already all in, it is seriously lack of buyers already. From the traded volume, I suspected there were few big players taking profit bit by bit and insanely push down the price.

Fair enough, they have bullish for many days, especially rubber glove makers, adding that analysts already warned there will be profit taking on rubber glove shares. According to price action, rubber glove stocks might be facing correction for the coming few days. Steel industry might be able to bull again on next week.

Just to let you know that I'm still holding still holding Harta, Supermx and Lionind. I have suffered huge unrealized profit vapored from my trading account on yesterday. I did not take profit for any of them, because I believe it is just a normal correction and they will definitely bullish again after next 2 weeks. You should know their 4Q09 results will be out in February right?

To be honest, one of the main reasons I don't take profit is, I don't have time to monitor the market to allow me to in and out at the right timing. Since I have confident on these 2 sectos future bullish, just let it be for now. I will look into more strong growth stocks to invest.

Happy trading.

IRCB Part II

Wow, let's look at what happen to IRCB these 2 days. It is just the top share listed in KLSE these few days! Rubber glove shares are in the highest play these few weeks!

On Monday, it managed to bull more than 40% in a single day, with the highest volume in the day. On Tuesday and Wednesday, it goes up 10% and 6% respectively. On this morning, it went up to the top with 20%, and finally it was queried by Bursa before lunch time. However, IRCB still managed to close with 3% and top volume share of the day. What a strong rally!

According to one of my mentors, whenever there is people fishing, there should be fishes to catch. This is very true. I should have look into this earlier and trade with my analysis and instinct, instead of just follow my dead rules.

Apart from the reasons in the post earlier, I noticed there were some reasons which is too risky to enter after Monday. IRCB is trading at price-to-earning ratio of 86 times for now, while IRCB's directors were crazily dropping their massive shares to the market on Monday. Perhaps they already knew their company share price has overbought which far away from intrinsic value, and they made some profits of it? It makes sense to me, but the market just gone crazy about this rubber glove share, it has risen for almost 40% again after Monday without any correction. It's totally out of my expectation.

So after Bursa's query and the high PER news were out, I believe part of tomorrow's KLCI attention will still dominate to IRCB. It will either continue to bull like nobody, or fall back to it's intrinsic value. How I wish KLCI has straddle so I can call and put options at the same time to make some profits of it. Well, let's see whether IRCB manages to push on upper side on tomorrow.

Happy trading.

IRCB

Ladies and gentlemen, I believe you have notice the crazy bullish of rubber glove stocks in the market these few weeks, they are just unstoppable. And CIMB's Terrance and myself are keep emphasizing the positive outlook of these companies and they are just overweight for year 2010.

So guess what, the leader companies like Topglov, Harta and Supermx have went up for quite some days, at least 20-30%, and now it's the turn for laggards to go up. Since the laggards price are very low, the gain percentage is amazing. Just look at Ruberex-wa, it went up almost close to 100% since New Year eve. Adventa was last 2 weeks back. These few days are Latexx and IRCB turn.

You must be wonder what the heck is IRCB. In fact, I got to know about this company when my broker friend told me to pay attention to it. From the day she told me, it stayed at about 73 cents. Even though I agreed with her opinion that these laggards will definitely go up under the same positive outlook industry, adding the positive entry point from technical analysis, I refused to go in after some thoughts, due to the followings:

1) I don't invest any share less than RM1 for now. They are just too lousy and have problems, as potential growth stocks should have a long bullish since March last year. And share below RM1 can easily trigger my stop loss.

2) I don't like it's annual report and financial result for last year.

3) I don't like it's management.

It is really tempting me these few days, but I just have to stick to my rules and be discipline. And guess what, it is finally exploded today, with 42% changed at RM1.34.

So do I regret? No, I don't. I always believe chances will still be there, once I'm getting more expert in the near future.

Profit Taking

Now you should know why the share market normally bull for 3.5 days and soften 1.5 days in a trading week. Some people said it's correction, some people said it's profit taking, and some people said other reasons. From my opinion, it's the effect of T+3 profit taking.

Well, today we are not talking about T+3, we talk about profit taking. We should know that a good trader or investor should possess the skill and courage to exit, rather than enter a share. Yes, indeed everyone know how to entry, be it in a new low, new high, price correction or any circumstance, as there is no right or wrong. But to exit, it is a lot harder than entry. It's about the strategy you apply.

It is true that taking profit is a lot safer than unrealized profit.

Some intra-days traders like to enter and exit within days. Mid/long term traders would be lasting for months to years. In fact, I'm not sure which strategy is good, as they have pros and cons. But I found out a strategy works for me at least at this moment, as I don't really have time to look at the market daily. I've problem study the outlook for the market weekly as well. Furthermore, I can save up the broker fees from in and out the shares frequently.

What I learn from the market is that, as long as bull run doesn't come to the end, we don't really have to take our profit if the industry and country outlook is still positive. We should increase our position in fact! Unless the share is not performing, it's kind of troublesome and wasting time of keep re-enter and re-exit the same share. Most importantly, we don't want to see the share going up after we take the profit. Don't you think so?

Of course, no strategy is perfect. Our accumulated profit can be easily wiped out in a sudden if any incident happen, such as 911 attack.

Dare or not?

The local share market is just went insane these 2 weeks, especially these few days in 2010! Perhaps people always say, a good year with good profit. So have you manage to enter or exit any share? Well, no matter which share you buy, you have very high percentage hit the correct one, or even a strong bullish one. That's good, many people wish it can be like that everyday, but it will just not happen for long in reality.

I feel very irritating because I've anticipated the market will up after the triangle breakout, but I don't dare to enter as I've no idea what to enter, while 60% of my investment capital stuck at rubber glove and banking companies. The way i seeing the market and share rise happily, the more frustrated I am. Those leader companies that in my list are already rising before the confirmation of bullish signal, that's my situation. I almost get over my emotion and simply enter the share in the top volume list, or those second grade company that I think it will make me profit.

With my past experience, I controlled myself and stay away from trading, because I just did not do enough homework and I don't have solid experience. I just don't want to risk my money at all, even though the percentage of earning profit is high from the market. Fortunately in the end of the day, the entire rubber glove shares performed in an outstanding way, a wonderful consolation prize for me.

After my dinner just now, I just recalled a lesson excerpt from Reminiscences of a Stock Operator, "This is a bull market!". Let's see what I can invest with my remaining 40% capital on the following days.