HUAT AH !!! Trading Blog

Market Outlook

2007-06-28T01:36:00.000+08:00

Although i've put up a couple of stock picks recently, i feel there is a compelling need for me to say a few words of caution at this point in time. The market has not been looking very good of late and it seems that it has taken a turn for the worse in the past 2 weeks, though it seems likely that tonight the market is taking a breather from the past 3 days of plunge.

I have been talking about this correction for a while, many who has followed my blog would have known. Just a few hours ago, a fellow trader, Swee Leng has kindly sent me his analysis of the Dow, to which i concur.

As we can see from the above chart on the Dow Jones Industrial Average, the index is forming a prominent Double top with the last day of price action resting slightly below the 50 days moving average. To make the matter worse, the oscillator is turning negative with the DE- above the DE+ and ADX turning above 20, indicating the formation of a negative trend.

There's only been a single instance in february where the index drop belows the 50 DMA since Oct 2006. At this point, with the Dow Jones hanging precariously below the 50DMA with so many indicators pointing to a correction (hopefully not a reversal), it is prudent to hold your purchases until the coast is clear. 13200 is a very crucial support and if it indeed falls below this level, it's likely trigger a massive sell-off. And if you've been thinking of selling something, perhaps you might wanna do it earlier and not later.

Of course, i may be wrong about this and the market continues to power on. So... "WHAT IF I AM WRONG" , i'll sacrifice some returns for capital preservation. Does it matter?.... No, it doesn't!

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The market will always be there for you, but will you be there for the market?

Stock Picks of the Week

2007-06-26T02:02:00.000+08:00

Hong Fok has since risen 30 percent and is on track to hit our target price of $2. That'll be the time for me to sell half and put a trailing stop for the remaining half.

Once again, it's back to our weekly stock picks' time. Picks for this week are namely, AusGroup and FJ Benjamin. For illustration purposes, we'll be looking at triangles for a few more times before we move into other chart formations.

AusGroup

Ascending Triangle with support at 1.8 (20dma)
Target price of $2.2 based on Fibonacci extension
Rising metal prices
Healthy order book expecting more contracts

FJ Benjamin

Ascending Triangle with a target price of $1
Support at 50dma of 86cents
Retail earnings during this GSS recorded higher than last year
Though effects of GST hike still unknown for future, it has stimulate better sales as consumers bring forward their consumption to beat the GST hike deadline.

Before i logged off, here's one of my favourite song (Perhaps Love by John Denver) for all of you to enjoy

Stock Pick of the Week - Genting International

2007-06-19T01:41:00.000+08:00

Hope everybody made money with the last example on Hong Fok. Its currently standing at 1.79, an almost 20% from the price in the last post. That was a very classic Elliot Wave 4 Buy example.

This week's illustration will be on Genting International. This counter has been rather quiet on the newsfront after it made headlines with the International Resort (IR) last year. Stock has retreated to it's current price of $0.94 after it made it's high of $1.2 with the IR news.

Currently, it's forming a very nice symmetrical triangle with the height of the triangle stretching some 6 months long. Support for the stock stands at $0.92 and assuming a conservative price target of the previous high ($1.2), we're looking at a whopping reward-risk ratio of more than 10:1.

In terms of fundamentals, Genting has some very nice cashflow after divesting it's non-core and loss-making asset - star cruise. Business at their resorts in the highland has been booming with close to full occupancy rates during this summer holidays (those who have went there for a holiday with their families would know exactly what i meant). I've went in for 10 lots myself at 94cents a piece but bear in mind, this is not an advise to buy. Do conduct your own due dilligence before any purchases.

Other than genting, friends who know me will also know that i'm also bullish on the marine sector, on commodities and on china environmental stocks. But these will probably be saved till the next time i post ........................... till then,

Happy Trading!

Stock Pick of the Week - Hong Fok

2007-05-28T08:53:00.000+08:00

Here's the pick for the week - Hong Fok (HF).

Technically, HF is sitting on a very nice support level at 1.44. It is on a Elliot Wave 4 buy with a projected price of 2.07. Let's be more conservative and assign a target price of 1.9, which happens to be the wave 3 high. This translate to a potential reward-risk ratio of more than 6:1, given my entry price of $1.51 last week..... And yes, i entered a position after i wrote this article.

Volume was low during the wave 4 correction and consolidation period. Prices stayed well above the 100 and 50 days MA, hovering near the 20days MA.

HF is a straight proxy for properties and much more direct than a lot of other properties counter such as capitaland, keppel land etc since there's minimal developments (with developing, there's more variables such as raw material, labour cost which affect margins). Much of the price appreciation in recent months was due to revaluation of their 2 prime properties - concourse building and international building. Furthermore, these 2 prime properties and with a small market cap makes it a choice acquisition target for anyone who intends to develop these 2 pieces of land. With prime office space becoming more and more of a scarcity, the likelihood of this becoming a possibility is increasing.

Above being said, Hong Fok makes an excellent medium to long term property play. The last revaluation happened in Feb 07. The next revaluation exercise could likely be done half a year after, in conjunction with the next earnings report. So, even without a takeover, one could still benefit from the next revaluation exercise.

Trading entails risk... This post does not constitute any advice to buy or sell.

Sell in May and go away!

2007-05-14T02:34:00.003+08:00

It's the time of the year where once again you sit down and wonder about that age old saying "Sell in May and Go Away". Are there any truths in this adage? Should we sell off our holdings and take a vacation?

Some of the reasons behind this may relate to patterns in bonuses, taxes, savings, elections cycles and a whole lot more. Most bonuses are paid anywhere from December to April. This is a result of companies basing bonuses on the calendar-year results. This creates a large cash flow for these individuals, and a substantial influx of money into the capital markets. This prophecy is also due in large to hedge funds and mutual funds window-dressing their portfolios for loss reporting tax purposes. These are just some of the repeatable causes that contributes to this phenomenon.

Put it simply, this adage tells us of a seasonal strategy of selling stocks before the six-month bad period (May to October) and buying them back before the good period (November to April). Before i tell you what i really think, let us take a really closer look at some important statistics on this seasonal phenomenon.

According to research done by Kepler Asset Management, for the period from 1969-2001, the average return for the "good" period is 7.5 percent vs. 1.2 percent for the "bad" period in the US markets. The Stock Trader's Almanac has also demonstrated this by tracking a $10,000 investment on the Dow.Money invested in the good periods" and then switched to fixed income in the "bad periods" over 56 years grew to $544,323. But money invested in the Dow in the "bad periods" and then switched to fixed income in the "good periods" compounded to a loss of $272.

Of course, exceptions do and will continue to occur and last year was probably an exception whereby the markets rose past record levels after a tumultuous period in June where we saw the Dow plunge 700 points. As we can see, the biggest problem with timing the market is that deciding when to sell is only the beginning. You also have to know when to buy back in.

Nonetheless, there is no guarantee this pattern will persist and i certainly would not encourage you to sell everything. But if you asked me what i think of this saying, i would rather err on the side of safety (i have been paring down my holdings rather substantially). It has been proven statistically and isn't investment all about statistics?

Now that we've done with the fundamental reasons and statistics behind this, let us look at some technical reason in which i think part of this prophecy would be fulfilled rather soon. Let us take a look at the shanghai composite.

The china markets are certainly the hottest things on planet earth and given how our markets move in tandem with their, it makes a lot of sense to check out this chart. As we can see, prices have stayed within a very strong upwards trend channel with a R-value of more than 0.9. As the channel approaches the 4000 psychological level, we are seeing a Doji star. The last time such a candlestick formation happens at the 3000 psychological level in Feb07, the index plunge 300 points.

Locally, we see a similar Doji happening 2 days back on high volume. More importantly, we see the formation of an white candle on low volume immediately after, which also fails to move above the trendline. Finally, we see an obvious double top formed just shy of the 3500 level.

With so many factors pointing to this and given where we are in the cycle, it may make sense not to rush into investing idle cash at the moment. And if you have stocks or funds you are thinking of selling anyway, this is one reason to do so now instead of waiting until the end of year.

Pre- Budget 2007 Ramblings

2007-02-15T10:40:00.000+08:00

Arlow Everybody,

Hope everyones doing alright! I'm not sure if anyone got my hint (posted 4 Feb) and bought Sunpower... If you had, you would have made a whopping 63% in just 2 weeks.

Anyway, since i'm at home having nothing much to do, i thought maybe i could just talk about the budget since it's gonna be announced at 320pm today. So, what about the Budget?

There's been many articles on what to expect from the budget and so, i'm not gonna dwell on that. Rather, i'm gonna talk about expectations and mis-expectations. With all respect to the market, it's not so much what the budget that matters, it's whether the budget meets the expectations that matters.

This line of though stems from the Macroeconomic theory of Rational Expectations and Adaptive Expectations. The proponents of this theory shares the view that the original equilibrium are formed through people's expectations. Deviations from this expectations will then result in shocks to the initial equilibrium. Should the truth be close to expectations, then nothing much will happen.

This theory are used mainly by central banks and the federal Reserve in targeting inflation. Perhaps, we could also generalised it and applied to the budget since both are a form of fiscal intervention. Since the 2% GST increment and the 1% coporate tax cut has already been priced in, any changes to both item in the above magnitude will constitute a non-event and will likely not precipitate any surge or falls in the stock market.

What then are the market expecting?

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This, my dear, is the million dollar question i would like to know too. =)

Getting Inspiration Anywhere, Everywhere

2007-02-04T08:40:00.000+08:00

Many people asked me:

How do you know which stocks to buy?

This, my dear, is a million dollar$$$ question. I'm sure many of us have the experience of cracking our head and not knowing what to buy, be it a lack of choice or simply spoiled for choice. However, choosing a stock can be easy if you just know where to look.

I get my inspirations from practically everywhere and anywhere. I get inspiration when i'm overseas traveling, when i'm shopping or even reading a news article. I shall give a very simple example. There's this news report that came out on the Straits Time on Wednesday.

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Ecology: China admits it has failed badly
BEIJING - CHINA has failed to make any headway in the past three years to protect its environment, remaining one of the world's worst nations on the issue, according to a new Chinese government report. The country ranks 100th out of 118 developing and developed countries in terms of 'ecological modernisation' - the same rank it held in 2004, says the China Centre for Modernisation Research (CCMR), a state-affiliated think tank
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What then does this article imply?

Simply said, China based environmental stocks that deals with waste water treatment, industrial gas treatment will go up in the not so long future.

Let's look at this using simple Demand and Supply. On the Demand side, we have China having it's BEIJING 08 Olympics soon. This report will no doubt strengthen the Chinese government's resolution to solve this problem by this year. Very soon, we'll see some drastic measures taken to curb all these. To the Chinese, saving the face (pride) is very important. If you're Chinese, you'll know what i mean.

On the supply side, waste/gas treatment are technologies that are subjected high barriers of entry due to a myriad of reasons such as patents, high cost of R&D, licensing, reputation etc. All these factors simply point to a controlled supply curve.

Now that we've established a theme: Environmental Stocks, comes the question of which company to buy then?

For myself, a few factors come into play. (1) The Charts must look good, (2) the price must be affordable, (3) the financial statements looks healthy. Charting is so profound that i'll probably can't finish explaining in 100 posts. Price affordability is subjective so i shan't dwell on this. So, what is healthy financials? To me, healthy is probably an understatement. I like to see a more than 50% increase in operating profits and at least a 25% increment in earnings per share(EPS). i also like to see some free cash flows.

With that, i shall leave it to your imagination what stock did i buy. Successful Investing is all about knowing what to buy and buying it just before everyone does.

-----Counters------- Qty--Avg Entry --Current-- Mkt value

BreadTalk _____30____0.245_____0.4 ______ 12000
ThomsonMed __ 11 ____0.35 _____0.535_____ 5885
Sunpower______40 ___0.225 _____0.23 _____ 9200
Banyan Tree ___ 10 ____1.50 _____1.62 ______16200
GlobalVoice ____ 60 ___0.195 _____0.135 _____8100
ChipESeng _____ 15 ___0.315 _____0.42 ______5700
FJ Benjamin ____ 20 ___0.568 _____0.725 ____14500
Ferrochina _____ 10 ___0.825 _____1.49 _____14900
Wilmar _______ 10 ____1.09 _____2.33 ______23300
Luzhou _______ 10 ____0.80 _____0.795 ______7950
Pac Andes _____ 10 ____0.705 ____0.94 ______9400
Celestial ______ 10 _____1.46 _____1.62 ______16200
Utac _________ 10 ____0.73 _____0.83 ______8300
Wing Tai ______ 5 _____1.88 _____2.49 ______12450

Market outlook for the year 2007

2007-01-29T16:59:00.000+08:00

I have not been updating this blog for the longest time and many people have been complaining to me about that. I'm currently busy applying for jobs and upgrading myself for a career transition. I'll be leaving my current job in less than half a month's time and it sure takes hell lot of time doing and re-doing the resumes and cover letter.... Anyway, there's really no excuse for taking so long to write something.

It's a new start of the year and the STI have passed the 3100 mark effortlessly. It seems that good time has come but within a few days of record high, foul news started coming in: Indonesia bans export of sand, Heavy vehicles to use 2nd link, Thailand impose restriction on foreign ownership. It certainly looks asif our neighbours are jealous of our new found wealth with the Integrated Resorts.

(High Pearson R of 0.974 for the trend channel, i wouldn't bet against this trend)

So what's my outlook on the market?

Personally, i feel that the property and construction market has run up quite a fair bit. That's not to say they can't go any further. They probably could, given the potential of the IR but some form of consolidation needs to take place before another spurt of rally. Furthermore, the sand ban is really gonna hit the construction sector hard. I mean, what's worse than expensive materials? ... You're absolutely right if you say NO MATERIALS! So much said, now isn't really the best time to go for the builders.

What is good then?

I like Retail, Commodities and Tech. China and Indonesia plays should also be interesting

Retail have always lag behind property - people always wants to know that the economy is good, that their houses have appreciated before they start spending. I know many are concerned about the effect of GST but how elastic or inelastic are consumers to a 2% increase in price. And that is we are all assuming that this 2% will be passed down to the consumers. Many economic studies have shown otherwise as the administrative cost of changing prices may be greater than keeping the status quo. Also, demand for ostentatious goods react much more sluggishly to price changes.

(Copper prices) (Crude Prices)

Commodities such as energy and metals have undergo a major correction of sorts lately. If you ask me, commodities price cannot stay at such depressed prices for too long. With the global economy growing at an alarming rate, basic resources will also be consumed faster. With BEIJING 08 coming, one can be sure China's appetite for energy and metals will be humongous.That's just the demand side of the equation. What about the supply side?

There's a theory that Saudis is keeping the prices low cuz low oil prices contribute to the stability of the gulf since neighbouring country like Iran and Syria relies on oil to fuel their ambitions. The cooperativeness of the OPEC countries is also another reason why crude supply is always so difficult to gauge.

Tech is a major under-performer in the year 06. The Dogs of the Dow theory and many factors indicate that 07 will be great year for tech. Microsoft Vista's launch this year is gonna boost demand for memory and indirectly storage. This may take some time before everybody accepts the OS and starts to gorge memory. Next, Apple iPhone will be the next watershed event for the industry this year. Last but not least, intel's launching of their latest nanochips will also give a major boost to the tech industry.

I shall provide a glimpse of what i'm currently holding in the local markets. In no order of merit, they are BreadTalk, ThomsonMed, Celestial, BanyanTree, Ferrochina, ChipEngSeng, FJ Benjamin, Wilmar, Ho Bee, Luzhou, Pac andes, UTAC, Wingtai. I am slowly paring down the construction and property counters. The above are solely a list of my own holdings and does not constitute any advice to buy or sell them.

Updates

2006-11-26T13:13:00.000+08:00

Stupid tagboard is down. I've decided to take down the tag-board and replace it with a new one that i saw on decipher's board. Kinda cool.

Have not written something for a while. Been rather lazy lately. Did a major restructuring in my portfolio some time back in Oct, been rather fruitful. Made some good Kopi money from the local markets. As for the US side, started trading a little since my big drawdown in Jul.

The other reason why i've not been writing so much is that i'm picking up GOLF. I'm getting hooked on it. It's such a fun game and there're just so many similarities between golf and trading.

Anyway, i'll be leaving town for a holiday backpacking trip to Yunnan, China for 2 weeks. Will be visiting Dali, Lijiang and Deqin ( the fabled Shangri-la of James Hilton's 1933 best seller, Lost Horizon). Brought along Jim Roger's "Hot commodities" to read. Hopefully, i'll get some inspiration for trading when i'm back.

I love holidays. It's the best time to do some self-reflection and discovery.

See you guys when i'm back.

M.Sc in Wealth Management

2006-09-28T23:32:00.002+08:00

On wednesday night, my friend and i went to this info session on the Master of Science in Wealth Management conducted by Singapore Management University (SMU), in collaboration with the Wealth Management Institute (WMI) and Swiss Finance Institute. The turnout was quite good that night. A conservative estimate would be around 120.

The programme taps upon a vast amount of experience and knowledge within the industry. Personally, i thought the stucture of the lessons were very well thought of, providing students with both the academic know-how and the practical experience in the industry. Courses in the programme include stuffs like financial statement analysis to Macroeconomics to real estate, equites, hedge funds etc. The 5 modules of intensive 2 weeks lessons with a 3 month break in between each module allows student to go for internship. This i think, is probably the best part of the programme.

IF this course is really as good as the faculty claims it is, the tuition fees of $48,000 really ain't too expensive. The programme director claims that 100% of students get placement for internship and most of them get sponsored in a way or another.

I wonder if i should apply?......... Hmmmmm

What went wrong?

2006-08-16T01:07:00.000+08:00

It's been a while since i've wrote anything. In fact, it's almost one whole month since my last post. Many of you must be wondering where i've been. Yes... i was away for a couple of weeks on business but i guess that's not the main reason why i've been inert for so long.

To be honest, the truth is i've taken a big loss in my account. Although it did not made me a bankrupt, it wiped out the profits for the year that i painstakingly took 7 month to accumulate. It was a painful lesson but an important wake-up call nonetheless. Since then, i've spent my trip and the past couple of weeks reflecting and recalling (it's the body's defence mechanism to forget painful memories) what went wrong, what did i do or what did i not do. I've also reverted to paper trading to get back my discipline, my confidence and testing some stuffs.

Looking back, the 3 most important reasons why this happened was GREED, COMPLACENCY and DISCIPLINE. I shall elaborate further on each of them shortly.

GREED

Profit stops are there for a purpose. The problem is when you make profit, you dun wanna stop. That was exactly what happened to me. To make it worse, instead of taking profits, i doubled up. That's the last thing i should have done. It happened to Las Vegas Sand (LVS) and Phelps Dodge (PD). I had made some good money from LVS and PD prior to this, expecially PD as i've correctly forecasted (guessed) the directions of copper futures.

So insead of taking profits and putting my money in the pocket where it should have been. I added more positions, which later compounded the losses.

COMPLACENCY

Someone once said "The worst loss always comes after a string of consecutive wins". I can't agree more on that. After making a series of profitable trades, i started to get complacent. To make it worst, the fact that i made money even in a rather bearish market lull me into a false sense of security. I highly suspect that i even thought that i could outwit the market at that point in time. That was the time i started to take out some of the insurance trades (the market had fallen the cliff twice and was doing a rebound at that time) that i've mentioned in the previous post. In addition, i spent less time monitoring my trades. Not only that, trades were placed without careful analysis, alerts and stops. In short, i was not planning the trade and trading the plan.

It's amazing that Shit always happens when you did not plan the trade. And when it does happens, you're not quick enough to react, to cut loss, to take profit, coz you're too shock to do anything. One could probably call that FEAR.

How true it is that GREED and FEAR are the 2 emotions that destroys so many.

DISCIPLINE

Discipline is the ability to do what is right when what is right is the hardest thing to do. It is trading what you see and not what you believe. Going back to PD again: At that time, Copper futures were rallying to new highs and yet PD kept falling. Although the charts of PD was screaming at me to get out, i was unable to reconcile the differences between futures price and PD's price. This is what i call cognitive dissonance and in trading, you can't allow that to happen. I held on to PD, hoping that the stock would at least follow the futures market. The more copper futures went up and PD went down, the more i feel short changed. PD is but one example where i did not follow my rules. There were many others where stop losses were triggered but i refused to admit/accept the losses.

Have you ever heard of the turkey trap story? i'm not too much of a story teller but here's how it goes:

There was a thief who wanted to steal some turkeys, so he made a trap. There was a total of 30 turkeys in the farm. So he told himself he would take off when he got 20 turkeys. One by one, the turkeys went in and 20 was reached in a short while. Instead of keeping to the plan and escaping with his good fortune, he thought " maybe i'll leave when i get 2 more". 2 turkeys walk out of the trap and now he thinks "i could have gotten 20", so all the more he refused to leave. As more and more turkeys left, the longer he waited until he was caught.

Alas, HOPE is a dirty 4-letter word in Trading.

Luckily, i had told myself to cut all positions before this 2 week trip. So just the night before the trip, i finally cut loose all my losing position. It was painful but you won't be able to imagine how easy it was easy once you started closing the first one. The trip was a good break and now i'm back, stronger, humbled and all ready to trade. This is the first time i've written about my lossess, it shall also be the last time you will see this. There will never be a second time.

What does not destroys me makes me stronger!!!

P.S: I'll like to take this chance to thank a fellow trader - Mark for the continual support and help he has shown, not to mention the constant nudge when i became too lazy. Trading is lonely. It is important to find like-minded people whom you can share and spur each other on.

Uneven Fly as an Insurance Hedge

2006-07-11T00:25:00.000+08:00

It's been a while since i last posted. I've been rather lazy of late but since i've promised Decipher on the tagboard that i'll post this, here it goes....

As many of my friends know me, i'm a perennial BULL. What do i mean by that? To put it simply, i SUCKS at picking bearish stocks. First of all it is counter-intutive. Secondly, a company is set up to make money not to lose money. In that case, what do i do when i feel that the market is gonna crash? When placed correctly at critical pivots or support/resistance, an uneven butterfly allows one to make 50-60 percent if market crashes. And when i say crash, i really mean CRASH.

what if i'm wrong?

What if it goes sideways or it crashes and rebound...... I'll make even more... up to 150-200 percent.

What if instead of crashing, it rallies? .... The fact is i couldn't care less, cuz.. it's an insurance! Remember, i'm long other stocks, i would have made more money on them to pay for the insurance premium.

Sounds Hocus Pocus huh? I've got a friend whom i've introduced this method to, who like it and have agreed to write something for me and i must say i couldn't have done a better job than him in writing this. So i'm present "Insurance to hedge against market crash" in all splendour and glory written by my dear friend, Sweeleng:

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Insurance to hedge against market crash

I believe most investors were hurt by the “market correction” in May after FOMC announced that interest rate hikes might not end so soon. After an euphoric bull run up since the start 2006, the decision resulted many investors to take profits which caused DOW, S&P and Nasdaq to give up their gains for the year and even dipped below the 2006 opening. How can a trader guard against such sudden market correction?

The below shows one possible way option traders can hedge against such risks., that is to enter a uneven butterfly on the major indices (ie DIA, MNX, SPY or SPX).

This trade was entered after the initial correction but as market is still volatile and unstable, a MNX 150-152.2-157.5 Jul06 uneven butterfly was entered to hedge against further downside risk. The sweet spot is placed below the index (near the support) such that should the market continues its downward movement, we would stand to gain and even if there’s a strong downside correction we are protected.

Since this trade is meant to be a hedge, one can expect to lose the entire trade since it’s a form of insurance meant to compliment your overall portfolio which might have a bullish bias. Hence, if you find that your overall portfolio’s delta is too high, this trade can help to reduce the delta and hedge against market corrections.

Also, notice that the trade is theta positive, so even if the index is moving sideways, you can still take some profits.

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Nice, isn't it? ....

As you all know, the market crashed quite badly in Jun. Employing this strategy, it's amazing i did not lose money (considering the BULL i am) during that period while i was on vacation in U.S. .....................

In fact, i even made a little. :p

Till then...... Happy Trading and always stay hedged!

OASIS 2006 After-thoughts

2006-06-25T21:38:00.000+08:00

After attending OASIS 2006, it seems that money-making opportunities are plenty. What amazes me is that there are so many starkingly contrasting individuals, and yet every single one of them makes money in their own unique ways.

With so many breakout sessions, it is difficult to summarise everyone of them. However, there is something common to all the sessions that i have taken away and that is:

There is no single way to trade that suits everyone. One needs to be able to find his/her niche. Every system/strategy/method has to be tailored for each individual to work best for him/her. One man's meat is the other's poison.

Discipline is the key to success. Be it discipline in following your own rules, discipline in cutting losses, discipline in researching, it is the #1 thing in trading that differentiates a winner from a loser.

Building a system that eliminates emotion and thinking from trading. For those who have serve NS, it is like an SOP (Standard Operating Procedures) which tells you exactly what to do in all the different scenarios. Every possible variations the market can have should be captured inside. You don't tell the market where to go, the market will tell you where she is going. You just have to act accordingly.

To excel, one needs to keep doing the same thing over and over again. Specialise in one or two things and be really good at it. Backtest, paper trade, trade small, keep doing the same thing until you are good at it. Then try variants of the strategy and keep doing it (i.e. butterflies, brokenwing flies, uneven flies, modified flies, doubleflies, dragonflies and what have you). Practice makes perfect.

Most of the top traders i know are all humble people. Humility is of paramount importance. It is the one thing that makes one continue to improve, to be open to criticisms and new ideas. Strangely and coincidentally, the time when we all make big losses is usually after a string of consecutive winners. Never ever believe you are smarter than the market.

These may seem like common sense to many out there. It may even sound like preaching. Well... maybe i am.......... I am trying to preach to myself myself because i know that many a times.....

...... COMMON SENSE ARE NOT SO COMMON!

OASIS 2006

2006-06-18T15:22:00.000+08:00

OASIS (Optionetics Annual Super Investor Summit) 2006 was a BLAST!

I'm so glad i took time off to attend this annual Optionetics events @ the Santa Clara Convention Centre. With 90+ Breakout sessions, nearly 3000 participants from over 15 countries, the event was very well organised indeed.

This time round, there was no cold soup as mentioned by last year's participant. And indeed, same as last year, there was a luncheon for all the international students with Tom and George and you bet we all took photos with them.

Singapore Delegation with TOM and GEORGE

The below is a list of the breakout sessions that i took. I'm really excited about some of these and i'm gonna compile the notes that i took on them and put it to use (Jack, will sent you a copy of Jeff's session once i typed it out). Of special mention are the ones done by Eloy, Jay, Jeff, Joe and Rob. Personally, i thought Meng's session wasn't too good. It was one of the lousiest among the ones i took.

Beating the Markets Systematically - Jay Kaeppel
Increasing Your Option Profits with ANY Strategy - Devon Pearsall
Getting Under the Hood with the Greeks - Mitch Genser & Christina DuBois-Nugent

Cashing Out on the ATM - Jeff Beamer
Checkmate Trading - Eloy Fenocchi
Squeezing Premiums Out of Double Diagonals - Meng Ng
Trading with the Tailwinds of Intermarket Analysis and ETF's - Mitch Genser

Live Market Maker Mock Trading Session - Alex Mendoza & Greg Loehr
Calendars on the Fly - Joe Contes
Trading With the ADX - Rob Roy

For those interested in knowing, here's the link to the synopsis.
http://www.oasis2006.com/speakers.asp?source=web

Those sessions was so intense and packed together that i was completely knocked out at the end of the day. It was a power-packed 3 day at OASIS 2006.

Of course, all work and no play isn't really what trading is all about, so you bet we took time off (when the market was crashing... haha) for some sightseeing in california before and after OASIS.

TranAmerica Building in San Francisco.

The Great Singapore Sale

2006-05-31T12:22:00.000+08:00

Here comes the time of the year where everything is on sale! Clothes, accessories, travel, lifestyle and even........................... STOCKS!!!!!!

Yes.... you've heard it! STOCKS!!!!

Up to 50% off Usual Price.... Bargains everywhere. And i must assure you it's not a UNIQUELY SINGAPORE event... hehe

So... is this the right time to enter the market? Many have asked me, from families, friends, fellow bloggers to some of my readers. Here's my answer to the million dollar question:

Invest in VALUE in bad times and GROWTH in Good.

So.... what does this means?

Using The Great Singapore Sale as an analogy, i shall explain the reason why. Say for example, you came across a brand or product such as Oakley, LV, Gucci which normally do not have sale and is now having a discount (and they're usually not big discount too), these are stuffs that probably will maintain it's value or even appreciate after the sale.

The converse is true for some shops or products. They are perpetually having sale. Products on sale during a period can be even cheaper a short while after the sale. They are cheap during the sale but they are not VALUABLE.

Likewise for stocks, VALUE stocks that took a plunge during such a period may fall below their fair value and this is exactly the time to hunt for such stocks. Whereas in the case of GROWTH stocks, one cannot be sure how much of the amount that was rubbed off was speculative growth or healthy growth.

Further more, one can't be too sure if the bad times are over. In VALUE stocks, at least you know that you have got it cheaper than what it already cost and would cost in the future. You probably just lose out to the other person who got it 5% cheaper than you (which is why even for such stocks, i would advocate buying in 2 phases). In GROWTH stocks, they may not have the financial clout and customer loyalty to ride through a crisis, not to say that market fundamentals sometimes changes during a big crash. GROWTH stocks are good during a rally because the very core of their existence depends on a good economy and extreme optimism in investors,

So what exactly are VALUE stocks? IMHO, i like stocks such as SGX, CAPITALAND, HO BEE, STARHUB, ST ENG, SINGTEL, F&N, APB and the likes. As for US stocks, i like CME, AAPL, BA, FDX, GS, NVDA etc.

Ratioed calendar on Harrah Entertainment (HET)

2006-05-11T16:13:00.000+08:00

The below shows a series of riskgraphs (with greeks) for a Call Ratioed Calendar on Harrah Entertainment (HET).

The CRC started of with Long 7 May $75 Calls (+7) and short 5 Feb $75 Calls (-5) done for a debit of $1586 on 23 Dec05. As you can see, theta is -$0.46. Compared to straight calls, this is very low, if not negligible. It is almost like buying stocks, except that it is much cheaper since 100 shares of HET would have cost $7,000 ++.

On 15 of Feb06, the position was rolled to a (+7) May $75 and (-5) Mar $75 by buying back the Feb $75 calls and subsequently selling the Mar $75 calls. By doing so, i have reduced the initial cost (and hence risk) of the trade from $1586 to $1010. This additonal $476 could then be used on other trades. The theta of the postion has also increased to $2.4 per day... better than putting money in the bank huh?? :-)

On 15 Mar06, HET had came down a bit since the last adjustment on 15 Feb6. This is reflected in the reduction of profits from $409 to $164. On this day, i adjusted the position again by buying back the Mar $75 calls and selling the Apr $75 calls, effectively changing the position to a (+7) May $75 and (-5) Apr $75. The dates of the adjustment are all in the last week of the expiration month. Once again, risk is reduced. This time to $461 as compared to $1010 previously.

At this point in time on 21 Apr06, total profit is $689 and is the day of the short month expiration. At this juncture, i have decided to take out my money and close the trade. Many may scoff at the idea of making only $689 in 4 months, however i find this strategy suits me very well as i do not need to monitor the position closely until every expiry week. In fact, during this 4 months, i was not in town and without internet access half the time. Anyway, $689 out of initial debit of $1586 is a 43% profit. One should also note that the risk is reduced every month after adjustment and the amount of debit reduced could be used in other trades. Hence, strictly speaking 43% is an understatement.

Below shows the date and the entry cost of my adjustment:

The CRC strategy has been mentioned in an earlier post as one of my favourite option strategies of all time. It can be one of the best strategies to employ for a sideways to upside environment, hence is most suited in replacement of holding stocks. Reason being that this strategy collects money even when stock price remains sideways. I will post more of this strategy should there be interest from readers out there.

Does Volume Matters in Trading?

2006-05-05T14:00:00.000+08:00

We all know that in trading, volume is everything. It tells a story when combined with price action. It is used in many indicators that we all know. We also know that a trend (rally) without volume ain't gonna last long. And many a times, a price spike with low volume are due to people or instituitions trying to manipulate the market. They probably can sustain the move for a short while due to their financial clout but nonetheless, if the masses don't follow through with the right volume, they're gonna fail miserably.

So.... if someone tells you volume ain't important, they're just bullshitting.

An example of low volume

An example of High volume

------------------------------------------

Disclaimer:

Now.... all that i'm talking are just financial and trading stuffs. And as with all financial and trading stuff, there must be a disclaimer. So....... if you wanna think otherwise, that's your own bloody problem (in hokkien: it's called LIM BO KIA EH DAI ZI) please don't put words in my mouth and sue me for defamation... =)

What your Insurance Agent would never tell you

2006-05-01T14:14:00.000+08:00

To begin with, let me cover some of the reason for writing this post.

I was in the midst of doing my insurance review, which is of course, prompted by an friend who is trying to sell insurance to me. It seems from the title then that this post is perhaps gonna be a negative report on insurance agent and the likes of it. But rest assured, there's no offence intended here. It is merely a factual comparison between term and life policies. I'm not even gonna mentioned the name of my agent or even his company. Everyone buys insurance at a certain point in life so i'm sure this would be useful.

The story goes like this:

I was about to purchase a 100K worth of insurance cover from this friend who just started out as an insurance agent when i happened to chance upon this SAF group insurance (term) thing. Upon performing some basic calculations using an excel spreadsheet, i came to the horrendous realisation that i would have gotten much more if i have just purchase the term insurance and investing the difference. It only came to my knowledge later that there is already a whole weath of literature on this issue but nonetheless, i still wish to share with readers of this blog what you could potentially have saved.

The main terms of both insurance are as follow:

Coverage: $100K of Death + $100K of Critical Illness.
Age of insured: 27

Premium of XXX Life Insurance: $2233 per annum
Premium of SAF Group Insurance: $ 312 per annum

Amount gotten back at age 60 for XXX Life Insurance: $94K
Amount gotten back at age 60 for SAF Group Insurance: $0

The coverage for both policies are more or less similar with only very subtle differences. It has to be so because with an identical policy, it would be very difficult for insurance agents to sell their products, although their punchline would probably be "different products cater to different needs" and theirs always cater to your needs... haha.

Jokes aside, suppose, i take the $1920 saved per annum to invest myself. And using a rate of return of just 5% per annum, the first 13 years of $1920 saved and reinvested over a time horizon of till age 60, one would also have gotten back $94k. Of course, the important differentiation here is that the $312 premium paid yearly goes down the drain should nothing happens, and in fact, one should be more than happy that it goes down the drain. I would be more than happy to give away this ($312 x 33) to Aviva (underwriter for the SAF group insurance). Many still can't get over the fact that the money cannot be recovered.

Simply think of term insurance this way: It is a Out-of -the-Money Put against your life, it is a cheap hedge which you hope you would never need to exercise. Cos if you do, it means something bad must have happened to you.

So using this super super conservative rate of return (5%) to calculcate and with the 33 years of $312 included, one would need just one more year (14years) of difference to more than breakeven with the life insurance. So, imagine the amount one could have saved if you add up all the 33 years of difference saved. And should one's ability to re-invest is more than the assumed rate of 5% here, the potential is even much greater. Suppose i reinvest using a super conservative ROI of 10%, one would breakeven with the XXX compnay life insurance with just 4 years of premium saved.

Of course, you insurnce agent would never tell you this cos if they do, then they'll literally have to eat shit. I'll like to give them the benefit of the doubt and say that maybe, their training would only have them brainwashed that only life insurance is good to their clients and the other side of the coin is always bad. So, the next time your agent ask you to buy life policies, show them this calculation.......

I hope i wun be getting hate mails and death letters from any insurance agents for posting this article.

Delta Neutral Trades

2006-04-12T23:11:00.000+08:00

Hi, for those of you who attended the short 1hr topical discussion (on invitation from OptionsAcademy) that i gave on monday and 2 months before, i've decided to pull out one of my previous post (dated 14 Oct 05) to save you all the searching. Please feel free to post any comments or questions that you have, will try my best to answer them. Will be flying to taiwan in another hour or so. Have fun paper trading!

=====================================

Hey Hey! It's been a while since i've last written something or anything at all. The market hasn't been very good, or so it seems. Am i worried? I could have, considering i've lost 5k + on that black wednesday where the STI fell 66 points. Ironically, i was off the day when it happens but i couldn't care less. In fact, i went off swimming at NUS after half-time when the market was down 30 over points. Why did i behave so nonchantly?

Reason ? ? ?

I did not want to be sucked into the pandemonium and chaos. Fear and Greed are the greatest emotions in the trading field. I could have made even more mistakes had i been around. I would have sold at the bottom. There's a hundred and one possibilities. Of course, proponents of the "cut your losses" short theory (coincidentally, i also advocate this) would have condemned me. But my belief is this, if i had not already noticed or forecasted this sell-off and sold my holdings before. There is little use in selling it on the day where everything seems to fall apart.... It's too late.

Of late, i'm more into non-directional trading. You may ask how? .... Of course, with just stocks alone, this possibility of trading non-directionally seems remote, if not totally absurd. Some may even ask, what the fuck are you trading if you're not trading direction? What are you trading then?

DELTA - NEUTRA TRADES

Non-directional trading, also known technically as Delta-Neutral Trading allows one to not be involved in guessing (forecasting, if you think guessing is demeaning to trading) where the stock will go. Instead, it allows one to make money regardless of where the market goes or better still, even when the market dun even move. The simplest form of delta-neutral trade is undoubtly, the straddle or the strangle. If you have no idea of how options work, click here for some intro. It involves buying an ATM call and put (straddle) or OTM call and put (strangle). For illustration purposes, i shall use the straddle to explain 2 strategies that i have tried and tested and which i'm very comfortable with. Bear in mind, the strangle will be exactly the same, just that the inital debit is smaller but the breakeven wider.

The straddles i'm gonna explain later is slightly different from the normal ones that people would trade them. It is no doubt, a little unorthodox. Nonetheless, they work. The first type of straddles trades Gamma. I'll like to term it Gamma Straddle (GS) to differentiate it from the other one i'm talking about.

GAMMA STRADDLE (GS)

Why do we wanna trade Gamma? As it is, Gamma is the rate of change of option price due to changes in the underlying. With a High Gamma, any spikes in the underlying will cause a huge jump in the price of our straddle (as shown in the diagram below, notice the steepness of the graph). Gamma, as we know, is the direct opposite of theta. When theta is VERY NEGATIVE, gamma will be super positive. With this in mind, a GS is done:

Using options with a few days left to expiry (high time decay), hence high Gamma.
Entered one day or even a few hours prior to earnings announcement or FDA announcements or any big events that affect earnings.
Entered on stocks well known for giving quarterly price movements (i.e. tech stocks, Biomedical stocks etc)
Best if earnings on the week of options expiry.
Avoid Volatility that are too high as the IV crush may hurt your position quite badly if stock moves a little.

As trade is entered one day prior to earnings and exited on the day earnings are announced, time decay is kept to a minimum. Moreover, due to the high gamma, a small move is required to breakeven. In addition, minimal effort in monitoring as trade is only opened for less than 2 days. Only thing to look out for is avoiding stocks with IV that is excessively high as the IV crush may widen the breakeven points too much. Results varies from a 50% loss to a 300% profit. However, this is definitely not the kind for the weak-hearted. It is TOO DAMN EXCITING!!!

VEGA STRADDLE (VS)

Contrary to the above, the other type of strategy is a Vega straddle (VS). A VS are slow and consistent strategy with no complicated exit strategy as compared to a GS. The exit are time based. A VS is exited one day prior to earnings. As the name suggest, a VS trades volatility. As covered under my previous post, options price can rise even when there isn't any movement in the underlying due to a rise in volatility. Volatility, in layman terms, is a measure of fear and greed and this drives up option prices as earnings get nearer. What we want do here is to lift the straddle off the ground (away from the zero line). Of course, any pre-event movement in the underlying is a bonus.

A VS is entered:

Approx 10-14 days before earnings announcement.
Where IV is slowly increasing but not too high yet
Where there are quarterly spikes in IV or when the last earnings was a huge surprise.
Quarterly spikes in prices not required as we are not trading movement in the underlying this time round.
Exited one day prior to earnings regardless of profits.

Good thing about a VS is that there are no emotions at all as the trade is exited before the big move. I have done this a few times and i must say it has worked well for me. On the average, i get consistently 30% profits in 10-14 days (if the stock dun exhibit pre-earnings movement) and more if it moves before earnings. The most importantly i feel is that i am comfortable to trade 10, 20 contracts with no fear, which i think is eventually how one is able to get rich.

I know some of the above technical mumbo jumbo is gonna turn people off but i'm commited to not only talk about stocks and looking at how my trading style and psychology evolves, i may slowly and gradually not do any stocks in the future..... And till then.......................

Happy Trading!

What is better than Reading?

2006-04-10T01:51:00.000+08:00

I love reading.

I love trading too.

So what's better than reading?
Reading an article on trading!

And what's better than Reading an article on trading?
Reading free articles on trading!

This guy Scott Kramer is the new kid on the block @ Optionetics. He post regularly with interesting articles and the best thing is, he writes well - poetic, sprinkled with a tinge of sarcasm and black humour. He is so sharp that he gets across his point like knife through butter and yet so blunt that you feel the soreness of that hit while sitting in front of your screen mulling over what he has wrote. For those not familliar with Options, i've attached some of his non-option classics (his articles on Options stuff are no less brilliant) and yes, it's free. The list are by no means exhaustive and for those interested, you may find his past articles here.

The Path to Success—“The Road Not Taken”
Two roads diverged in a wood, and I – I took the one less traveled by, And that has made all the difference. ~ Robert Frost

On Anal-ists, Overbought, and Stop Orders
Interesting comments on some of the commonly and perhaps misused trading nomenclature

Flight Checklist

The importance of a checklist cannot be overemphasized

The Zen of Trading

Important lessons from Zen and Buddhism

The Black Bubble
Scott's thoughts on oil. Refreshing!

Enough said.

I shall end this post with 2 charts from the local arena:

Semb Marine and SAT Svcs

Triangle forming. Impulsive price action to either side likely to follow within next few weeks. Downside support - $2.3 Upside resistance - $ 3.2 Reward-risk ratio of 1:1. Not exactly the kind of RRR i'm looking for. In such a scenario, what i would have done is to sell half of my holdings (lock in profits), lowering the risk to half.

Neutral on this stock though probabilites of breaking to upside is higher due to oil play.

Gyrating in a slow upwards trend, forming a nice Elliot Wave pattern. EW5 target at $2.58 and immediate support at 2.27, representing a reward-risk ratio better than 3:1.

Defensive stock that gives out high rate of dividends. Outlook is as clear as the blue skies due to the recovery of airline sector. One of the few defensive stocks i have in my portfolio to reduce the volatility of the portfolio.

My Trading Style

2006-04-06T23:35:00.000+08:00

A trading style is something that is very personal and unique to an individual. It is the reason why some can go against the market and still make money, and why some who follows the best guru but loses money. It cannnot be cast in stone and changes as an individual's lifestyle, mindset changes. It matures together as a trader's experiences increase and as he ages.

To me, a trading style is the core component of a Trading Business Plan (posted under Business makes money, Hobbies cost money! ) By figuring out your trading plan, you would have answered question 2, 5 and 7 in the earlier post:

What trading time frames are you looking at? (i.e. Intraday, short term, long term, etc)
What is your strength and forte? (i.e. value, growth, technical, fundamental, economic outlook)
What strategies are you employing? (i.e. directional, delta - neutral, abitrage)

Before i proceed further, it is important for me to share abit of myself, which shall probably explain my trading style at this current point in time. I have a full time job and hence, is unable to indulge myself in sitting besider the computer and looking at the quote ticking. Furthermore, i'm a lazy bum who doesn't like to work too hard, which also means that even if i quit my current job and turn full-time (likely by early 2007), i would rather not stay glued to the screen. I wanna be a full-time trader but i dun wanna trade full-time (sorry roger, borrowed yr phrase here). Most who knows me will know that i graduated from NUS with a economics background and honestly, i love ECONOMICS!

With all these in mind, my trading style is more like a combination of charting and economic analysis. I like charting and technical analysis, cause with these, one doesn't have to do too much research. Fundamental Analysis (FA) requires too much time and effort doing research, reading financial statements and reports. Over and above all, it also requires the conviction to believe that the reports are true and accurate.

I term Economic Analysis (EA) as the law of demand and supply. Trading is nothing but a mangement of expections. Stock price is people's perception of a company's value in the near future. It is more than just the intrinsic value of a company, it is the percieved value of the company. EA requires ones to anticpate future demand and supply. The ability to differentiate if certain news/factors/events causes a movement along the demand/supply curve OR a shift/shock in the curves certainly helps in understanding if these catalyst are short-lived or longer term in nature. Many phenomenon in the trading can be explained using economics theory. In fact, i personally felt that one particular area of economics that have helped my understanding of trading is, the adaptive expectations model.

You see.... i can go on and on talking about economics but that's not the objective of this post. The objective here is to define my trading style.

The fact that i don't like to stay glued to the screens make short-term, intraday trades unsuitable for me. Most of the time when i try to do such trades, it turns out quite bad or even ugly for me. As you can see, my options are limited to mainly mid to long term kind of trade and out of the two, majority are mid-term (I'm not a particularly patient man). Now, some may say time frame are relatives and i do agree. My mid-term is trades that ranges from 3 months to a 9 months.

Learning to trade options has definitely been a major turning point in my life. I like the idea of getting money as time goes by even if the stock doesn't move (Time Decay). I like the idea of the option prices rising when nothing is happening EVEN MORE (Volatility). The fact that prices rise when nothing is happening is due to volatility, when people expect things is happening. This idea appeals to me. This 2 ideas shaped the cornerstones of most of my options strategies. Most, if not all of my trades are theta and vega positive. As a rule of thumb, my portfolio greeks are slightly delta positive, theta and vega positive.

Partners in Crime... or... the Dynamic Duo?

2006-04-03T22:37:00.000+08:00

Hello Ladies and Gentleman,

It's been a really long time that I've been crashing over at Ah Huat's Blog. He's been a really nice host and a really good friend. I must say I've learnt a lot from the Great Maestro. Ah Huat that is. Doing all this post for him have been great I must say and it has made me think of setting up my own trading blog as well. Nevertheless, I've promised a friend to stick around and running two blogs and writing for them is sheer hardwork. I'm not hardworking. If I was, I wouldn't be trading yar? Ha.

Congratulations to Ah Huat for his stellar performance! Everyone is now wondering when he will start his boutique fund. The question for me is if he does will he recruit me along? Hahaha... Anyhow consistency is really the thing that we must start perfecting to stay in this game for the long run.

Let's see, what my performance for the last year? Huat's evaluation prompted me to do mine. It's a mere 52.8%. Drats, I lost by a good 5 odd percentage points. Well, That means I'm only qualified to be the sidekick. You can be Batman and I'll do with Robin. How's that bro?

Anyhow, I've been training up a group of traders/investors as well. For free. What free? Yes, I'm not kidding because I believe financial freedom is for everyone.

I've really not help them lose any money. Thank God! In fact, they would have made quite comfortably. Actually, I've done so for the people here too.

Here's a particular recap. If anyone had followed the last fundamentalism update. Pulled a punt on Ascott. Here is how they would have done.

Price on the date of post. $0.965 Price of ART at IPO $0.68
Price of Ascott today $1.15 Price of ART today $1.18

Assuming they bought 10 lots of Ascott and then took up the future offer of the 2 lots of ART they would have spent $11010 (9650 + 2 x 680)

The little investment would have made about $13860 which is about 25.88% and still running.

If you followed from the first fundamentalism post in 14 Oct 05. You'd been even better off.

Okay, what about the good ol' Ho Bee?

Price on the date of post. $0.815
Price of Ho Bee today. $1.01

That's a gain of 23.9%

The list goes on. It may seem like a good thing going on here but remember the caveat emptor.

We cannot predict the market. We can merely position ourselves to benefit from a growth of a sector or to feed on the greed of the market. Good times will defintely not last forever. So as much as I'd like to put feathers on my cap. Please please please take our recommendations with a pinch of salt.

Why am I saying this? Because from hence forth. Be prepared. This blog is going to be super active. It's going to have plenty of trading ideas and recommendations. Ladies and gentleman, we're shifting to a higher gear, so fasten your seat belts.

Hello Pin, my cousin from Australia. If you are reading this. This post is dedicated to you. I'm going to do my very best to help you trade Singapore Stock CFDs from Down Under.

The next post will be the finale to the Profitunity system with actual trade examples. Blow by Blow.

Promise.

Regards
Dewayne

Review of last financial year

2006-04-01T00:11:00.000+08:00

The last financial year was quite okay for me, although it could have been better. All in all, my performance averaged around 58.3% (including realised and unrealised gains) in the local market for the last year (1 Apr 05 - 31 Mar 06). Hopefully, this year would be much better (target for this financial year is 100%) after having thought through torturously over the past month on my Trading Business Plan. After a year's of active investment, i have more or less found my direction and niche (This would be mentioned in the next post). This would definitely come in handy in the business plan.

After some restructuring and trimming (it is still ongoing but is almost there), i am left with the following after selling away Celestial, UTAC, half of my CAPLAND, COSCO during last 2 weeks:

-----Counters------- Qty--Avg Entry --Current-- Mkt value

DMX TECH _____10___0.975_____0.995____ 9950
BIOSENSORS ___ 10 __0.825 _____1.21_____ 12100
CAPITALAND ___ 2 ___3.06 ______4.84 ____9680
HO BEE _______ 10 ___0.645 ____1.00 _____10000
GLOBALVOICE _60 ___0.195 _____0.175 ____10500
SAT SVCS _____ 3 ____2.3 _______2.34 ____7020
ST ENG _______ 5 ____2.26 _____3.10 _____15500

CASH Holdings = $19668

This blog has certainly help me in improving my trading (and to a certain extent, my writings) through detailing my thoughts and through interaction with other people who visited the blog. Over this short period, i have experimented with a few styles of writing, a few forms of communications and even wrote a movie review (hahaha). I realised my articles have dwindled down to a trickle but i do not intend to keep it this way. Will definitely make a more conscientious effort to post more of my observations and thought.

"V" for Vendetta

2006-03-19T00:37:00.000+08:00

I know this is probably out of place in a trading blog, but there is absolutely no way i could, not say something about this movie and chuck it down memory lane. The feelings accompanying the movie is nothing short of explosive, and before i implode under the monstrousity of the elation and euphoria (it seems a bit weird that i should use this 2 words, however this was exactly how i felt when i saw the explosion and the fireworks) that swept through me, i present my first movie appreciation and afterthoughts:

What does Vendetta means? A quick check under dictionary.com reveals the following:

A feud between two families or clans that arises out of a slaying and is perpetuated by retaliatory acts of revenge; a blood feud.
A bitter, destructive feud.

The word vendetta comes from the latin word for revenge - Vindicta.

The story starts off with the story of Guy fawkes being hanged at the gallows and the poetic rhyme:

Remember, remember, the fifth of november

The Gunpowder Treason and plot.

I know of no reason, Why Gunpowder Treason

should ever be forgot.

It is amazing that the show draws many parallels from the Guy fawkes incident, modern day Western governments (maybe even ours) to fascist ones. It is amazing to note the uncanny similarites in the show and the world we live in (censorship, total surveillance, Homeland Security Act etc). Coincidentally or maybe intentionally, the government described in the movie resembles that of the Fxxking G. Bush (anti-gay, uses GOD as a reason/excuse etc), though the movie is set in 2025, England. However, it is worth pointing out too that the chancellor in the movie bears a striking resemblance to Saddam Hussein.

It is also interesting to even look at terrorism from a different angle - perspectives, perspectives. It is a wonderful rendition of the phrase: A man's meat is another's poison. A freedom fighter's revolution is but to the government, an act of terrorism. We've all been brought out to think that the government is always right but the truth is, the government need not always be right. Power corrupts, Absolute power corrupts abosolutely.

I must clarify that i am not an advocate for acts of terrorism (before i get caught and charge under the internal security act) and neither do i think that violence can solve everything (although many a times, revolution can only be achieved and freedom exchanged with bloods and sweat). Quoting V in the movie, "for every action, there is a equal and opposite reaction", vendetta means exactly this.

Interestingly, it's weird that people thinks that the show gorifies and even justify terrorism. No one made so much noise about the graphic novel (Novel was written in the 1980s) before and after 9-11. Personally, i think the show is about an ideology, a belief, about unity through faith, about the power of the masses. Together, we can do so much more.

Somehow or rather, the story strikes a chord in me and it seems especially relevant to me. For a person stuck in a regimental environment where freedom of expression is minimal and perhaps where all your actions and conversations are monitored, the show have a enormous impact on me. This movie shall remains one of my favourite for many years to come.

Business makes money, Hobbies cost money!

2006-03-16T22:21:00.000+08:00

It's been a while since i posted anything substantial. This long break from trading really set me thinking about my trading performance. I must admit i'm not keeping a record of what i've been doing and not penning down my thoughts as much as i should have. In the deep recess of my rusty mind, i still treat trading more of a hobby, i guess. A very engrossed hobby, to the extent of a passion. That's probaby the strongest form that i can word it.

The reason why i'm saying this is upon reviewing my results, i found that it is only mediocre at best and way short of my expectations. The long break coupled with reading "Stock Market Wizards" by Jack Schwager made me realise something very very important, that is - i've not treat trading as a business all this while. And the sad fact is " BUSINESS MAKES MONEY, HOBBIES COST MONEY!" The reason why i said this is that i've not been strict enough with my Stops, trigger loss, profit taking and a a hell lot of stuffs that i've not done as a out and out trader.

At this juncture, many would probably be very bored. Nonetheless, i'm still going to complete what i've set out to accomplish, that is - to come up with a full blown trading plan. So just bear with me, this is gonna be very very long.

To make trading a living, you gotta treat it like a business and treating it like a business involves tremendous planning, over and above that of, entry & exit, execution etc. It includes R&D, reports, statistics, analysis (in a wide sense). It means devoting enough time and effort to make the distinction between business and hobby. Below is a list of questions that i've set myself to answer before the end of the month which would then lay the foundations of the business plan. A good plan should include but not limited to the following:

What markets are you trading? (Internet? Retail? S&P 500? Big cap? Small cap? Indexes?)
What trading time frames are you looking at? (i.e. Intraday, short term, long term, etc)
What instuments are you using? (i.e. stocks, options, futures, CFDs, warrants)
What are the tools you need? (charting software, market research, trading platform which affects commissions and slippage) - A business can have many suppliers just like a trader can have many brokerages, utilising the best commission charges for different trades.
What is your strength and forte? (i.e. value, growth, technical, fundamental, economic outlook) - i term this as the business concept, all strategies will be centred around this core
How large is your trading capital? - It should be small enough that you could afford losing it without adversly affecting your lifestyle, yet large enough for you to make an equivalent of your current monthly pay.
What strategies are you employing? (i.e. directional, delta - neutral, abitrage) Some prefers high probability and low reward risk ratio, others may prefer lower probability but higher reward-risk ratio (a.k.a let yr profits). It's analagous to some business who takes small profits but makes it up in volume and some whose transaction is small but keeps a large chunk of profits.
What is the exposure of your trading capital? - the amount that is in assets and not cash or to put it simply the percentage of trading capital that is at risk at any point in time.
How is your trade allocated? - the amount of money tied up in any single trade. It could be a fix dollar amount, a percentage or even (1/risk) x % of capital
How will trades be executed? (i.e. all at once or scaled in and out)
What are the profit goals on a D-to-D, W-to-W, M-to-M, Q-to-Q and yearly basis?
When should there be withdrawal and/or contributions to initial pool? - just like any other business, one may start small and expand and at some point in time, withdraw some money and diversify.
How are trades analysed and how often? - accounting and analysis of sales & revenue performance are of utmost importance to business
What further education is required? (i.e. books, courses, seminars etc) - Businesses also needs to upgrade the skills of their employees
Research and development of system and variables? (i.e. best tradings days of the month, best month of year, how certain news affect certain sectors, how stocks react to earnings announcement etc)

Enough said. I already have most of the answers to the above. Every business is different just as every individual is. It is important that the plan suits the personality and the capital available of the trader. Remember, Plan the TRADE and Trade the PLAN

I'm Back!

2006-03-15T12:20:00.000+08:00

Hi all,

It's good to be back in Singapore after a long 3 weeks trip to India. Time to get back in sync with the market after such a long break. It's good to getaway from the market once a while to do a bit of reflection without getting distracted. During this period of absence, i must thank My bro - Dewyane for posting 2 excellent articles. Reading those articles makes me wonder if i should turn into a fundamentalist... haha

I've taken this time off the markets to reflect on quite a bit of stuff and i've gotten a lot of insights and things figured out for myself. I've also use this lull period to study for my GRE and read a few books (Why men don't listen and women can't read maps, Stock market wizards and Freakonomics). You bet i'll be posting some of this stuff real soon - probably within next 2 days.

HUAT AH

Dubai - A Double-Edged Sword

2006-03-03T00:00:00.000+08:00

Hello Ladies and Gentleman,

I know that it is very uncharacteristical of the Ah Huat Blog to talk about something apart from trading, but today I'd like to make an exception because of something that I'm beginning to feel stronger and stronger.

My topic or subject of interest - Dubai

So you might ask. What about Dubai? If anyone has recently followed the P&O saga where PSA lost the bid to DP World. I think you'd probably heard or learnt something about Dubai. I think Dubai is amazing and yet extremely scary - in the perspective of a Singaporean - at the same time.

Dubai like Singapore share some similarity, lack of water (hence Hyflux got deals there), arid land area not suited for much agriculture and generally depended on imports. Dubai has got a slight edge over Singapore though and that's black gold AKA Oil. Of course nothing is forever and even natural reasources will run out. Hence Dubai under the good leadership of their King and government has decided to think of ways to remove their dependence on oil.

Strangely, they have developed idea to reinvent the Emirate and best of all their methods have an uncanny familiarity. You got it! They copied Singapore! I might be presumptious to say this but let me prove it and you be the judge.

Firstly, Dubai has a sprouting Tourism Industry. While Singapore continues to promote a Uniquely Singapore, it was not too far away in history that our tagline was the Great Singapore Sale. Priding ourself with Mega-Malls like Suntec and Ngee Ann City. Guess what? Dubai build Super Malls to match and they are bigger if not better.

Secondly, land scarce Singapore has often prided itself with her land reclaimation projects to help us create more land for economic value. Our good friend Dubai topped it and has a major reclaimation project that is unrivalled in grandeur. (A whole city on reclaimed land and shaped like the World Map from the sky! Maybe Ho Bee can start developing residential plots there?)

Thirdly, One of Singapore's pride is our Changi International Airport which was uno numero a number of years. Even today in parliament, it is articulated that for us to become or remain a aviation hub is our national interest. To add to that, we have SIA, our national carrier that is one of our pride, as well being a leader in the aviation industry. To match us, Emirates have been relentless in promoting and upgrading it's service and has now become a comparable competitor to SIA (of course there is Cathay Pacific as well but that's another story). Dubai is also set to become an aviation hub for the MiddleEast.

Apart from aviation, shipping which is the key impetus for the founding of Singapore and its economic growth is also being mirrored by Dubai. (Read : DP World) It is as though the competition from our neighbours is not enough. What Dubai cannot grow slowly they buy and buy relentlessly.

In truth the list is unbelieveably long if you take time to look into it. From Medical Tourism, Electronics Industry, etc. Everything that Singapore does, Dubai copies and not only becoming a mere copy but making it even bigger and better. Soon they move into the high gear and become a financial hub, have Islamic banking or perhaps even Shariah compilant REITs or Business-Trusts.

So what's my whole purpose in going on this rhetoric?

It's simple. 2 lessons.

One. We'd better not rest on our laurels or we'd get our butts kicked pretty soon. (pardon my language) The whole country need to work together and improve our services and whatever nots.

Two. Dubai is our greatest competitor but it can become our greatest friend and ally. I think it's about time that Singapore and Singapore businesses start thinking how we can engage this awakening behemoth in a tighter and more cohesive alignment(or should I say genetically perfected clone of Singapore)

Puns intended. Right now I'm scrambling to see how I can find investment opportunities in Dubai if you know what I mean...

Dewayne

Extreme Fundamentalism Update

2006-02-28T23:02:00.000+08:00

Hello Ladies and Gentlemen, Boys and Girls,

Did you remember the first post that I did for this blog when Ah Huat first invited me? That was way back in October 05 and in my introductory post, I did one on Extreme Fundamentalism. It's been slightly more than 4 months now and I think in the spirit of Quarterly Reporting, I'd present my scorecard too.

As you know Huat is a TA man while I'm the FA fanatic. So how does FA stand it's own ground without the TA hubris? Well here is it. Revisiting the fundamental stocks that I recommended.

My previous comments in Green. My updates in Fashionable Blue.

CapitalLand - The management is stable with very good performance from their sub-units. The company is expanding well and not limited by markets. Locally, the company's high-end projects are in line with the rise of the market.

CapitalLand continues to grow from strength to strength. Although there is a little unrest in Thailand for the moment, CapitalLand is firing on all cyclinders. With subsidaries like Ascott and Raffles continue to create value and cash to reconvert into equity and investment in growth economies. CapitalLand is on track and should have a few spurts left before needing to rejuvenate itself.

Price on 14 Oct : 3.34 Price today : 4.20

Ho Bee - The stock has excellent price fundamentals which is like a averaged linear graph upwards. It is a second-tier stock heavily locked in on high-end projects on Sentosa (2 out of 3 mini-islands) and yet their pricing for those projects are not out yet. Performance of Azure is only an indicator of what is to come for the little outfit.

Good Ol' Ho Bee remains strong as the Sentosa Developer. Prices growing steadly making even good ol' Ah Huat a Ho Bee convert. Don't say I never "cio". In property, it's all a matter of timing and this one has certainly got it right. Threats to the high-end housing is really the foreigner cap and of course the local home loan rates that has been rising quite a far bit in the news. Sentosa however make the ball game a little different because of its exclusitivity. Remain that the IR and other development are still in the pipelines. So hang on for the ride.

Price on 14 Oct : 0.66 Price Today : 0.815

Ascott - It is a market leader in service residences and its assets and value of its business is at a discount to it's price. The company has been expanding well without overwhelming debts and has good y-0-y performance.

Anyone here doesn't know what is ART? Enough said, creating value is untimely the reason for drawning shareholders and hence everyone still cannot get enough of REITs and hence the recent shoring up of prices for Ascott. Breaking it up is really good for share holders just look at prime examples like Coca Cola. Putting the selling and bottling apart for more value. Everything said before still holds true. Good job to the people at Ascott.

Price on 14 Oct : 0.69 Price Today : 0.965

Raffles Holdings - it's in the process of unlocking value for its shareholders and may play an integral role in Capitaland's IR bid. It's current assets are beneficiaries of the development downtown.

After the sale, Raffles kinda dwindled down a little. (or should I say after ex-Dividend) It's price have made a fair bit if recovery however because it seems that the remaining part of Raffles could be up for sale. More uncovering of value for shareholders. Although this might mean nothing is left, but it could mean a new beginning and something is definitely brewing. Just as you would let go of one of your prime stock for good value to start investing in something new, the analogy is the same here.

Price on 14 Oct : 1.03 Price Today : 0.76

Starhub - A victim of Mediacorp's profit taking recently, but still strong and showing an improving financial record. 3G services are here to stay and at infancy and hubbing concept will really go well as a one-stop service provider. Starhub has the greatest probability of adopting VoIP quickly with it's already present broadband networks in Singapore. Risk is the limited local market but it may not be bad in the near time.

The outstanding legal tussel with Singtel has been recently brought rememberance doing not to well for the share price. This coupled with Mediacorp's possible boost as a content provider for a second broadband broadcaster would certainly pile on the competition. It's current position is still quite protected for now but Starhub better get quick on its feets before it it gets sweep off (its feet that is)

Price on 14 Oct : 1.88 Price Today : 2.19

Mediaring - VoIP, enough said. The definite future of things. Good that it is cheap now because it will go a long way. There is anticipation of a possibility of convergence and consolidation with a telco. Think Skype in a smaller scale.

Man oh man, did the good people of Mediaring read Ah Huat's Blog or what? If I'm this accurate I might as well be a fortune teller. Lo-and-behold, I was spot on about convergence and consolidation but not quite with a telco but rather a service provider none other than Pacnet. Indeed the synergies are obvious but nevertheless not so clear cut. Why is that you ask? Let me give you and example. Say you are an ice-cream maker and you make chocolate ice cream. So since you need cocoa as a main ingredient you decide to do some vertical integration. You buy a cocoa plantation. But you don't really need a whole cocoa plantation do you? Now you need to run and plantation plus you need to sell cocoa to other people too because too much of a good thing is a waste. Enough said.

Price on 14 Oct : 0.26 Price Today : 0.305

Jaya Holdings - There is many ageing tugs out there that are looking for renewal and Jaya's proficiency in this area is notable. Jaya has noted that there are scaling back on the more unprofitable sections of its business to mantain operating efficiency.

If you have read the Budget, you would have noted a few pro-shipping initiatives. Especially with regards to ship builder/owners like Ezra and Jaya. Securitisation of vessels is getting a boost and so the industry gets a boost. It's as simple as that. Hooya!

Price on 14 Oct : 1.28 Price Today : 1.30

SFI - This is a slow price mover. (all food businesses are) It is still having the prize customer of the SAF and has an expanding UK business. Apparently, they are taking to the Asian food product lines that is sold there.

Everyone knows that the military has gone to 5-day weeks and plus some new account POS sort of terminal to control cost. This means that blatant wastage in food indent is getting trim and thus bound to hurt good ol' SFI. The resilience and continuing innovation of the company is amazing. They have even branched into packaging of sorts. That's a small feature of course and all other areas have been extremely healthy in terms of growth. Like I said, food companies are somewhat slow but nevetheless steady. The faithful will be rewarded.

Price on 14 Oct : 1.15 Price Today : 1.14

CCT - A defensive instrument like a REIT may be good for portfolio protection. Office rentals are usually the next cycle from the rising rates of commercial space. The government's thrust to promote financial services is a big prime mover for them.

It remains as it is for the REITs market and CCT is still a good yielding one with growth potential.

Price on 14 Oct : 1.60 Price Today : 1.72

CH Offshore - Offshore Marine arm that was divested to the Indonesians. Now they are increasing utilization of their crafts for the coal market demands.

CH Offshore has been quite since splintering from Chuan Hup. It remains however in a growth industry and it well position has a logistic provider in this area. I'll need to do more research if I want to know if anything has changed fundamentally.

Price on 14 Oct : 0.41 Price Today : 0.39

ST Engrg - ST Engrg is has a blurgeoning market share of the Aerospace industry. It is also being to wean itself from the dependency of the local defense industry. It's US presence and acquisitions see that is potential of becoming a big defense player. It's snergies with DSTA and DSO is providing them the technological leapfrogging factors.

ST is really grown from strength to strength. The possible purchase of SIA Engineering could really make it a market leader of the Aerospace industry. It's military technologies and development is apparent very strong as observed from the Asian Aerospace. I think for ST to develop into a defence industry powerhouse is not too hard a target to achieve. Hopefully, the new R&D funds initiative can also be applicable to this field.

Price on 14 Oct : 2.55 Price Today : 3.04

=========================================

Alright! That's all for now, I hope this has been useful.

Adieu.

Dewayne

Learning How to Fish (The First Wise Man) - Part 2

2006-02-04T00:50:00.000+08:00

Hello Trading Fans,

Welcome to the second installment to the Trading Chaos Learning How to Fish series. Actually, I didn't really quite reach that 10 comments target because in part some were by Huat talking about some other stuff and some comments was made by me. Nevertheless, AH HUAT compelled me to write the second installment.

The First Wise Man

Okay, I guess it's common knowledge that you should buy low and sell high. When you buy low, you want to buy as low as possible and when you want to sell, vice versa. This ethos however is contrary to the theories of trend following. If you wait for a trend to appear, you will never pick the bottom or the top of the trend. To do that, you need to be contrary to the prevailing trend. Problem is how can you tell?

There is way however and there are some FIRST signs that you can look out for. The First Wise Man is that FIRST sign.

What is the First Wise Man?

It consist of two component, It requires a Bullish Divergent Bar (for a bullish countertrend) or a Bearish Divergent Bar (for a bearish countertrend). Next you need an Angulation from either of the 2 Divergent Bar to the Alligator and the Alligator trendline itself. Do note that the Bars have to be the highest or lowest bar at the time if is formed. The longer the bar and the clearer the divergent bar the better. Confused? Here are some charts and hopefully is clarifies things.

In this weekly chart of ASIAPHARM near the end of last year, there were clear trend reversal moment. Using The 1st Wise Man, we could have made 10 cents on one swing trade. What's important is not the money but the clarity of the 1st Wise Man on the charts.

BIOSENSOR is a well traded stock and the downtrend was not unpredicted. Using the First Wise Man we were able to put a stop loss or a sell short point. It was triggered 3 days later and we saved ourselves a lot of pain and possibly earned ourself a fair bit of money.

Okay, I hope the 2 charts are able to illustrate the identification of the First Wise Man.

Please note that the First Wise Man is a countertrend identification method and so it's great for stop losses or trailing stops for gains. It can however be used as an entry for a new position but it must be used with caution and in conjunction with other 2 Wise Man that I will cover in the next series.

Of course HUAT has mentioned on the blog that perhaps we can even add stiffer rules like a 45 degrees angulation to make it more rigourous. I think it's unnecessary however because a good angulation is clear and the price bars are a good deal away from the Alligator. Too rigourous and we might just end up not finding the countertrend. Everything is a fine balance.

I hope this series has been useful and I seriously want that 10 comments before I post. It's a drag to know that you take good time to explain such an elaborate system when you don't have readers.

Do feel free to ask questions because this is an exchange. I'll be taking extra effort to answer them and even tell you some of the tricks that I have incorporated with this system.

Adieu!

Dewayne

What is worse than losing money??

2006-02-02T20:59:00.000+08:00

To many traders, losing is undesirable. To some, it is unacceptable. I have learnt to deal with it. Losing is part of the game. I look upon it as a form of feedback, an inevitable part of trading.

Yesterday, something happened that is worse than losing money.

What could be worse than losing money???

It is none other than knowing that you could win money and yet you don't have the capital to partake in that ability. What happened??

For the whole of last week, i have been telling all my friends to buy Celestial Nutrifoods, China Sun, Pearl Energy, Sky Petrol. Especially Celestial. (see below for reason why) And you know what, all my funds are locked up in other counters and there ain't a single DAMN thing i could do!!! My good brudders, LONG GER, Dewayne and Raymond can attest to it! It's really a

TAMADE, KNN, CCB, !@#$%*

Here i am, with a beautiful trade that is screaming at me " DO ME!!!"

And there i am with nothing in my pocket to DO HER.... Sianz!

Lesson Learnt:

Never ever be stuck in a situation with no money. Always leave some cold hard cash lying away in some corner, be it in the bank, biscuit tin, inside the pillow ... whatever. The problem with me is that i have too little cash holding as compared to my total trading portfolio. Believe it or not, i have less than 0.5% in cash. Like it or not, there will be the occasional time when something comes along asking you to "DO ME!!" Always exit some positions when you enter a new one, especially if your cash holding is empty. Always leave $7,000 to $12,000 lying around.

------------------------------------------------------

Back to the reality, why am i so bullish on Celestial and oil counters?? Look at the below futures chart and you would know why. I have incorporated futures into my trading and they have helped me alot. Believe it anot, all these was not on hindsight, wanted to post this on first day of CNY but whole post was gone when my internet screwed up. Hope brudders on this blog manage to participate in the rally.

Soybeans:

Double bottom
End of Elliot 5 Wave and start of the corrective 3 Wave A-B-C
Target of 670
If broken, Next Resistance at 740.

P.s: If you're holding Celestial, Dun sell so soon. It'll break $1 very soon.

Light Crude:

Elliot 5 wave pattern
Target $77
Hurricane season over
Unrest in Iran and Middle East

新年快樂 !

2006-01-29T01:51:00.000+08:00

新年快樂 !

Wishing everyone a Happy Chinese New Year!

May the new year brings good health and prosperity to you and your family!

Learning How To Fish (Trading Chaos!) Part 1

2006-01-12T00:38:00.000+08:00

Hello loyal followers of Ah Huat's Blog,

First of all, I would like to congratulate Ah Huat on his mention on Mr Miyagi's Today Column. Kudos to the young man's determination in bringing good financial advice to all of you sports fans. *Clap Clap Clap*

Now, on to serious business. As you all know, I've thrown the gauntlet out several weeks ago regarding the new Trading Concept knows as the Profitunity system developed by Dr Bill Williams some time ago. The challenge was 10 mere comments to the post before I would post. Lo and behold. It was attained about a day ago and hence now I have to post.

So why did I have to go through all that trouble? Making people post and all that before writing. Makes me some kind of snob isn't it? Shouldn't I just share and cut the chase? Well, I had a small reason for that and it's in part the same kind of discipline that you need to follow a trading system. Once you hit that trigger, you execute. If it doesn't, just sit on tight and not act. Even if there seems to be a good trend building. I hope it proves a rather weak point that I'm trying to make.

Learning How to Fish (Trading Chao!) Part 1 - The Alligator lines

One of the first component of the Profitunity System is the Alligator. The Alligator lines are constructed based on a combination of Balance Lines using Fractal Geometry and nonlinear dynamics. It is made up of 3 Balance lines, which we will have in Blue (Jaw) , Red (Teeth) and Green (Lips) . The Blue Line which is the Alligator jaw is the Balance line and is where the market would be when there is no new incoming information and the distance between the price and the line is investors and traders interpretation of the chao (information). The Red Line is for the significant time frame lower (1/5 of the Blue) and the Green again another significant time frame lower (1/5 of the Red).

Based on what time frame each line represents, it's clear that the Green line is the most responsive followed by the Red and then the Blue. With these lines you will be able to

Monitor market momentum on three different time frames on one chart
Have a simple indicator to know when a trend starts and stops
Use it to avoid a range bound market that can cause you to lose money
Provide an advance indicator to signal the end of a trend

The formula of the Balance Lines are calculated and reduced using a mainframe computer (supposedly) and is accurate to the point of 99.5% (one 1 of 200 trades is wrong)

Blue Line (Jaw) - 13 bar smoothed moving average offset 8 bars into the future
Red Line (Teeth) - 8 bar smoothed moving average offset 5 bars into the future
Green Line (Lips) - 5 bar smoothed moving average offset 3 bars into the future

As you can see Fibbonnaci numbers has a strong presence here.

So now that we have our lines, How do we use it? Let's look at some charts.

This is a Chart of one of our favourite local stock. It's Capitaland. On the chart you can see the nice alligator lines in blue, red and green. When the lines are a mish-mash or entwined or entangled. It mean that there is a lack of a clear trend or an indicator of a range-bound market or you can say that the Alligator is Sleeping. However, with a situation (Look at Mid-July) where the lines start to open up, you can see that the Alligator is Hungry! and it is opening it's mouth in an attempt to chase and swallow up the price. It's trying to seek balance. This is probably the time when your money is worth it's bang in the buck if you toss it into the markets. Unless of course you trade options like Ah Huat.

Honestly, I like the animal analogy that is used because of the simplicity to illustrate a point. So in short, you have a very useful trend indicator that tells you to look for awakening Alligators that are becoming hungry and so you trade those counters to roll in the dough. Comprehende?

Now, there are some little adjustment that you can add on to this trending indicator which Ah Huat uses for a longer time horizon like the 200 MA line. I however think that it's not necessary because it's too long and not indicative of anything. When you say that everything is above the line being indicative of a strong trend, I think it's a given.

Okay, so there you have it. The Alligator, the next post we will be sharing on the 1st Wise Man. (there are 3 in total if you need to know) Once we have the all 3, we'd have the complete trading chaos system or should I say Profitunity system. We'd also see more local charts to illustrate all of the points that I'm making.

Again, I'd collect another 10 more comments to this post before I move on to the next post. If I don't get them, I'd do some profit-taking (AKA stop the series) This is to get you readers involve and like I say, to get you into the whole pyramiding your positions concept.

Adios Amigos,

Dewayne

Financial tips you can trust?

2006-01-12T00:11:00.000+08:00

First of all, i'll like to thanks Mr Miyagi for generating some traffic to my blog, though i'm not too sure if these are the traffic i want. Can you really trust financial tips?? Or should you trust them?? If the tips is in the form of " Buy XXX counter, i've some insider news" or " A lot of people says this stock is good", i think you better run. Buying stocks or put it nicely "investing" on tips is tantamount to suicide.

I'm not saying those blogs (including myself) that was featured on TODAY is no good. In fact, many of them are linked to my blog and mine to them. The thing i wanted to point out here is that they are good not because of the stocks they recommended (although i must say some of them are uncanningly accurate), but rather because of the process of the analysis, the entry and exit triggers and plan. Of course, all these coupled with the respect for the market makes all these blog good material for references.

There really isn't anyway you can exonerate yourself from blame should your investment move against you. And if those tips that you follow should decide to screw you left right centre upside down, i can rest assure you that the people giving you these tips will be busy getting out of the position themselves first before telling you. But of course, if you make a big sum following what we've said, we really wouldn't mind you donating some to us.

Don't ask what the markets gonna do, Ask what you're gonna do when it gets there

Options Academy™

2006-01-05T17:43:00.000+08:00

In case anyone is wondering where i have disappeared to, i am very busy helping some friends come up with advertisement and designs for an Options education provider. In doing so, i have actually discovered one of my hidden "talent" (this is my first time doing and i'm quite satisfied though it may still be not up to par) and i must say i really enjoyed it a lot.

Without further ado, i present:

This actually looks nicer on a white background and cos my site is black, i have border it with red rims. To see how it looks like on white background, click the picture. Back to Options Academy™ , it is setup by a few of my friends who have traded successfully themselves and have in each of them > 15 years experience trading stocks and options . Options Academy™ was formed with the primary objective of providing wholesome education to and creating awareness among the general public on options (warrants) investment in the local and US Market.

The 2 seminar offered on the 13th and 15th are totally FREE!! No Strings attached. Though it is a short course (2hrs), it provides a very good introduction to Options Trading and Investment. For those trading warrants, this short and FREE !!! course is extremely handy!

HAPPY NEW YEAR

2005-12-31T23:59:00.000+08:00

First of all, i'll like to wish everyone frequenting this blog a

HAPPY NEW YEAR !!!

It has been an exciting and fruitful 2005 for me. This is especially so in terms of my trading, both monetary and spiritually. Through trading, i have learn more about myself, my strengths & weaknesses, my bad habits (i wanted to say & good habits, but apparently there isn't) and most importantly, i've known and become good friends with many people, including Roger, Jack, Mike, KC, Frankie, Kok Wee, Dewayne, SL, TT and many others. I've learn a great deal from all of them and i'm looking forward to learn more from them.

The start of the New Year also means that i only have 1 year left before i become a free man - free to persue my own dreams and do what i've not been able to do (hobbies and pastimes) for this past 2 years.

I've never started a new year resolution for myself as i've always felt that they make you more demoralised for not achieving them. But this time round, i shall make an exception. I have not think of them at this point in time. I shall update on this blog once i've thought of them (hopefully before the end of 2006...hahaha). Once again, all the best for the new year!

Trading Chaos!

2005-12-30T01:22:00.000+08:00

Ladies and Gentlemen,

Apologies to all of you and Ah Huat for taking such a looong sabbatical from posting. Anyhow, I'm back. Not that I believe that I am missed.

As you all have already realised that Ah Huat has found a new love which is options. All that cheem CRC and PRC (People's Republic of China?) and PCCRC thing-ma-jig. Now don't belittle them because they really work and I think it's very pro. I'm even learning those from him. Dragonflys, ButterFlys and what-ever not.

So I've promised Huat to give our fans some value for visiting the blog and being so absolutely loyal to it. To give you a bang for your buck, I am please to introduce to you a new way to trade and I have recently mastered and trading with. It's called Profitunity!

A simple Google search would yield results about the Profitunity Group in the US by Dr Bill Williams and his daughter Justine. Now this is really a super super trading concept. How did I chance upon it? Well... it's from this book.

This book can be purchased from Amazon.com or Borders (Amazon seems to be a better deal and it cost me $135 from Border because I couldn't put the book down after I picked it up)

So how does it work you may ask? Well, It is a trading system based on Chaos Theory. Markets are non-linear systems and yet we often use linear systems in attempts to pre-empt, anticipate and predict it. The markets will therefore often mess up our nice positions using mechanical technical indicators and coupled with little or no discipline, we find ourselves getting whacked left, right and centre.

The Profitunity System however is extremely rigorous and robust. It uses a combination of Fractal theory and excellent money management to beat the markets. Now, I know many people are fans of Fibonnacci and Elliot Wave Theory. These methods are actually part of the system but viewed with a different perspective. Fibonnacci are natural occuring sequence that has appeared in many natural occuring things, example. the 0.618 ratio that express the relationship with the numbers in sequence and the one preceeding it, is the same ratio as your navel to your height. Coincidence? Maybe. Elliot Wave Theory is great. But, there's just one problem. Where do you start to count them? Could there be a BIG Wave with a smaller sub-wave in it? Does it mean that the move would be stronger an indicator? If you are like me who cannot count them accurately, this system removes the fuss of counting it. How? Because it uses fractals as a basic pattern to trigger and these fractals are like the smallest unit of a Ellie's wave.

So what's the best part of this system? It's the super combination of the ability to use Candlesticks to indicate a countertrend to enter the market, then using a specially designed Momentum indicator to comfirm the move and pyramid into the position and then using Fractals to generate subsequent buy signals to add your position. Power? The best part that I really like is this notion of Reverse Pyramiding that they advocate coupled with a trailing stop provided by the counter fractals to the view you are taking. This is super position management and risk management.

Excited? I sure am. If I can get more than 10 comments to this post that they are interested. I'd do a learning how to fish series on it and probably you'd save yourself $135 if you are a cheapo and don't want to buy the book.

Meanwhile, I'd put up local stock charts that comform to the triggers of this system so that those people who are even more lazy and wants to be spoon-fed solutions can stay tuned and buy and sell to what I tell you. Good? I accept no liability to the suggestions however because the system is not perfect. No system is. And you trade at your own risk. That's my caveat emptor for you.

That's all for now. Adios Amigos!

MYOG Calendar

2005-12-22T20:00:00.000+08:00

The below is a OTM (out-of-the-money) calendar done on MYOG on 16 Dec. A Calendar, as most options traders would have know, involves the sale a shorter term options against a longer term one that was bought. The OTM portion is something which i like as compared to the traditional ATM calendar as it provides a better Reward-risk-ratio.

The trigger for this calendar is the same as that for the CRC/PRC system :

huge gap up/price movement + high volume + news catalyst in same direction.

Here's the news for MYOG:

Biotechnology company Myogen Inc. (MYOG.O: Quote, Profile, Research) said on Monday its experimental drug for a rare vascular disease met the primary goal in a late-stage study, sending shares up 40 percent. The news sent shares of Myogen up $7.90 to $27.14 on the Nasdaq.

The Myogen drug, ambrisentan, helped improve exercise capacity and delay worsening of pulmonary arterial hypertension, or PAH, a blood vessel disorder of the lungs in which pressure in the pulmonary artery rises above normal levels. Myogen, which is based in suburban Denver, said the drug also was generally well tolerated.

Bill Freytag, Myogen's chief executive, said results from a second pivotal-stage trial of ambrisentan are expected in the second quarter of next year.

As can be seen, the breakeven on expiry is 33 and 51.45. With such a wide range, i am quite comfortable with minimal monitoring. This allows me to profit should the stock stays within the above range at March expiry, as indicated by the black line. However, current profits should be checked using the red line. As of today, i'm having a $130 unrealised gain on this trade, 30% of the $450 debit. Quite decent for a trade less than a week.

March was chosen because of comments by MYOG's rep which states that the next trial results will be out only 2nd Quarter of next year, which means that the likelihood of MYOG blowing past $40 before March is low . IV for MYOG is also at it's one year low, which means any increase in IV will benefit my calendar. Experienced traders may question about the big skews in IV for the mar and Jun options. At the point of execution of the trade, IV skew is between 3-5 points. Even now, during market hours, IV skew is also 3-5 points. This could be a flaw when End-of-day (EOD) data is used.

Some may think that the potential profit of 200% is low for a trade held to Mar06. However, what is implicit here is that should IV rise (and most likely, it will), it will push the risk graph to the left and hence increasing the reward-risk ratio.

Hyflux for Randy

2005-12-19T09:37:00.000+08:00

Hi Randy,

Thanks for following me through ever since i started my blog. It's been some time since i've wrote something about the ocal markets. You may have known that the bulk of my portfolio has been divested to the States. I hope you have been doing well locally. And since you mentioned about HYFLUX, it has caught my attention too and I shall briefly talk about it

The indicators are giving us some mixed signal as of friday close. The last 2 days are 2 nice up days on higher than average volume. But care must e taken that this in itself does not constitute a buy signal as it can be shown historically in Oct 05, there are also an up day with super huge volume but still the stock did not reverse. In early Sep05, we also see a failed attempt to break the 50days EMA (high of day).

That being said, Hyflux's Oscillator is showing some divergence in spite of the lower lows and lower highs. A true breakout should fulfil 2 important criterias: move above 50days EMA and a move past previous high of 3.15 on higher than average volume.

Fundamentally, water recycling and treatment is in great demand and as China gets more stringent on their environmental laws and hygiene standards in preparation for the Olympics and other international summit, business is only going to get better and better. After falling from an all time high of $5, Hyflux current price of $3 represent great value. For long term investor, it is a good time to start accumulating this stock although a true chartist may still need to wait for those 2 criterias to be met before entry.

Regards

HUAT

My Very first PRC

2005-12-07T14:55:00.000+08:00

This PRC here does not refer to People Republic of China. It is what we call a Put Ratio Calendar. Trigger for such trades are a 5% or more change in prices with high volumes and an important catalyst, which could be news or better/worse than expected earnings etc. Of course, the charts would have to agree with the news. PRC makes money when stock moves sideways and down. It is simply a hedge against time should the stock takes longer to react to the catalyst.

The news are as follows:

Career Education (NASDAQ:CECO) , the US campus and online education provider, was yesterday dealt a blow in its ongoing battle with regulators when one of its key businesses was put on a year's probation by a state accreditation agency.

The Commission on Colleges of the Southern Association of Colleges and Schools, which oversees education in 11 states, placed the company's American InterContinental University under review for undisclosed reasons.

AIU incorporates five US colleges and campuses in the UK and Dubai, and analysts are concerned the move could damage student enrolment and the growth prospects of the company's fast-growing and more profitable online business.

Technical Stop: Stock > 37.75
Time stop: 30 days before Apr Expiry (sell or adjust)

Charts

2005-12-03T23:45:00.000+08:00

Capital Land

UTAC

Starhub

COSCO

Kinda busy this whole week. Have attached some charts which i think are longer term plays. Will elaborate on them when i have more time.

Know thyself know thy enemy

2005-11-22T20:03:00.000+08:00

I'm quite sure most, if not all of you, would have heard of this saying by famous strategist, some say general, Sun Tzu:

Know thyself know thy enemies,

A Hundred battles, a hundred Victories!

This quote was taken out from his famous book, 'Sun Tzu's Art of War'. I find this to be very useful to me in many aspects and i find the above especially true in trading. Why did Sun Tzu put thyself in front of thy enemies?

The greatest enemy lies from within, and hence, knowing thyself comes before one should even consider taking on one's enemy. How do we then get to know oneself? Who then are one's enemies?

In this world where we seek instant gratification, what happens when we are offered something nice? What happens when something unpleasant is going to unfold? For the former, we take it without a single moment of hesitation. And for the latter, we try to defer it and hope that time will lessen its impact. What does all these means in the general scheme of things in trading. Put it simply, we cut our profits short and let our losses run. Dun believe this?? i shall illustrate this with a simple example.

Let's assume this scenario:

I present you with (a) a chance to win $10, 000 with probablility of 80% and winning nothing with 20% probablity and (b) a $7, 500 cash offer. Which would you choose?

Let's assume a 2nd scenario:

I present you with (c) a chance to lose $10, 000 with probablility of 80% and losing nothing with 20% probablity and (d) a $7, 500 sure loss. Which would you choose?

More often than not, a normal homosapien would have happily choose (b) in the first scenario and (c) in the second. In the first scenario, expected return of (a) is $8, 000 whereas return for (b) is only $7, 500. In the latter, expected loss of (c) is $8,000 and loss for (d) is $7,500.

Why then do people always prefer taking immediate profits and deferring their loss? Experiments such as the above has been done countless times and the results does indeed suggest that humans are not as rational (one of the core assumptions in economics is rationality) as they may seem, which IMHO, lead to the development of behavourial economics.

I'm sure that there are some who thought "cutting your losses short and let your profits run" sound so commonsensical. I must assure you that in trading, "common sense" are not so common!!

Learning to fish - Divergence

2005-11-15T01:36:00.000+08:00

It's been quite a while since i wrote something on the learning to fish series. I agree that the pursuance of knowledge can never be overemphasized. However, it is one thing to know more and another to pursue knowledge for the sole purpose of avoiding losses. Losses can never be avoided, it is an integral part of trading. If one are fearful of losses, no amount of knowledge can mitigate that. Fears of losses can be very hazardous. In fact, failure to cut one's losses and fear of entering a good trade are some common examples of the consequences of fearing losses. I shall stop here and let you dwell on this by your own.

What is Divergence?
How does Divergence work?
What is the underlying explanation or market psychology behind divergence?

What is Divergence?

To put it simply, divergence is the difference in the directional movement between PRICE and a OSCILLATOR (the oscillator can be a MACD, CCI or anything that measures rate of change of prices w.r.t volume). A divergence occurs when price reaches a higher high whereas the Osc reaches a lower high as shown in the chart above. The converse is true.

How does Divergence work?

When divergence occurs, a POSSIBLE ( i stress again... possible) reversal will take place. Look at the chart above. It is a chart on BIOSENSOR in mid october. As you can see, a divergence has occured with prices going higher, forming a higher top and Oscillator forming a lower high. Anyone who is following this stock will know that after this divergence, BIOSENSOR fall to 1.2++. Isn't this stuff great?

What is the underlying explanation or market psychology behind divergence?

When stock rises, the bulls are in control and they go long. Upon gathering some momentum, the bulls feel elated, they start pyramiding their position by adding to their longs. Those who shorted felt pissed and disappointed and fearful and starts to cover their short. This drives the prices even higher. Once the buying has dries up, the bulls start taking profit, the market undergoes a correction.

When it starts picking up again. The bulls are more cautious and they buy in smaller amounts. The bears think that it's a retracement to the upside. Those who missed the last fall tries to get in (short). This greatly reduces the rate of the rally (which shows under the oscillator as a lower high). Eventually when buying dries up again this time round, the fall will be dramatic.

That being said, using divergence alone without other indicators is not enough. Personally, i use a trend channel and MACD crossover on top of Divergence.

SIBOR? (Are you sure or not?)

2005-11-13T21:51:00.000+08:00

Hello Boys and Girls,

I'm back! I've caught up on the last few articles that Ah Huat have written and I've got only one thing to say. Phwoar! There is no doubt in my mind that Ah Huat is a Market Wizard-wannabe. His recent research on options is really fantastic and if you understand his post well enough, you should know that you have stumbled upon a real gem of a trading strategy. I think he is really super nice for him to share the wealth with everyone.

Okay, enough of admiration for my brother-in-trade. It's not Phwoar I'm interest in but Sibor.

What is Sibor? Is it the hokkein phrase for "You sure or not?" Well, not quite. I'm really referring to the Singapore Interbank Rate.

Well, what is the deal with the Sibor? For one, the Sibor has hit a recent high of 2.92% on the 11 Nov 05. I think that's very significant fundamentally and can tell us some of the things that we can expect of the future. Here's a list of things that I've come to notice when I noted the rising rates.

Sibor is the rate at which banks borrow from one another and rising rates means that banks that are net borrowers have to pay a high rate which would hurt margins. So this means that you wouldn't want to betting on banks that are too much of a net borrower.
Sibor also compels bank to raise deposit rates and this is because attracting deposits is way more attractive that sourcing for liquidity for elsewhere. The money loaned at the Sibor would beat the rate of payout for the deposits from you and me.
Sibor is also a mover of loans rates. Since liquidity in the backroom is now more costlier than before, the money that is loaned out must rake in more to maintain the margins of the bank. Hence businesses with variable loan debts and high gearing would be hit. Most significantly, the REITS as well as investors of real estate property like you and me.
Rising interest rates are a sure fire way to retard the growth rate but it works like a double-edge sword to arrest inflation as well. There is however a remote possibility of Stagflagation (I think Greenspan spoke of this term). This is probably the most tragic or worse case scenario when the interest rates stagnate growth and does not bite inflation hence creating a double whammy.

Alright. Conclusions? If you don't own property like me. Good for you. If you do, it's going to get tough for you in the next few years to come if you don't have a fixed rate. Bank stocks will likely see modest growth and the best bets are the net lenders because they'd earn from everywhere. Deposit rates are set to rise and it many be a good time to start switching some funds out to put them in the 'real' guaranteed deposits. (Fixed-Ds, Time-Ds and whatnots) REITS are going to see some stagnation in capitals gains as compared to the good years but nevertheless, good for income distribution for the years to come. Last but not least, it's a good time to put grain in the store house for the coming winter. I strongly urge more conservative and defensive views in investing.

Of course, now you may say to me .... Sibor?

PS: This is perhaps my 5th contributions for Ah Huat! If you have any topic of interest that you might like to hear about leave a comment and I'd write about it! Cheers.

Quick update

2005-11-10T09:25:00.000+08:00

I know i haven been updating this blog as regularly. The main reason for this is that i've been concentrating quite a lot on US options nowadays. Of course, other reasons are as stated in my earlier post - cognitive dissonance (click here to read).

In fact, i've recently liquidated a lot of my local portfolio. Not all are winners though, there's one loser among them. I think the local markets is still gonna rise but there is now an underlying sentiment of fear on the bird flu issue, until this is removed, the markets ain't gonna rally big. And of course, if this stupid birdie flu breaks out, Asia on a whole would be very worse hit. This is also a reason i'm uncomfortable having 80-90% of my money in singapore on directional trades. If you've been following my blog, you'll probably have catch it somewhere that i'm gonna shift half or more of my local portfolio to the US as i've kinda found a relatively risk-free and stress-free way of trading (please read delta neutral trades).

Just a quick update, i've sold all of my SGX shares, half of my COSCO, all of my SINGPOST (i haven even paid money for this, read comments of this post for reasons why), all of HUANHSIN (this is the loser), half of my ST ENG just this week alone. I'm still in the midst of paring down my stakes locally. I'm still gonna save some here but it's greatly reduced. On top of them, i'm going to possibly do a restructuring (write until machiam alot of money... hahaha) of my local portfolio too, some sort of a year end review.

To end this post, i'm gonna mention a brudder who just started his blog. The stuffs he writes in his blog are real advance and i've learnt a great deal from him so far. He is a real advanced trader who's been to the US quite a few time for courses. In a recent post (click here), he practised his newly learnt GANN analysis on GLOBALVOICE. I'm also vested in this stock 2 weeks back. Here's his blog, sit tight and enjoy:

THE BIG GREEKS

Reviews on Options Seminar

2005-11-06T00:06:00.000+08:00

Today i went to this great Options seminar conducted by ThinkorSwim and hosted by Marketwise Investor. What was even better is that it is FREE ( okay... i admit i'm a cheapo)!!! The usual price for this full day seminar (9am - 6pm) was $350, however, it was provided free for all Thinkorswim account holders (funded) and Marketwise Graduate.

Before i even continue to talk about this seminar, i must clarify that i am not beholden to ThinkorSwim or MarketWise, i do not get any commisions and/or renumeration in cash or in kind for writing this post.

The course was conducted by Steve Rashis and here's a small background cut n paste from MarketWise's site.

Steve Rashis, the head firm trader at thinkorswim, Inc., began his career at the Chicago Board Options Exchange (CBOE) in 1986. He has worked as a CBOE market maker for more than 16 years, with 10 years experience in the S&P 100 Index pit, followed by 6 years as a market maker in the YHOO/NOK/HPQ. After leaving the CBOE in April 2002, Mr. Rashis joined thinkorswim and now primarily focuses on managing the firm’s enhanced index products and option advisory.

Personally, i think he is REAL GOOD!!! The seminar today emphasizes very strongly on the probablistic nature of options and does indeed makes me see options in a different light. Before this, i was very adverse to credit type of trades (credit spreads) or any trades which requires margin (Iron Condor, Diagonal etc). Now, i start to see the beauty of such kind of trades.

Today's seminar was kinda advance for an introductory seminar which i have no complains but for beginners, this is really heavy stuff. I especially like the part on the so called "LEGO" type of trade in which you basically stacked strategies on top of of one another with absolutely no regards as to where the underlying is heading. To put it simply, you don't need to know where the market is going to make money. The bad thing is such trades incurs heavy commision costs, which from a maket maker's standpoint is good. However, from a retail investor point of view, it may not be as good.

The courses does not end here. They have a basic course on the 7th Nov (Mon), a live trading session on 9th (Wed) at night and a 2 days advanced trading camp on the 8th and 9th. I wun be going for these as i'll be overseas on monday and tuesday. (Not bcos it's not free =p)

Nonetheless, there were important lessons to be learnt from the seminar. IMHO, i think the price of $350 was a steal. Most of the options course currently in the market are definitely more expensive. Apart from being expensive, some just look good on the outside (slick marketing) and is crappy. I shan't say who but fellow traders will know who i'm referring to.

The night ended with a FREE ( let me emphasize again.... FREE!) cocktail at IndoChine Bar Opiume with a platform demonstration, wine, booze and food. A pity there's no chicks!

Vega Strangles On Power (VSOP)

2005-11-02T00:02:00.000+08:00

Alright... you've heard the theory about VS and GS. How about some real trades on them? I'm gonna post 2 little pictures on 2 stocks that a VS was actually traded and adjusted. I am quite convinced this is the way i wanna trade my options, are you?

And for those who only trade local stock, a little update on my portfolio. I closed half of my COSCO trades a week or 2 ago and i went in SINGPOST this monday. The charts for SINGPOST looks good and my LOGIC is this:

The festive season is around the corners. Volume for greeting cards is gonna soar and being the monopoly in postal services, SINGPOST is definitely gonna benefit from this. Plus somemore, with deepavali and hari raya around the corner, we sure gonna have more bangala and indonesians maid sending letters and stuff back.

Jokes aside, SINGPOST is well positioned given the innumerous services it is rolling out. And if you believe in cyclical analysis, take a look at 2003 and 2004 nov-jan period. It could be due to the xmas rally, considering what SINGPOST does. Look at how well it is holding ground at the 50% retracement level now. Tgt price: 1.25 by end of year

On the Contrarian...

2005-10-28T12:59:00.000+08:00

Hello Ladies and Gentleman,

I'm about to take a loooong business trip and on Ah Huat's insistence, I am to contribute a nice little piece before I go. (for 2 weeks) It's really scary to be away for that long especially when you have open position. What's even worse is that I'm leaving at a time when the market is wired down. *Sigh*

Well, to fit the mood of the market. Allow me to share with you the concept of Contrarian Trading. As well all know, there is basically 2 main schools for stocks. Contrarians and Trenders. Trend following is quite obvious. They buy into stocks that is making it way up. To do this right, they wait for stocks that break out of a sideways trend and buy it as breaks out of that trading range. Contrarians however are people who bet on the opposite. They are the ones who think that they trend has come to an end. So it's finito. It's coming down. Hence they bet on the opposite of a trend or general pattern.

So the good question is who is RIGHT? Or more appropriately who makes the most money? In my honest opinion. NADA. Zilch. It's neither. (I can feel people from both schools ready to pulverise me.) I believe that Contrarians or Trender should always have a good basis to be in that stand. If a trend has developed and nothing changed so it shall be. If something has busted the bubble then you can think on the contrary. It's as simple as that. Now, I can almost hear you say "Hey Dewayne, how can you work this way. Won't it mean you don't have a stand? No discipline! How can you make money without being consistent in your strategy?"

Well, let me tell you a story. A true trading story. And yes, it's yours sincerely.

Abouth 3 months ago, I've liquidated some shares (SembMarine & Keppel). So there I was sitting in the living room, expecting some money to come in and deciding on my next best bet. Armed with a copy of Shares Investment (You know that little thick book with all the stocks in the Singapore Market having those chartlets and financial numbers & corporate briefs?) I was looking for my next trading theme. Looking at a some many charts and numbers and remembering an article that I read in the Edge Newspapers, I was drawn to Aspial (Ladies should be quite familiar with this). Why? Aspial had a relatively small market cap. The article in the Edge Newspapers talked about very cheap and good companies could enable you to have a controlling stake (of about 5%) for the price of a bunglow/house/apartment. So me in my dreamy state thought that it would be nice if I could continually accumulate stocks in some small and profitable company and eventually own a controlling stake one day. Just like the big boys AKA Warren Buffet but with a Singapore Twist. So what was the draw of Aspial? Apart from the relatively small market capitalization, it was a profitable business. It was consistent and we are in the age of growing female purchasing power. Numerous articles spoke of it. I think there was even an article about the growth of the jewellery business. (It was that obvious) Plus, if you read enough newspapers, look at the growing number of female head honchos! There's even one article in today paper on the new head of Citigroup Singapore Private Banking that move from Morgan Stanley.

So how was Aspial priced? It was at 0.3-0.31. Volume it was low. really low. only 32000 on a good day. This meant that Aspial was fairly illiquid. When I announce my intention to my wife that I was going to buy Aspial, I thought she would be happy (Gosh, my husband in not only getting me the stones but buying the shop! Yippee!) but she ended up being quite the wet blanket. She didn't think it was right given the low volume, no trend, yada yada yada...

At this juncture, Aspial would be a contrarian move. It was beyond the conventional wisdom of buying stocks with good volume and whatever not. Moreover, there was no darn trend. So why should I buy it? Well, to cut the long story short (sorry quite long already) I dropped the idea.

RESULTS?! By now most of you already knew what happened. Aspial bought Goldheart. For a relatively good steal, boost its market share and gave a really good push in her stock prices. $0.40 if my memory was good. That's a 25% captial gain. TAMADE! (to borrow a term from Ah Huat)

The lesson learnt is never listen to your... no joking. The real lesson is, if you a contrarian for a good reason and can see the end result. It could really come true. Regardless of what the market tells you. In this way, you bought into the value that you 'saw' which may not be what people see. Does it matter? I think not. Why? Because I believe that the truth will prevail. And that's how we should really invest.

Okay, end of story. So bringing us back to reality. We have a downward trending market. Are you for or against it? That is the question. Hahaha...

Have a nice day.

Hubba Hubba!

2005-10-25T14:16:00.000+08:00

Good Afternoon Gents,

For all the stock owners of Starhub, I present you good tidings. I think the news more or less confirms the view that I have of Starhub. Honestly, I not sure if the writer reads this blog and decided on the same rhetoric as I have. (Hahaha... like the LTB article mike has on his wonderful blog)

Anyway, to make a long story short. Here is the news bite.

==================================
SINGAPORE, Oct 25 (Reuters) - Singapore's second-largest telecoms firm, StarHub Ltd., probably swung to a third-quarter profit, buoyed by rising mobile subscriptions and the bundling of its broadband Internet, cable TV and mobile services. StarHub's outlook will remain bright for the next 12 months, analysts predicted, as it wins a bigger slice of the markets for pre-paid mobile phone and higher speed broadband services, and as more users migrate to its digital cable TV offerings.

On Thursday, StarHub is expected to report net profit of S$43.4 million for the three months ended Sept. 30, according to the mean forecast of 4 analysts surveyed by Reuters. That compares with a net loss of S$700,000 in the year-earlier period and a net profit of S$52.7 million in the April-June quarter. "StarHub is executing well, and there are upside risks to our
earnings forecasts," said Law Coo Way, an analyst with Goldman Sachs, in a client note.

Law is projecting a full-year net profit of S$170 million for StarHub, a shade below the mean net profit forecast of S$172.4 million from 13 analysts polled by Reuters Estimates. StarHub, which is Singapore's second-biggest mobile phone operator and its sole cable TV operator, competes with market leader Singapore Telecommunications Ltd. and third-ranked MobileOne Ltd. in a saturated domestic market where at least 9 in 10 people own a handset.

In August, StarHub raised its growth forecast for full-year operating revenues to a "low-teens" percentage from "high single-digit" previously. But it warned that revenue growth in the second half of the year could ease slightly compared with the first six months of the year, largely due to the saturated mobile market. StarHub had an estimated 31.5 percent share of the domestic mobile market at the end of June, up from 30.9 percent at the end of March. This puts it ahead of M1, which has a 30.0 percent share of the market, but behind SingTel, with 39 percent. Mobile services contribute the lion's share of group sales at 53 percent, while broadband and cable TV account for about 11 percent and 17 percent respectively.

'HUBBING' STRATEGY

Analysts said the migration of users from analogue to digital cable TV would increase StarHub's average revenue per user (ARPU). The roll-out of new channels (up to 130 from 89 currently), on-demand services, and the introduction of digital video recorders by year-end, would further boost ARPU levels. The firm's broadband services, which offer the fastest Web surfing speeds for the lowest prices compared with rivals such as SingTel and Internet service provider Pacific Internet Ltd. , would also drive earnings growth, analysts added.

Despite intense competition in mobile services, analysts said that StarHub would continue to win market share away from rivals, largely due to its innovative offerings for pre-paid phone card
users, which include a higher number of free international direct dialling (IDD) calls and text messages. Pre-paid users pay a fixed cost for a defined amount of talk time, compared with post-paid customers who are billed monthly for their phone charges. Goldman's Law also predicted that StarHub could enjoy higher profit margins in its mobile business as growth slows. In a saturated domestic market, operators could see margins expand as
they cut back on heavy marketing expenses to woo subscribers.
=================================

Understanding Mayhem...

2005-10-18T13:26:00.000+08:00

I guess after today's morning session, many people may be asking what on earth happened to the property stocks or the STI for that matter. Mayhem is perhaps what we might call it.

Well, let's introduce another fundamental concept to fundamentals.

It's called group psychology and foreign analyst reports. (Merril Lynch, UBS, Morgan Stanley, etc)

Here's the news bite first.

==========================
SINGAPORE, Oct 18 (Reuters) - Singapore's Straits Times Index
<.STI> was down 0.21 percent at 2,283.71 points by 0230 GMT.
Stocks and factors to watch:

- Blue-chip property stocks CapitaLand , Keppel Land
(KepLand) and Wing Tai Holdings are the three
biggest losers in Singapore's Straits Times index <.STI> on
Tuesday morning, falling more than two percent after UBS
downgraded Singapore's largest property developers on Monday.
CapitaLand fell 2.4 percent to S$3.26 while Keppel Land
slipped 3.43 percent to S$3.94. Wing Tai plunged as much as 4.3
percent to a low for the month of S$1.34.
UBS cut its rating on CapitaLand and City Developments Ltd.
to "neutral" from "buy", and downgraded KepLand to a
"reduce" or "sell" recommendation, from "neutral".
UBS analyst Charles Neo said in his research report that
intensifying competition has pushed up land prices and might
reduce profitability for the developers.
"The key risk is sharply higher interest rates. Rising
interest rates will affect REITs' ability to overpay for
developers' investment property portfolios," Neo said, adding
that higher rates also lead to higher mortgage rates.
CapitaLand, KepLand and Wing Tai are the best performers in
the STI in the past three months, each surging around 40 percent.
0230GMT

==========================

First of all, we must look at the validity of the news. The crux of their arguements. "Intensifying competition" "pushing up land prices leading to reduce profitability". Does this hold water? Well, I do believe that if the developer's current land banks are insufficient and intends to accumulate more, their bidding power is really relative to what they believe the market can fetch after the development. Hence is a very long term view. In the near term, what we have witness from The Sail is that second launches are priced more than the first with sunk cost maintaining the same for developers. The sunk cost for land would therefore probably affect the developers after the current developments have run out. (Out of land supply) This is therefore a very conservative view although not wrong.

Secondly, interest rates. This can be a real killer and bummer to everything from the entire general economy to the more expensive mortgage loans and developmental loans undertaken by property players. It's definitely a clear and present danger. Of course it also means that REITs would not be able to pay developers attractively for the property. Again this is a very forward looking view that is a signal of what is to come and reinforces the conservative view.

All in all, this is partly due to the circle of life of the assets. (It's even in the bible) I'd probably write a piece on it in the future.

Since the STI as our great bloggie chief has pointed out is made up of up to 5 property counters. It's bound to take a hit.

Do I think that this will persist? Well probably for the near term. It's probably a nice retracement for people to get in if they haven't (Maybe it's a conspiracy for U** to get into a property position! Hahaha...) Maybe the move is over and it's time for the market to head down.

One thing I'm sure is that it's a shorting market out there... Congratulations Ninja on your successful prediction of Pancakes!

Meanwhile, I'm looking for D+3 days and hope things start looking up.

Oh BTW, I was in at Capland at $2.15 early this year. I'll keep my fingers crossed.

Huat Ah!

Under the Radar

2005-10-17T17:26:00.000+08:00

Hello Ladies & Gentlemen,

I've always loved the under the radar section in Optionetics i figured the Ah-Huat's trading blog could do with a under the Radar section. He would probably like to call it under the sonar but since I started this. It's radar for me.

First the news bite.

===============================
SINGAPORE, Oct 17 (Reuters) - Singapore's Cambridge Real Estate Investment Trust is close to finalising a portfolio of industrial buildings worth up to S$600 million ($354 million) for a stock market listing early next year.
"We've more or less stopped looking for new properties in order to prepare our IPO," Cambridge REIT Chairman Finian Tan told Reuters on Monday.

Set to compete against rival government-linked industrial REITS Ascendas (A-REIT) and Mapletree , Cambridge also expects to buy its first foreign property in its first year of listing.

"We are reviewing proposals from many different countries but haven't made a decision. Clearly growth will come not just from Singapore but from region...and when I say region, I include China," he said.

Although logistics services firm CWT Distribution Ltd. owns a 21 percent stake in the management firm behind Cambridge, the REIT will be the first in the city-state not backed by a major developer.

===============================

First of all, it's important to note that Singapore really has a cap or limit to how many logistics real estate it has and foreign expansion is definitely the way to go.

Secondly, the management of the REIT is everything and considering Finian Tan's track record, I'd go with a slightly positive vibe. The REIT is technically starting off with a good foot. More assets that what Mapletree initially had if I am not mistaken.

Thirdly, considering that this is for the purpose of protecting your assets (Remember REITs are defensive and especially so at IPO because it's accounting priced and not market priced to the DPU) this makes for a good buy with money you know would do better. My move would be to use my CPF OA account with only 2.5% to make a calculated risk of a possible gain 4-5% or more plus some possible capital gains.

Since it's not going to be within the 3 months, I think I better start saving up for it. Year-end bonus perhaps?

Once again, a disclaimer because this is really Ah Huat's bloggie after all. This solely represents my view only and reader are to exercise their own analysis/crystal-ball gazing/tikam-tikam/gut-feel and whatever not. Adoption of this suggestion would be at your own risk. Caveat Emptor. (Buyer's Beware!)

Morning Fundamental Updates

2005-10-17T09:44:00.000+08:00

SINGAPORE, Oct 17 (Reuters) - Blue-chip stocks such as CapitaLand , ST Engineering and DBS Holdings are likely to be in focus on Monday. U.S. stocks rallied on Friday as a report on U.S. consumer prices relieved investors' worry about inflation and strong earnings from General Electric Co. lifted optimism about corporate financial health.

Stocks and factors to watch:

Singapore's CapitaLand Ltd., Southeast Asia's biggest property and hotels group, is set to buy an apartment block in Japan for S$118 million ($70 million) upon completion of construction in 2008, it said on Monday. The company said in a statement the block, with a net floor area of 35,000 square metres, was located on the artificial Island City in the eastern part of Fukuoka's Hakata Bay.

J.P. Morgan on Monday raised its 12-month target price for shares in Singapore Technologies Engineering to S$3.45 from S$2.56, citing the aircraft maintenance group's favourable outlook. It kept its "overweight" recommendation on the stock, but raised its 2006 net profit forecast by four percent to S$443.3 million.

Extreme Fundamentalism

2005-10-15T16:06:00.000+08:00

Hi Everybody,

I'm gonna introduce a good friend and an excellent investor - DEWAYNE .... Unlike me, he is a fundamentalist who does more of a warren-buffet style investment. I thought his involvement and contributions to this blog is a refreshing change from my technical mumbo jumbo. Even though we use different analysis methods, i respect his views and thinks that they makes alot of sense. As you can see in his article shortly, he is very experienced and judging from his portfolio, definitely much richer than me! ..... keke.

As like me, the content of his articles are not inducements to buy or sell any stocks. Every investment entails risk and further analysis should be undertaken by investors, in addition to whatever has been written.

Without further ado, i present "EXTREME FUNDAMENTALISM" from Dewayne.

Your Truly,

Ah Huat

--------------------------------------------------------

EXTREME FUNDAMENTALISM

I am not Ah Huat. Don't Panic. I'm just a Hitchiker. (or you could say Hijacker) Am I a fundamentalist? You bet I am. I'm just here to to offer fresh perspectives to what Ah Huat has been advocating.

First of all, I need to clarify. I am not Ah-Huat's split personality. Secondly, I'm not a cyber-hacker (aka fundamentalist) that has stolen his blog from him. I'm merely a friend who has been invited to help Ah-Huat solve his problem of cognitive dissonance. An offer to write in someone else's diary was an offer I can't refuse. =)

I've been trading the local market for about 4 years. I've been only a little more active in the last 2 years. Reason being the lack of funds in my early formative years. My track record was about 25% annualised and I've double my money in 4 years.

As a fundamentalist, I do not ignore technicals totally. (In fact I respect Ah Huat and admire his skills very much) Every good fundamentalist must use tech-nology to win wars. (erhms) Nevertheless, the first principles are always the fundamentals that form the fundamental LOGIC of the trade. If the LOGIC is no longer there. we're out.

Here are some trading rules that I follow:

a) Spread your risk and diversify your porfolio. I use about 7-12% for each trading idea. This means you can have about 10 trading themes for your portfolio. Note that this does not mean 10 stocks. 2 stocks could be a the same theme. i.e. Capitaland & Keppel Land on the property market revival. It's usually quite hard to have 10 themes (believe me).

b) My cousin who is FOREX trader with Morgan Stanley always told me that real trader are committed and don't move in and out of the market too much. Commission would bleed your accounts slowly. Always ride the winners and quit the losers. (There is the old adage of the 80-20 rule where you are right 20% and wrong the rest)

c) Be forward looking and spot the fundamentals. A strong ROI or ROE, low debts (essentially good cashflows), PTB discounts, Market fundamentals, Company fundamentals and Profit model fundamentals.

So what are the risk of being a fundamentalists like me? Well, we don't time the market because it's irrelevant but we don't get the best deals all the time. We're essentially a medium to long trader (or should I say investors) and may suffer some short term sideways or losing periods. We face the problem with lack or or out-of-sync information.

Okay, enough prep-talk. So show me the money yeah?

Here is a list of my holdings and some reasons for why I still have them.

CapitalLand - The management is stable with very good performance from their sub-units. The company is expanding well and not limited by markets. Locally, the company's high-end projects are in line with the rise of the market.

Ho Bee - The stock has excellent price fundamentals which is like a averaged linear graph upwards. It is a second-tier stock heavily locked in on high-end projects on Sentosa (2 out of 3 mini-islands) and yet their pricing for those projects are not out yet. Performance of Azure is only an indicator of what is to come for the little outfit.

Ascott - It is a market leader in service residences and its assets and value of its business is at a discount to it's price. The company has been expanding well without overwhelming debts and has good y-0-y performance.

Raffles Holdings - it's in the process of unlocking value for its shareholders and may play an integral role in Capitaland's IR bid. It's currently assets are beneficiaries of the development downtown.

Starhub - A victim of Mediacorp's profit taking recently, but still strong and showing an improving financial record. 3G services are here to stay and at infancy and hubbing concept will really go well as a one-stop service provider. Starhub has the greatest probability of adopting VoIP quickly with it's already present broadband networks in Singapore. Risk is the limited local market but it may not be bad in the near time.

Mediaring - VoIP, enough said. The definite future of things. Good that it is cheap now because it will go a long way. There is anticipation of a possibility of convergence and consolidation with a telco. Think Skype in a smaller scale.

Jaya Holdings - There is many ageing tugs out there that are looking for renewal and Jaya's proficiency in this area is notable. Jaya has noted that there are scaling back on the more unprofitable sections of its business to mantain operating efficiency.

SFI - This is a slow price mover. (all food businesses are) It is still having the prize customer of the SAF and has an expanding UK business. Apparently, they are taking to the Asian food product lines that is sold there.

CCT - A defensive instrument like a REIT may be good for portfolio protection. Office rentals are usually the next cycle from the rising rates of commercial space. The government's thrust to promote financial services is a big prime mover for them.

CH Offshore - Offshore Marine arm that was divested to the Indonesians. Now they are increasing utilization of their crafts for the coal market demands.

ST Engrg - ST Engrg is has a blurgeoning market share of the Aerospace industry. It is also being to wean itself from the dependency of the local defense industry. It's US presence and acquisitions see that is potential of becoming a big defense player. It's snergies with DSTA and DSO is providing them the technological leapfrogging factors.

Alright. That's not the end of my holdings but I'll leave it at that. Do note that these fundamentals change and are constantly relative.

This couple with Ah Huat's excellent TA. I'm sure we will all Huat-Ah!

DeWayne signing off...

Oops.. I did it again!

2005-10-15T13:46:00.000+08:00

I think i have a real problem here. I'm too lazy. I have a inertia to find new stocks until somebody pointed me to a direction or until i read about it somewhere. Ended up, i always talk about the same stocks over and over again.

This time round i'm doing it again (oops... i did it again). Anybody here have any good potential stocks with daily average volume of > 300, 000 lots and at least 3months history that needs to be analysed, please leave a comment. I'll try to provide some analysis. I see this as a method to open up my stock selection.

Stocks to watch

2005-10-11T00:53:00.000+08:00

On leave today. Damn shiok! Had lunch with my University Professor - Anthony, then went for a swim in the afternoon followed by a leisure jog in the evening. Finally, ended the night with some light beer at Baden, Holland Village with a good friend. I call him LONGER! (his name ends with a "long" and ger means brudder) - pls do not think of this in a sexual connotation.

Anyway, not much inspiration to write anything. Suffering from a major mental block. i did scan through the charts during the weekend. Nothing much except for the same old stocks i would recommend - BIOSENSORS, SGX, COSCO, CAPLAND etc. A few of you pointed out that LABROY broke support of $1. It is a fact and i do not deny that. i trade on what i see, not what i think. Being a good trader, i should cut loss and sell it. But i do also see that, it broke support on low volume (half of average vol). I will give it a few more days before i cut loss.

Wanted to go in MEDIARING but at a price of 0.285 and given the technology it is dealing with, it's kinda speculative for my comfort. Don't get me wrong, the chart looks good. It's just me. Not comfortable.

Eventually i found only 2 to monitor and maybe to trade. I shall just post them below. Do take a look. Both are very simlar - reversal play (as Ninja termed it). The thing i like about them is the limited downside risk and the high profit potential. Strategic Stop loss and profit taking point make both very attractive trades.

HUANHSIN

NOL

Remember:

It is not how many times u win. It is how much profit you take when you win and how little you lose when it is not a winning trade!

The best place to park your money!

2005-10-05T23:19:00.000+08:00

I just got home after going down cold storage to buy 12 bottles of Erdinger (4 bottles + 1 mug cost only $26.8 ... promotional offer). They're now placed nicely in my wine chiller, beckoning me to drink them... hehe

Am i having a celebration ? ? ?

No... Not yet. The rally has only just begun.

To tell you the truth, i just have a knack for good old beer lately. Especially german beer. Don't get me wrong, i'm not a diehard alcoholic. I just like to enjoy a cold glass of beer after a hard day of work while i surf the net and scan my charts.

At this stage, I must clarify that the recommendations that i've made are for myself. They are not inducements to buy and/or sell. Although you probably would have made a neat sum following them (I know of someone who does... A, pls identify yourself ... haha). That aside, i think penning my thoughts and charting on a blog does help alot. A pity i have not find ways to write more about my options trading, and i seriously suspect this probably explains for my lacklustre perfomance in the U.S options market. (I've jus made $500USD less in 3 days due to not having a concrete plan).... TAMADE!

The US market fell through the floor yesterday after those stupid fellows at the Fed TOK COCK (quoting my brudder Mike) at market close. It seems tonight the after effects are still there. However, the local markets seems to shrug it off.

I sold off all my STARHUB today @2.05. It's a good stock but the target just don't seem to worth the wait, given that the charts and the sector doesn't look so good now. The main reason, perhaps, is the rationale for me doing the trade is gone. I shall term this as the LOGIC of the trade. I did this trade around 10-11mths ago when the IPO just came out. The LOGIC of the trade being:

"STARHUB and M1 are similar companies with almost equal market share, with STARHUB having the advantage of SCV and broadband. Given the case, it's price will eventually catch up and overshoot that of M1's"

Bear in mind this LOGIC of this was out before i knew any TA. I learnt all i know only this year.

Back to where i was, if the LOGIC for the trade was gone or has been met, the main impetus for the trade will be gone. Likewise for people doing IR play, once IR results is out, then one should plan to exit the trade... and so on and so forth. Of course, the other reason for bad outlook for the telco sector (IMO), is the saturation of the local phone market and the advent of VoIP technology. Imagine if now it cost a fraction of the cost for you to make IDD, dun you think telco's bottomline gonna be hurt?

Hmmm... Maybe this would explain why companies such as GLOBAL VOICE and MEDIA RING was in the limelight.

Now, with the delay of the RFP for the IR and the boom of the property market, coupled with the earlier reasons mentioned in my previous posts (effects of guidelines relaxation kicking in + end of hungry ghost festival) , it seems Capland and the likes (i.e. keppel land, CDL etc) are in for a bull run until november. My target remains $3.48. To a certain extent, i felt the delay of the RFP is actually a blessing in disguise. This stock was identified just last week but i think it's still not too late to put the money in (at least for me, my LOGIC are still intact)

Last but not least, I always feel that the Marine sector is the best sector to put your money in. Be it SEMB MARINE, COSCO, CHUAN HUP, LABROY etc. Also remember, freight rates just increased 1 Oct. Once earnings season comes, these stocks will not sail, they'll FLY!

My Portfolio

2005-10-02T23:49:00.000+08:00

I did mention during the last article that i'll post my the stocks i'm currently holding. I not afraid of people sabotaging my trade for i am of the view that i'm jus a small fry compared to the market. The purpose of posting my portfolio is to remind myself the reason for the trades and for me to review on my trades. The portfolio posted is by no means an inducement to buy or sell. The criteria for stocks that i trade are very simple:

Liquid stocks
Fundamentally sound
Technically attractive
Sector outlook clear

Biosensor

Cosco

Labroy

Capital Land

My current portfolio includes but are not limited to the above charts. The others are STARHUB(bought @ IPO 0.95), ST ENG (bought @ average price of 2.2 3 years ago), UTAC (bought @ 0.66 a few days ago).

Some others that were bought and sold recently includes SINGTEL, HYFLUX, SINGPOST, STATSCHIPAC, BIOTREAT, COMFORT, OSIM ........ etc

Those that are on my watchlist are NOBLE, COMFORT, MMI, CHUANHUP, BIOTREAT.

Lastly, i think the bulls have started their run. We are in the 6th week of the bullish 20 week cycle in a bullish year ending with 5. If there are no more external shock factors such as the likes of Katrina, the rally should continue till next year Feb. Of course, i could be wrong so hope for the best and be prepared for the worst!

Learning to fish - Continuation Patterns

2005-09-27T01:04:00.000+08:00

The chart patterns covered in this series are what you would call Continuation Patterns. As the name suggest, these patterns usually indicate that the sideways price action is nothing more than a breather in the prevailing direction. Let's start off the series with the most common pattern - Triangles.

There are three types of triangles - symmetrical, ascending and descending.

The symmetrical triangle shows 2 converging lines, the upper line descending and the lower one ascending. The ascending triangle has a rising lower line with a flat upper line. Contrastingly, the descending triangle has a downward sloping upper line and a flat lower line. The point where the 2 line start is called the base of the triangle and where it end, the apex.

While the minimum requirement for a triangle is 4 reversal points, many triangles like the one shown above have 6 reversal point. This means that there are usually 3 peaks and 3 troughs.

The triangle, also provides an interesting combination of price and time. The converging lines give the price boundaries of the pattern, and indicate the latest time the pattern has to be completed. However, it has been observed that most triangles have breakouts somewhere between 2/3 to 3/4 from the base to the apex. If for example, the height of the triangle is 30 days long, the breakout should occur on the 20th to 24th day from the base.

Volume should decline as prices ding-dong within the triangle. However, it is important to take note that in the case of a upwards breakout, volume is higher on the up-moves during the ding-dong upon close scrutiny.

There are 2 ways to measure the extend of the breakout. One is to measure the height of base (AB) and project that distance from the breakout point at C. The other is to draw a parallel line upward from the top of the base (A) parallel to the lower line in the triangle.

Take a look at my previous post. Alternatively, there are many good chartist around and a lot of them have drawn some very pretty triangles which you can use to practise yr charting skills. Among them includes Forrestgump, Gallen, Kaze, Dreamer's.

-------------------------------------------

Many people are asking me for recommendations. Sad to say, my trading style does not generates recommendations like nobody business and most of the time, i keep to the same few stocks. Of course, the most important reason perhaps, as you may have guessed is, i dun have so much money!!! I'll maybe put up the stocks that i've currently holding and the time and prices i've entered them on my next post.

Cognitive Dissonance

2005-09-22T00:21:00.000+08:00

I don't write with the verocity and the fervour that i use to when i started this blog. It could be a sign that age is catching up with me... haha. Or it could simply be the dissonance between my trading style (mid-long term) and my writing frequency.... bombastic words (WTF? Trying to act cheem?) ... haha.

I studied some psychology in my Uni and it suddenly comes to my mind that that perhaps the above phenomenon can be explained using some stuff i learned then. Dissonance is a psychological phenomenon which refers to the discomfort/conflict felt at a discrepancy between what you already know or believe, and new information or interpretation.

In simpler terms, the style of my trading and the freq of writing creates an imbalance due to extremes nature of both activities.... asif i write alot *chuckle*.. this creates a dissonance which can only be reduced by 2 ways

1) Increasing my trading activity 2) Reducing the freq of my post.

However, option (1) is definitely a no-no for me as increasing trading activity leads to increased commission and slippage without neccesarily leading to higher profit. As a result, i choose option (2).

Anyway, i never like to tell people how accurate my recommendations are (too ego) as i always believe the most important thing of trading is not how many times you get it right or wrong. It is how much you make when you're right and how little you lose when you're wrong. There are many out there who can be right 60% of the time but they make less than someone who is right only 40% of the time. It can be easily traced if you go thru my blog.

Just in case any of you felt bored listening to my ramblings, i've attached a chart of a stock i've picked. Cut loss at 0.645, take profit 0.74. I'm not saying which though... make a guess?

No prize for guessing it right.... or is there? =)

*WTF = What The Fuck?

Stock Reviews - 20 Sep

2005-09-20T00:31:00.000+08:00

It's been quite a while (last was 1st Sep) since i reviewed my stocks. I shall go through them again. The general environment is still very cautious. Many retail investors tends to take profits very fast during a rally. All this results in consolidation. One general observation about consolidation though, is that, the longer and tighter the consolidation wedge, the greater is the next breakout! Coincidentally, the theme for this review is also consolidation!

Labroy Marine

Good stock with great fundamentals. A picture tells a thousand words. Look at the chart above. In fact, many marine stocks also exihibit simlar characteristics but Labroy has the best chart. I like COSCO too.

SGX

The mother of all stocks... haha.. i know you were thinking of something else. If the STI rallies, this stock is definitely gonna make lotsa money! Imagine the clearing fees and the value of transaction.

Biosensors

This stock rallied today on news of patent approval in US. Will it stop here? I don't think so. Next target at $1.38. I won't be surprised if it close above $1.3 tomorow.

Capital Land

Hey... wait a minute. This isn't one of the stock in my previous reviews. You're right! This is the newest addition to my portfolio. Like what i told "Hammie" in my tag-board. Property stocks are the next sector to watch. With the passing of the hungry ghost festival (dun be surprised how superstitious sporeans can be) and the effects of the housing relaxation coming in coupled with the spillovers from tomorrows launch of PRIME REITS, property stocks sure looks good. I like Capland especially!

*Many of the TA is in the chart so i shan't bother to explain too much. Left click on the charts for a better view. For my previous reviews, click here.

Stock Reviews - 1 Sep

Stock Reviews - 15 Aug

Of Gamblers and Wankers

2005-09-16T23:27:00.000+08:00

Gambling is one of the oldest activities on earth. Gambling was said to have existed ever since the start of the chinese civilisation, which may well explain why most, if not all chinese are born gamblers. Gambling is nothing more than a game of probabilities, chances and odds. Trading, in its purest form is nothing but Gambling. Whereas in gambling where the odds are always (yes, i emphasize ALWAYS) against you, trading allows you to have the odds in your favour.

Consider a roulette: it has 38 slots, 1-36, 0 and 00. If you get the number correct, you get $36 and nothing if it's wrong. What's the expected return? ..... Simply take $36 divided by 38, which gives 95 cents. Playing this game infinitely using 95 cents just allows you to breakeven, but no casinos gonna let you play this game for 95 cents. In reality, this game probably cost you a dollar............. Why then do people still gamble?

It is believed that gambling is a substitute for masturbation, as the famous Sigmund Freud once said. Quoting Alexander Elder, "The repetitive and exciting activities of the hand, the irresistable urge, the resolutions to stop, the intoxicating quality of pleasure and the feelings of guilt link gambling and masturbation"

Doesn't all the above sound too familiar? ..... No No No... i'm not insinuating that you're masturbating (which you probably are guilty of anyway), but doesn't this also seems like the time when you're trigger happy and places one trade too many? Doesn't this resembles the instance when you lost money and told yourself to stop?

The next time you masturbate..... i'm sorry, i meant to say trade or place your bets, ask yourself this question:

Am i doing it too often? Am i betting more than i can lose? How many times can i bet before i lose my whole account?

--------------------------------------------

If you don't bet, you can't win.

If you lose all your money, you can't bet.

BUTTERFLYS

2005-09-13T12:03:00.000+08:00

Options are an amazing financial instruments which allows higher profits with lower risk, given that it is used correctly. There are 101 strategies that can be used, depending on the prognosis of the stock. And out of so many, i have to admit that the butterfly is one of my favourite strategies in options. I use it to play the sideway markets, bullish markets and bearish markets. This is a wonderful strategy and used originally for a non-trending market, however, when used correctly in a directional way, the profits can be up to 1000%.

So how does a butterfly work? It may seem daunting to the beginner options trader, which in fact is a combination of 2 vertical spreads: a credit spread + debit spread.

A call butterfly involves the purchasing of 1 lower strike call (e.g. $45) + selling 2 higher strike call (e.g. $50) + Purchasing a even higher strike call (e.g. $55). The whole cost of which is $2, given the following parameters:

Underlying @ $50, $45 call= $7 $50 call= $3 $55 Call = $1

At expiration, if underlying remains at $50, only the $45 call would be ITM and be worth $5, the remaining calls worthless. Hence, max profit occurs when underlying is $50. Breakeven is at $47 and $53.

One way of using ATM butterflies is to identify key support and resistance level and place the breakevens at those level. A very good example would be Yahoo. Very strong resistance and support at $30 and $40.

Personally, i prefer using butterflies to take directions. At times, butterflies with 30 cents debit can be done with reward/risk ratio of up to 1000%. It can even be done at zero cost if it is done one leg at a time. Of course, that entails certain amount of risk. Execution is the easy, it is always the exit that is a problem for a fly. Attached is a fly on PD done on Mar.

System Trading

2005-09-13T01:56:00.000+08:00

Today was a tiring day. Spent some time going throught a new trading system with Mike. I must say it is an fairly simple and interesting system and results are promising. This particular system is for the US markets although it could be further tweaked for the local markets. I love system trading, it eliminates all emotions and guessing. The problem is up till now, i've yet to find a really good one. Hopefully this works!

Pictures speaks a thousand words. Today i shall not write too much. Instead, i shall post 2 charts and solicit some response from everyone. Please leave yr comments.

STATS CHIPAC

FibreChem

Which sector is good?

2005-09-09T21:51:00.000+08:00

We have come to the end of a very mixed week for the local bourses. Indeed, the last few days can be considered DOJIs with relatively low volume. Likewise for the US, we have seen some very strong buying on tuesday and wednesday after news of Katrina's aftermath was out.

Get the joke??......... wahahahahaha..... indeed

The market on the whole are just very reactive to oil price. The moment Katrina passed, people started to short oil even when assessment of the damage was still not out yet. This is a very good example of "Buy on rumours, sell on news". Of course, we cannot discount the fact that a few countries started releasing their oil reserves. But at least, demand due to speculation has been quelled at the time being. At the same time, as oil production from rigs affected by Katrina slowly resume, we shall see oil supply decreasing slowly.

Reduced demand and increasing supply. What does basic economics tells us? Yes.... you are right!

OIL PRICE WILL FALL!!!!

Although to what extent we do not know, but for those who is spending $90 to top up a full tank ...... !#%&*@^ ........ it's GOOD NEWS!!! Expect discount at petrol kiosk coming up soon.... *rub hands gleefully*

You may now ask what is a good sector to get into with the oil decline. If you ask me, compared to high oil days, every sector is better..... hahah..... stupid answer.Ok ok... let's be serious.

To a huge extent, singapore stocks are very much affected by the general thrust of sentiments in the US. I strongly urge everyone to look at some of the sectors ETF and indexes for a general feel of where the stocks are heading. After looking thru the whole list, i found this very nice setup withing the SMH - Semiconductors holders. Basically, this is an exchange traded fund for major semiconductor companies including NSM, TXN... blah blah blah.

SMH

Look at the higher lows and higher highs. start looking for good local semiconductors stocks. Just buy the leaders of them all. Myself?? I bought STATS CHIPAC a few days back. This is not an inducement to buy. Do your own research.... i'm not gonna take responsibility. I've identified my profit taking point and cut loss point... Have you?

Lastly, I've realised i'm too narrowly focused on the local markets. I wanna be more global in my outlook for my site. Slowly, i shall introduce more on the other markets. But for today, i shall introduce one very good US stock that i really like.... CME - Chicago Mercantile Exchange (By the way, i've bought the singapore equivalent @$2.22 ... make a guess). Still thinking whether to do a OTM butterfly or a OTM Calendar? Anyone any suggestions?

CME

Are Great Traders born or made?

2005-09-06T23:27:00.000+08:00

Can Great Traders be taught?

If you ask me, my answer is YES!!

I am a strong proponent of the nurture side of the argument. Of course, it makes it easier if you're born with the flair but it doesn't mean one cannot achieve this if one is not born with it. If you're thinking of quitting due to heavy losses the last couple of weeks or wondering if you have what it takes to be a Great Trader, maybe you should read the real story below before deciding.

The key to a Great trader is nothing but Displine!

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In mid-1983, famous commodities speculator Richard Dennis was having an ongoing dispute with his long-time friend Bill Eckhardt about whether great traders were born or made. Richard believed that he could teach people to become great traders. Bill thought that genetics and aptitude were the determining factors.

In order to settle the matter, Richard suggested that they recruit and train some traders,and give them actual accounts to trade to see which one of them was correct.

They took out a large ad advertising positions for trading apprentices in Barron’s, the Wall Street Journal and the New York Times. The ad stated that after a brief training session, the trainees would be supplied with an account to trade. Since Richard was probably the most famous trader in the world at the time, he received submissions from over 1000 applicants. Of these, he interviewed 80.This group was culled to 10, which became 13 after Rich added three people he already knew to the list.

“The students were called the ‘Turtles.’ (Mr. Dennis, who says he had just returnedfrom Asia when he started the program, explains that he described it to someone by saying, ‘We are going to grow traders just like they grow turtles in Singapore.’)” – Stanley W. Angrist, Wall Street Journal 09/05/1989

The Turtles became the most famous experiment in trading history because over the next four years, they earned an average annual compound rate of return of 80%.

Yes, Richard proved that trading could be taught. He proved that with a simple set of rules, he could take people with little or no trading experience and make them excellent traders.
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Are you convinced? No?

For those interested in the turtle trading rules, leave your email under comments, i'll sent you the full article at the end of the week.

Stock Alerts! - 4 Sep

2005-09-05T00:52:00.000+08:00

Market has been trending sideways and consolidating for the past 2 weeks. I firmly believe these are the times when weak holders are shaken off (especially if your entry timing are wrong) and most stocks are accumulated at the strong holders side. I'm very much an optimist although i do not buy stocks and pray and hope. Nonetheless, i am still rooted in my belief that the STI is in for a major bull run and further more, it's gonna happen within the month.

In addition to the stocks that i'm very much in favour (i.e. Labroy, Biosensors, cosco, SGX etc), i found 2 good stocks (in terms of fundamental and technical) while going through my weekly charts review. I shan't say too much as i've attached the charts. Identify the correct entry and exit (cut loss trigger and profit-taking pt) and everything should be fine.

CHUANHUP

Strong support at 0.865 (stop-loss trigger)
Resistance at 0.97 (1st level profit-taking pt)
Target of 1.03 based on Elliot wave. (2nd level profit-taking pt)

SINGTEL

2 levels of Support at $2.57 and $2.53. (Stop-loss trigger)
3 levels of resistance at $2.7, $2.75 and $2.85 (Profit-taking pt)

Learning to fish - Candlesticks II

2005-09-03T04:20:00.000+08:00

Learning to fish - Candlesticks I was very well-recieved which prompted me to continue with candlesticks II. Over here, i must reiterate again that candlesticks are a visual representation of mass psychology, which means that this charting method works well only on stocks with high liquidity (i.e. volume). Stocks with low transaction volume are highly susceptible to manipulation by a few large players and hence it becomes the psychology of just a few people, which makes it hard to fathom.

In addition, candlesticks works extremely well in shorter timeframes, 5 min and 15 bars. When using daily charts, it is still useful but it may be too late to enter upon confirmation by candlesticks pattern. Although i do not practice intra-day trading, i do use candlesticks to time my entry and exit for my longer term trades for less slippage. Without further ado, i shall introduce 3 more candlestick patterns i find useful:

BULLISH HARAMI

The 1st day is a long black day.
The 2nd day is a short day whose body is engulfed by the 1st day's body.

Psychology... A long 1st day with high volume in the existing downtrend brings complacency to the bears. The next day trades in a small range within the previous day's real body. Light volume on the 2nd day should give rise to concern by the bears of an impending change of trend. Look for higher prices over the coming days, especially if the next day provides confirmation of a trend change by closing higher.

BULLISH LADDER BOTTOM

1st three days are long black days with lower opens and closes each day.
4th day is a black day with an upper shadow.
The last day is white that opens above the body of the 4th day.

Psychology... In a downtrend and after moving solidly down for three consecutive days, the bears feel in control. The 4th day prices trade near the open of the previous day, but close at another new low. This draws attention to the bears who realize that markets do not go down forever. If the next day opens higher, then shorts will lock in profits. And if volume is high, then a reversal has probably occurred.

BULLISH HAMMER

Small real body at the upper trading range.
Color of the body is not important.
Long lower shadow at least twice the length of the body.
Little or no upper shadow. Previous trend should be bearish.

Psychology... As with any single candlestick, confirmation is required. The Bullish Hammer formation shows the price goes much lower than the open then closes near the opening price. This fact reduces the confidence of the bears. Ideally, a white real body Hammer with a higher open the following day could be a bullish signal for the days ahead.

Stock Reviews - 1 Sep

2005-09-01T00:48:00.000+08:00

It's been some time since i did a market review and i think it's about time i review on some previous stock picks and at the same time, add new ones (that is, if i can find any).

Due to my sheer laziness to edit any pictures tonight (just came back from overseas trip and beer), i decided to link the counters to Yahoo! charts, so that everyone can see how useful Yahoo! charts are (though update is slow at times). Just click on the counter names.

LABROY - One of the stronger marine counters. Stong support at $1, in fact, it has held strongly above $1 for the last 2-3 weeks when the market has fell badly. Today, Doji was formed on low volume. Recommendation BUY!

OSIM - Broke our trigger point of $1.33 at the last review on 15 Aug. I sold mine at $1.34 around 2 weeks back when my cut loss point was triggered when OSIM fell out of it's strong trend channel. However, the stock has rebounded from the week's low at $1.25 held on well above the $1.3 level for the last week. Stiif competition from OTO, VGO and many other similar companies may hinder the growth prospect of OSIM. HOLD...

BIOSENSORS - Recommendations on this counter remains as BUY as menitoned in the 15 Aug Review. Tremendous breakthrough on tues. News of the bio-stents caused the stock to break the $1.1 resistance. Outlook for the company looks damn good! Even as i'm typing this post, i've already added on to my current position.

As for those that i've already downgraded to sell in the last review, i shall not mention those (SAT SVC, ASIA PHARM etc) again. In addition, i'll like to take your attention to

SGX - Strong support at $2.3. Good companies with great products, service and strong, consistent dividends. IPOs launch for year 2005 has picked up again (open up the newspaper for the past 3 months, you'll know what i mean). Although volume has reduced to a trickle for the past week, average volume for this year is much bigger compared to last year. You can also be sure that this company will be the first to make money when volume comes back (doesn't matter if it's bullish or bearish).

That's all for today.... I'm too tired to write anymore. Will attach the charts at the earliest opportunity when i'm not too lazy =P

Warrants/Options

2005-08-28T17:17:00.000+08:00

I have been trading US options since last year. With the exposure, many of my friends are curious why i do not trade warrants in singapore. In fact, i wouldn't have written this post if not for the fact that sombody requested me to do an article on this + the fact that many of the top volumes nowadays are warrants. As i am not an expert in warrants, i shall do a short intro and use options as a benchmark to compare them. I shall use the terms warrants and options interchangebly for the rest of this post.

Warrants are really just options that work slightly differently. Options can be written by practically anybody on stocks that are already floating in the market, warrants are issued by financial institutions on stocks not yet issued. When they are exercised, the company issues more of its own stock and sells them to the option holder for the strike price.

"The exercise of a warrant therefore leads to an increase in the number of shares outstanding" - (pg 163, John Hull, "Options, futures and other derivatives").

A call option gives the owner the right to purchase the underlying at a price (strike) within a certain timeframe (expiration).

A put option gives the owner the right to sell the underlying at a price (strike) within a certain timeframe (expiration).

In general, the trading name of a structured warrant reflects the following information (in sequential order):

Underlying instrument
Issuer (in abbreviated form)
Exercise style (American or European style warrant);"e" represents an European style warrant. If the letter 'e' is not denoted, the warrant is an American style warrant
Traditional and non-traditional warrant;"X" represents a non-traditional warrant. If the letter 'X' is not denoted, the warrant is a traditional warrant.
Type of warrant (Call or Put warrant);and"CW" represents a call warrant. "PW" represents a put warrant.
Discount Certificate;"DC" represents a discount certificate.
Expiration date. The expiration date is represented in this format: yy mm dd

There are 4 important Greeks associated with options. They are namely: Delta, Gamma, Vega and theta.

The above is a risk graph of a long put for illustration purposes.

Delta refers to the change in option price due to change in underlying price. In warrant terms, delta is the what people call gearing ratio. Calls will have positive delta and puts negative. Deltas are 50% when options are at the money (ATM). As the options go deeper in the money (ITM), Delta tends to 100%.

Gamma refers to the change in delta due to the change in underlying price. Delta is to velocity as gamma is to acceleration. Long options have +ve gamma and short options have -ve gamma. Gamma and theta are inversely related.

Vega, is what we called implied volatility (IV). It is one of the most important variables in option pricing which is neglected by many people. When we long options, we want IV to be low and when we short, we want IV to be high. The same thoery of "buy low sell high" applies to vega. In layman terms, Vega refers to the chaos (fear and greed). The more chaotic it is, the more expensive warrants cost, other things constant. Once the hype passed, warrant price drops drastically even when underlying price remains unchange.

Last but not least, Theta refers to the time decay of a warrant/option. Any long position in the above results in a negative theta. At or near to expiry, theta becomes zero. It is important to take note that time premium decays exponentially in the last 30 days, hence, never ever hold options into the last month of expiry, unless you are doing some advanced strategies.

Options provide a form of low risk, high return investment when used correctly(you are better off buying the underlying if you do have the know-how). In addition, it also offers hedging and means to profit from sideway markets when a combination of options are used. Check out the optionetics link on my side bar for more detailed explanation and analysis.

Have fun exploring!

The Guru (...Continued)

2005-08-26T01:13:00.000+08:00

Before i continue writing this blog, i gotta reiterate that i went for this meeting not with the intention of it being an interview, much less as a post. It all started as i was thinking of introducing market wizards to my frens here and the fact that i was all too excited about the meeting that day. I combined the 2 and it ended up with "THE GURU" ... haha

Having said this, the conversation part was construed to be as close to what we said as possible, given the fact that i'm getting abit senile.

ok... where were we? Oh ya... The 10 criterias. As i have not yet gotten permission. I shall just state all the indicators in the criteria only. Edward uses a combination of candlesticks, CCI, stochastic, ADX, and OBV to generate his buy and sell signals.

In the midst of the conversation, Edward handed us another piece of paper which says "Successful Day-trading Nikkei & Simsci" to which he says,

This is a course which i am conducting. Do not be mistaken, i am not asking you to sign up for this. Take a look at the contents.
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Hmm... Looks interesting. It is very structured and the notes are very user-friendly. How long have you been teaching people trading?

18 years or more. I teach people how to trade. I also teach brokers and remisers how to be a better broker and remiser too.

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Does broker and remiser need to be taught too?

Yes... of course. It is an art to keep your good customers and increase their trading size.

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Wow... do you have a specific software you are using to teach? Is it the same as the one you are using now?

Yes. This is a very good software. It wasn't as good few years back then. I provided some feedbacks and suggestions. It has since improved by leaps and bounds. A lot of brokerage firms' remisers are using it. Recently, it is also very popular in shanghai. The current management is much better at marketing the product. Just at the start of the year, it was selling at $35 and $85 for the standard and advanced version. Now, it is $50 and $100. Can you imagine how popular this is? I told all my students then to sign up for 3 years in anticpation it will go up... haha

Up till this point, Edward began showing us the functions of the software which included real time stock filters (by setting yr own parameters), SMS alerts (yes... it'll sent SMS to the phone numbers u keyed in when the price u specified is triggered)among many others.

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The above marks the end of the conversation. There are some parts that i cannot remember due to my ailing memory and some that is not worth a mention here. Anyway, hope you guys like it. This is a new attempt to write in a different style. Please provide feedbacks and suggestion under the comments. Thanks

Shit Happens!

2005-08-25T01:14:00.000+08:00

Yesterday was one of those shitty days where everything seems to go wrong. TAMADE! First, i returned late from my overseas working trip. Upon which, i was thrown some last minute slides and work to which is due today!! Then, i found out that my car was clamped when i was about to go home.! #$%*@!

Yes, i did promise to post that part II of The Guru but i dun want the quality of my post to drop due to slip-shod work. I had just finished my slides and powerpoint as i am writing this post with a major OBAKAK. Nonetheless, it should be out tonight or latest before the weekend. To all those who were patiently waiting for this, i'm really sorry.

Market Outlook - 22 Aug 05

2005-08-22T12:21:00.000+08:00

I continue to be very upbeat about the local economy. Accumulation is still taking place and short-term profit taking the past 2 weeks have helped enforce a very tight trading range on the STI. Looking at a daily chart of the STI updated last week, we see a very strong support level at 2287 (61.8%). This is a strong fibonacci level. We may continue to see some sideway movement for a while before the STI takes off due to cautionary behaviour among investor in view of high oil prices. CCI have turned the corner, MACD in the midst of crossing and stochastic oversold. However, all the above are just indicators. More importantly, we see a decrease in volume as the STI came down to the 61.8% level which signifies selling strength is over. Target for STI is 2430 within year end. For other analysis on business cycles and why 2005 is a good year, please see the following post Of fortune tellers, feng shui, astrology, and such

Oil continues to be an important catalyst in the next few weeks. As long as the rise in oil is fueled by increasing demand, there is no issue for concern. However, if the rise is due to supply shock factors and/or speculation, the consequences would be grave indeed.

I continue to favour water-recycling and water treatment stocks such as BIO-TREAT and HYFLUX (See stock alert - 15 Aug for analysis) as water scarcity continues to be a global concern. Marine stocks such as COSCO, NOL, SEMBMARINE, LABROY, CHUANHUP will continue to shine when freight rates are adjusted come October first.

The Guru

2005-08-19T23:02:00.000+08:00

Had the honour of visting an experienced Trader and witness him day-trade in his office in Raffles place. Last but not least, we had a little sharing session on his day-trading system. I must say, it really is an eye-opener!!! Before i even continue onwards, maybe i shall just give a short introduction of this guru - Edward

Edwards was a licensed remisier (retired). For the past 18 years, he has been a trainer for brokerages and Prodynamics Consultancy and has trained more than 800 dealers and remisiers. Mr. Lee is presently the regional Head Trainer for Advanced Trading Strategies program for NextView Pte Ltd, training both corporate and retail clients in Southeast Asia.

Although me and Jack (it was him that i get to know Edwards) trade different timeframes from him, we kinda respect each others and the way each of us trade. And if you do not know, Edward's specialise in FOREX and major stock indices. Below are some of the conversaton we had. As i went there not with the intention of writing this post in mind, i did not copy any notes. As such, the following dialogue are constructed to that of the actual one, to the best of my ability.

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What is your trading timeframe?

Anything from lunchtime to dinnertime is considered long to me. I close most, if not, all my position my before i sleep. I want to have a good night sleep. But yesterday, i woke up in the middle of the night and i saw an opportunity in the Nikkei with all the indicators aligned, and i entered, went up 20 points in 20 minutes. I exited and went back to sleep. So, what is yous?

I'm more of a mid-term to long term trader. I have a job and is trading part-time. I do not have the luxury of monitoring my portfolio that closely. No offence, but wouldn't daytrading be very commision intensive? It may not work for retail investors like us?

That is true. Some systems that may work for me may not work as well for others simply because of the high slippage. Due to the sheer volume i trade, my commision/slippage is a fraction of yours. Although all of us trade differently, i totally respect how you all trade. In fact, i just learn something about options from Jack.

To this, jack said something which i agreed: Many singaporeans still have the mindset that only a single method works and that theirs is the correct one. Others who have different views from THE method is wrong. Day-traders can't agree with longer term traders

What system are you using?

Any system that makes money is a good system. Some uses a lucky coin to decide buy or don't buy, long or short. Some likes candlesticks, others uses indicators like MACD, Divergence, Stochastic and etc. As long as it works, it is good. In short, any system that makes money consistently when you follow it is a good system.

Upon saying this, Edward handed me and Jack a checklist (with 10 criterias!!!).

Do you follow this checklist religiously?

Yes. I find it very useful. My students find it very useful too. In the past, they don't know which trade to enter and when to enter. With this, they tend to be less trigger-happy and enter trade more discriminately. With the checklist, you ensure that the trades you find have better odds of being right. At times, you may enter with only 8 or 9 criterias, but at least, you know where your risk are.

Edward proceeded to show us the 10 criterias on a few real time trades and also, some of his system. Some have names like Bear counter-attack, Bull counter attack. And the amazing thing is: they all works! For those interested in the checklist and the system, i need to seek permission from edward before posting.

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Due to the length of this posting (and also the fact that many people are rushing me for this), i will continue the rest of our conversation on a later date (hopefully with the check list =p). Btw, if you like such conversations or interview-like posting, i'm sure you will enjoy Market wizards and New Market Wizards: Interviews with top traders!

If you're already ordering other stuff from amazon, it is definitely cheaper (by $7-8) to purchase it and ship together. If not, you can get the left one for $28 SGD and right one for $20 SGD from Kino. Never Never buy from Borders! They charge a whole lot more expensive!

More to Trading

2005-08-18T01:53:00.000+08:00

There's more to life than trading. Take a break. Enjoy these clips:

Ladies: you wouldn’t wanna have hair so smooth!

Stupid song by TW artiste Kang kang

Tell your kids not to OR PI KANG

Micheal Jackson’s classic Moonwalk

Taekwondo: This guy ROCKS!!!

So Sweet! Girls will love this!

Careful of Dogs at Home (RA)

Trading for a living

2005-08-17T01:00:00.000+08:00

Coincidentally, the title of this post is also the name of a book, written by Alexander Elder.

"You can be free. You can live and work anywhere in the world. You can be independent from routine and not answer to anybody. This is the life of a successful trader. Many aspire to this but few succeed."

Is it really that easy to trade for a living?

I must say it is my dream to be able to watch my child grow up, to tour the world, to have spare time to do so many things that i would like to do now, not when i'm too old to enjoy it. Yet, to be able to do all the above seems to be almost impossible with a job. Looking around, it seems like there is only one solution. That is, TO TRADE FOR A LIVING!

But i never said trading was easy. You need to study and research, test systems. (Some thought it's just clicking away on the computer... asif). There are start up cost as well. Education, tools (softwares, newsletters, earnings updates etc), capital. These may seem daunting and scary initially, but ask yourself: which business doesn't require start-up cost? Doing a business requires one to worry about rental, renovation, turnover, water and electricity, employees' salary and most important of all, one will have to sacrifice one's time! Do all these suddenly make what is required for trading seems like peanuts (i'm sorry i use this term again but i can't find a better word)?

Trading entails certain level of risk and is definitely not for the fainthearted. If you have a job, i would strongly advise against quitting it for a full-time trader immediately. Paper trade, then trade small and slowly increase your size when you feel no emotions trading the current size you're trading. Trade only money you can afford to lose because if you can't take a small loss, sooner or later, you're take the mother of all losses!

Time Frames

2005-08-16T00:00:00.000+08:00

This is a tricky question. Time is relative. I subscribe to Einstein's theory of relativity. personally, i think it makes sense. What is long to you may be short to me (I know you're thinking about that thing below)? :p

I'm a mid-term to long term trader (same as mike). I trade anything from a few weeks (not very often) to even a few years. Not that short term trades are no good but in my humble opinion, those are income trades. It provides you with the monthly incomes required for subsistence. Every portfolio should have a bit of these but they should not make up the main bulk of it. It is the longer term trades that are wealth building in nature for the fact that you don't get stopped out that easily and you catch the big moves. Lastly, though not so importantly, you incur much lesser commissions. Sometimes, long or short term also depends alot on how much time one can spare. As i'm working full-time, i cannot afford the luxury of time to monitor the market every minute.

Over these weekend, i get some queries over what stocks to buy or is XXX stocks good? It is difficult for me to give my comments when i do not know your timeframe. In fact, it can be hazardous if we have different timeframes. I can tell you what i see from the charts but i cannot tell the stock where to go. For me, i never trust other people to analyse for me, not because i'm untrusting in nature. It is for the simple fact that i would not know what to do if stock reverse directions or as a matter, i would not know when to take profit even if it's in the right direction. Even if i ask others, i try to form my own opinion.

The trades which i recommended below i may not do all of them if it does not breakout. I believe strongly in buying on strength, hence i do not mind paying a bit more for certainty. I also believe in holding on to stocks if it has not meet my exit stops, and not sell on panic. I tends to have wider stops for longer term trades and especially if the stock has moved a lot in my favour since buying.

Lastly, i do buy stocks that i recommend. I do not merely put them out for the sake of putting them out. However, i adhere to the trading plan (exit and entry) strictly. I am currently holding ST ENG, COSCO, BIOSENSORS, SGX, STARHUB. Recently exited OSIM, ASIA PHARM, SEMBMARINE, SPOS and SATSVC due to trigger stop hit and/or prognosis change. Still tryng to get filled for LABROY.

Stock Reviews - 15 Aug

2005-08-15T00:34:00.000+08:00

Before i even start on last week reviews, i shall take this chance to introduce 2 blogs: one is a very good friend of mine - MIKE, whom i sometimes turns to for option trading advice;

Catching a butterlfy - Very zen style of writing. :p

the other is my real brother - Kok Kiang (KK), whom have some great inspiration once a while. In fact, HTL was alerted to me by him.

My trading Diary - Short and concise writing. Refreshing change from mine.

Now for some reviews on last week's alerts:

LABROY

Doji on low volume (friday) signals selling strength weakening. Labroy is a great company with strong earnings, poised for very strong growth. Remains BUY!

ASIAPHARM

5-50 EMA crossing soon. Stock hits 0.64. Trigger for our cut loss. SELL!

OSIM

Stock suffered some retracement last week. However, still within a very strong trend channel. Traders should take note if stock broke $1.33. If not, stock not a major concern for long-term holders. In the meantime, i would not recommend adding more position due to the current bear climate. Take on this stock is HOLD.

BIOSENSORS

Biosensors had just published their earnings $78500 compared to $14 mil last year same period. Personally, i dun see any cause for alarm as this has already been expected (drop in licensing fees) and anounced by the company prior to this. Furthermore, revenues earned from their award winning stents rose to $487,000 compared to $3,000 last year.

First support is at $1 followed by $0.9. IMHO, i take this retracement in a depressed climate as a chance to enter more position. BUY!

SAT SVC

Stock still within a trend channel with support at $2.3 and resistance at $2.43. Friday showed a bullish hammer with higher volume than previous day. The pearson R's value for this trend channel isn't as strong as OSIM's as the range is wider. With rising oil prices, airline will be busy cutting costs. Outlook for the industry looks bleak.

However, divergence in the MACD and the price (price goes higher and MACD goes lower) is a strong cause for concern. Such cases usually signifies a huge price fall if the stock reaches the end of Elliot Wave 5. Outlook for this stock is confused. No recommendations.

This additional piece of info may help. I just sold my 10 lots @ $2.39 (bought it at $1.95 3 months ago, that's almost 25% gain inclu div) due to the confused outlook. My rationale is: No point taking a risk!

Stock Alerts! - 15 Aug

2005-08-15T00:14:00.000+08:00

Feels like back to NUS days, rushing my assignment. Everybody been asking me for my latest posting. I shan't spend too much time writing this. Most should be self -explanatory.

HTL

5-50 EMA crossed. Strong resistance at $1.4, 2 support levels at $1.3 and $1.25

Strong Bullish Hammer on last fri supported with high vol showing that strong players are absorbing the demand. Signs of accumulation.

For Risk-lover, may enter now in anticipation of breakout. If not, enter only when price breaks $1.4. Risk - averse traders may also want to set $1.3 as cut loss instead of $1.25.

HYFLUX

Strong White Bar (almost an engulfing white candle) on Last friday coupled with strong volume also seems to imply stock is supported at this level. Another sign of accumulation. For those not familiar with candlesticks, a engulfing white candle on a bear market is almost a sure sign of a bullish reversal

For risk-averse traders, enter upon breakout of $3.3 for a stronger confirmation. In addition, as there are no known resistance level for Hyflux, if it tumbles, this stock may go down a lot. So, be sure to set your cut loss point before entering.

A FAILURE TO PLAN IS A PLAN TO FAIL !

Goodies for sale - SKII

2005-08-13T14:38:00.000+08:00

Hi everybody,

Although this has absolutely no relevance to trading but to reward all my readers, i'm gonna do this:

SKII SALE !!!

100g of Facial Treatment Cleanser, 30ml Facial Treatment Repair C, 30g of Advanced Protect Essence UV, 75ml Facial Treatment Essence, 15g Eye Treatment Film, 3 pieces of Facial Whitening Mask.

All this for only $109! nett.

Yes... you are not hearing wrongly. It is $109!!. Sold separately, this would have been $250 or more at shopping centres and retail stores. Only 20 sets for this month..... whilst stocks last.

For those interested, please send your name, email and contact numbers to aishitejia@hotmail.com under an email titled SKII. I will arrange 2 dates for the collection and inform you through your contact number or email.

HUAT AH!

2005-08-13T01:09:00.000+08:00

Hey everybody! Wanna know the secrets of my success! Why i did so well in stocks? ........................................... *suspense*

Silence !

Louder Silence ! !

(huh? Contradictory!)

Deafening Silence ! ! !

Here it is!

I'm not joking! This is what i have as my handphone wallpaper. I know it sounds stupid but it's true. I made $20K SGD within the month after i placed this there. This is really the secret of my success... hahaha.

Trading is all about feeling good. And if you feel good, you make money! Psychology is one of the most important thing in trading. To win money, you not only need to have the desire to trade, you need to have the confidence!

I'm not asking everyone to buy and hope and pray! .... You must be wondering: "KNNBCCB!!! what cock is this asshole saying?" It is one thing to buy and hope and pray, it is another to be confident enough to able to hold it out when the market goes against your direction. What is the difference between the 2?

The confident investor does his homework and plan the trade, including the entry and the exit. So if the stock suddenly changes direction, he will not sell unless his stop loss is reached. If it is not reached, he will hold on to it.

Next question is how to be confident?

Ans: Knowledge, Planning, Execution.

Knowledge

Knowledge of the companies, knowledge of the fundamentals, knowledge of the charts, knowledge of the markets, knowledge of when it'll rain, when earthquake or even when terrorist strikes!

Planning

Enough said on this. Always have a plan in mind. Never ever trade on somebody's advise. Plan your exit and entry point. Do not be trigger-happy.

Execution

Be disciplined! If you're supposed to exit, do so!

Drunk!

2005-08-12T00:40:00.000+08:00

Damn Fucking tired today!! Went out for dinner and wine. Super shag!

Anyway, was talking to a fren in one of the Major Financials Bank who was doing FX. So, for those dabbling in FX, open your ears BIG BIG!! They're Short USD, Long AUD and Short Yen till end of year. It was futher confirmed by another fren working in DB. Howver, please do you due dilligence before taking any postion.

I won't be doing any analysis today... too shag and MABOK! I know everyone is talking about the 30 point drop today in the STI. I'm not gonna talk about it since everyone is talking about it. Who cares? As long as you do the below, you're fine:

Don't think about what the market's going to do. Think about what you're going to do if it gets there!

What i'm gonna say here is if you want to buy local stocks, wait till after monday, cos with all the panic selling, those who were long with contra will have to cover their position within T + 3. This will prompt more selling but will eventually stabilise. If you do some calculations, that'll be around tuesday. I think you could take this as a good retracement and chance then to take position in fundamentally and technically good stocks like LABROY, OLAM, COSCO etc

Learning to fish - Candlesticks I

2005-08-10T16:05:00.000+08:00

Fish of the Day!

*Drum roll*

JAPANESE CANDLESTICKS!

What the F*** is that? Can eat anot? Is it used for praying during the 7th lunar month?

Japanese candlesticks is a form of charting tool. The Candlestick signals are the visual depiction of investors’ greatest weakness – EMOTIONS. Somebody is panic selling at the bottom. Somebody is exuberantly buying at the top. Making money in investment markets has very little to do with how well companies are doing. Stock prices depends on "percieved" intrinsic value and not real value, which is why some stocks tumble when earnings are good and some rockets when earnings sucks!

A Candlestick formation provides a visual graphic of investor psychology during a specific time period. The graphics of a Candlestick chart have greater appeal than Western Charts (bar charts). The amount of data displayed is exactly the same. But the ease of visual interpretation is dramatically different.

Horizontal lines represent the open and the close. Once both lines are added to the chart, they are boxed. This box is called the BODY. If the close is higher than the open, the body is white or empty. If the close is lower than the open, the body is black or filled. Keep in mind, this does not necessarily mean that a white body represents that the price was up for the day or that a black body represents that the price was down for the day. The body color only illustrates where the close was as compared to the open.

The lines extending from the body represent the extremes of the price movement during the day. These are known as the SHADOWS. The shadow above the body is known as the upper shadow. In some Japanese analytical circles the upper shadow is also described as the HAIR. The shadow below the body is known as the lower shadow or the TAIL. The length of the shadows has important implications to the strength of reversal moves.The bodies with shadows look very much like candles, hence the name Candlesticks.

I shall start off with 3 types of candlesticks for this learning to fish issue.

BULLISH KICKING

The first is a bullish Kicking. As can be seen, first day is a black Marubozu (i.e. no shadows), followed by a white Marubozu gapping above the close of the first day.

Psychology:

The gap created by the 2nd day becomes a support area. Expect higher prices and for the gap to be tested before breaking back to the downside.

BULLISH ENGULFING

The next is the Bullish Engulfing. The colour of the first day body reflects the present trend. At times, the first day may also be a Doji ( no body with tails, resembles a cross). The 2nd day's real body engulfs the 1st day. It is important to take note that the 2nd day must be a white for this pattern.

Psychology:

If not much volume occurs on the 1st day of the Bullish Engulfing formation compared to the 2nd day, then this increases the strength of the pattern. The 2nd day opens below the close of the 1st day, however quickly rallies to close above the open of the 1st day. This damages the spirits of the shorts and brings into question the bear trend which prompts additional buying in the coming days.

BULLISH 3 WHITE SOLDIERS

The last candlesticks pattern is the three white soldiers. The pattern is a combination of 3 consecutive long white days with higher closes each day, with each day's open within the previous day body. Psychology:

This formation represents powerful unabated buying. Shorts would be wise to stay away from this steam engine. Longs should be prepared for a rest before proceeding on to higher prices.

Top 10 Trading Rules

2005-08-09T11:10:00.000+08:00

After trading for some time, i've compiled what i believed is the Top 10 Trading rules for me. Some of them may seem simple but trust me, they are NOT easy to follow. If you can do all of the below without anything more than a sweat, you are on your way to being a SUPERTRADER!

In no order of merit, i present to you MY TOP 10 TRADING RULES:

Rule 1: If you don't bet, you can't win. If you lose all your chips, you can't bet!

Rule 2: A Winning trade may not be a good trade; A losing trade may not neccesarily be bad!

Rule 3: Don't think about what the market's going to do; you have absolutely no control over that. Think about what you're going to do if it gets there.

Rule 4: Do what is correct rather than what is comfortable. What feels good is often the wrong thing to do!

Rule 5: Cut your losses short and let your profits Run! Amateurs go broke by taking large losses, professionals go broke by taking small profits!

Rule 6: Systems don't lose money, People lose money!

Rule 7: Never trade with money you cannot afford to lose!

Rule 8: Never be loyal to your position (Ego)!

Rule 9: Look for reasons not to trade, not reasons to trade!

Rule 10: There is more to LIFE than TRADING!

Stock Alerts Updates

2005-08-08T11:37:00.000+08:00

It has been less than a week since my first stock recommendations: SAT SVC, LABROY, OSIM, COMFORT DELGRO and ASIA PHARM. I shall do a recap and updates on the above.

Recommendation for SATSVC was buy when prices is at 2.28 and target price at 2.46 based on fibonnaci extension. At the time of this writing, prices is now at 2.42, 4 cents short of target and a 6.2% increase in less than 4 days. Competition has intensified in the airline service provider sector although the increase in budget airline competition is a Boon for the sector. Recommendation for SATSVC is Hold.

LABROY has risen to 1.09, a hefty 9% increment since the recommendation was made. Target for Labroy is 1.5 at year end. Coupled with the strong outlook for the marine sector, if you have yet to buy this, it is a good time to buy today (long weekend for many traders due to national day). You can be sure this stock will shoot up after national day. LABROY remains a good Buy.

OSIM's recommended buy price was 1.24 a few days ago. As of now, prices is 1.3, a 4.8% increment in 4 days. Fundamentals for OSIM remains strong and we expect prices to reach 1.5 year end. Buy.

COMFORT DELGRO is still moving in the 1.5 to 1.6 range and has not trigger the buy signal of 1.6 or the 5-50 EMA crossing. However, the outlook for the transport sector remains bright. Hold.

ASIAPHARM has fell from 0.68 to 0.67. Company fundamentals remain strong and stock has not reached out exit triger at 0.645. Recommendation for this stock is Buy.

Regards
Huat Ah!!

Learning to fish - Moving Averages

2005-08-07T04:35:00.000+08:00

"Give a man some fishes, it may last him 3 days or even a week; Teach him how to fish, it'll last him a lifetime."

It is with this in mind that i'm starting this new series - Learning to fish. In this serie, trading techniques, indicators will be dicussed in depth.

The Moving Average (MA) is one of the most widely used of all indicators and is also the most easily quantified and tested. It is precisely this characteristic of MA that makes it the basis for many mechanical trend following systems being use today. The MA is a trend following device: it's main objective is to identify or indicate that a new trend has begun or that an old trend has reversed or ended. The MA is reactionary, it does not predict new trends, it merely signals a new trend after it has begun and not before.

Next, we shall define what a MA is. As the name suggest, it is an average of a data group. For example, a 20 day MA is the average of the prices of the last 20 days divided by 20. The term moving is used is because only the prices of the last 20 days are used in the calculation.

The simple moving averages is one of the most commonly used averages used by technicians. The pros of this method is that it is easily to use and is easily available in many free charting services (e.g. Yahoo). The main drawback is that equal weight is given to each day's price. Some analyst believe that a heavier weighting should be given to the more recent price action.

The exponential moving average (EMA) is a weighted MA. It assigns higher weightage to the more recent price actions and yet still include past price data in its calculation. Hence, the EMA is more sensitive and reacts faster to price changes as compared to the simple MA. This indicator can also be found on most free charting service.

Use of One Moving Average

The Moving Average is plotted on the bar chart is shown on the graph of IBM on the left.When a closing price moves above the 20 days MA (red line), a buy signal is generated and when it moves below, the converse is true. If a very short term (5 days, 10 days) average is used, it becomes too sensitive and several crossing occurs. This produces many false signal but has the advantage of giving signals early in the move. There is a tradeoff here.

The longer averages works better as long as the trend remains in force, but a shorter average is better when the trend is in the process of reversing.

For individual stocks, the commonly used MA is 20 days for short term (1-6 months) and 50 days for longer term (6 months to 2 years or more) trades.

Use of Two Moving Averages

This technique is called the double cross over method. This means that a buy signal is generated when the short term MA crosses the longer term MA. The converse is true. The picture on the left shows a 10day (red) and 50day (blue) MA. A sell signal is generated in Mar and a buy signal in Late Jul. False signals that could have been generated using only one MA would have been avoided under this method. This technique of using 2 MA lags the market a bit but produces fewer false alarm.

5 -50 EMA

The chart above shows where you can find the indicators in a Yahoo! chart. The following example is a Singpost chart. From past experiences, a 5day-50 day EMA works best for stocks in the Singapore stock exchanges. For the US markets, a 10day-30day EMA works quite nice.

Market Outlook - 6 Aug 05

2005-08-06T03:06:00.000+08:00

The weather for the next few days will be sunny with isolated thunderstorm and scattered showers in the morning and the late evening at the eastern and western part of the island.

HUH??!! Vague, right? You just had a taste of what the professionals always does -Be as generic as possible, cover their own backside. You can never go wrong.... Here's my go at it:

Oil has been a major catalyst for the past few weeks and will continue to be a major catalyst for weeks or even months to come. After some retracement last month, it looks set to break the $65 mark before the month is up. Don't be surprised if it reached $75 this year.

The FOMC has raised interest rates for the 9th or 10th consecutive times and yet, the US economy seems unfazed by it: Non-farm Payrolls this friday rose to an unexpected levels as 207,000 jobs were added, consumer confidence are high, Balance of payments getting better. Greenspan will continue to raise interest rates as long as the economy shows no signs of slowing down. As long as interest rate hikes remains at the public expected level of a quarter percent, the US markets will remain bullish. However, sooner or later, interest rates effects will set in. Coupled with high oil prices, this could be lethal. Be ready to turn all your longs to shorts when it comes.

The STI is experiencing one of the biggest bullrun in history. It has passed the 2300 marks with nothing more than a half a drop of sweat. End this week, we see some breathers as many market makers and traders take a break with a long weekend (that's 5 days incl of fri, monday and national day). Expect trading to be light on monday, just like today. The STI will rise till 2400 without much resistance.

What does all the above equates to?

Transaction volume increases + Stock value increases = Transaction value increase
........... Which means people pay more in commissions, transaction and brokerage fees. All this makes all the brokerage companies, especially and including SGX, a wonderful purchase.

I particularly like the marine sectors (LABROY, COSCO) as what i've mentioned in previous posts and companies dealing with oil exploration and supplying equipments for the petroleum sector (i.e. CHUANHUP, PEARL ENERGY, SEMB MARINE). The transport sector looks good as well, with Temasek holdings releasing 5% of SMRT's shares, thereby making the market more liquid in the long run. It seems the sector may be ready for some consolidation. When that happens, you sure do want to hold on to SMRT, SBS, COMFORT DELGRO shares.

Property shares seems a bit hyped up now, especially when we have many people looking at properties and not buying. However, rest assured that the effect of the new housing guidelines relaxation will be shown in another 2-3 month time. CAPITAL LAND and KEPPEL LAND are the more outstanding ones within the sector, given their massive investment locally and in China. I'm sure they'll outshine the rest when China decides to revalue again.

Regards

HUAT AH!!!

Stock Alerts! - Biosensors

2005-08-05T06:56:00.000+08:00

Was going though my charts when i saw this. I was holding this stock when it was 82.5 cents since 4 weeks ago. No doubt it has risen more than 30% since than. The last week's acceleration have slowed down and the stock is currently hovering between 1.1 to 1.3 (the 2 red lines). Even then, the stock still remains in it's current upwards trend channel as shown by the shaded region. Upon breaking through the 1.2 level, it'll rise till somewhere near 1.4 before meeting further resistance. The recent attention on telecommunications stocks, marine stocks and real estate trust have stolen the limelight from biosensor, and hence it's lacklustre perfomance last week. However, the volume remains high (14 mil) and Biosensor has all the while maintained it's position in the top 20s.

It is a good growth stock with strong potential. The recent Euro approval for its Bio stent signals strong inroads into europe and other potential markets. Currently, this technology are wielded only by Boston Scientific (BSX) and Johnson and Johnson(JNJ). In fact, BSX is currently having some problems with the FDA for its biostent. Target for Biosenors is $2 by year end.

(Disclaimer: Stock investing entails certain amount of risk. The author bears no responsibility. Please do your own due diligence and for goodness sake, play only with money you can afford to lose)

FA or TA

2005-08-03T15:01:00.000+08:00

After seeing what i've written below, you must be wondering what method am i using in analysing stocks such that i'm so inaccurate or accurate. First, i do believe system trading works! You may ask how? It is not just how good the system is. It is how discipline one can follow the system. Discipline is the one most important principle in trading.

Secondly, market are not random. Proponents of the efficient market hypothesis may now be spitting saliva or throwing rotten eggs at me. But, i must emphasize again that markets can never be random. The first assumption of the hypothesis, if you can remember, is that human are rational. Let me rephrase: People are rational, at times! Fear and Greed controls the market, they can make rational people do irrational things. The charts are a reflection of mass psychology. Hence, Technical Analysis (TA) are in fact, a form of behavourial analysis.

The system i use in trading local stocks can be considered quite ROJAK. I use a little of fundamentals, in terms of very broad macroeconomic factors and outlook of industries. I am also a strong believer of technical analysis, it gives me a summary of the market and the emotions in them. Lastly, i use a method which is very economic in nature, which makes everything so commonsense (Although for some people, commonsense is not so common afterall). Ths method is called volume spread analysis.

In terms of fundamental, i subscribe to the the CANSLIM school of thought. CANSLIM is a formula created by William J. O'Neil, who is the founder of the Investor's Business Daily and author of the book How to Make Money in Stocks - A Winning System in Good Times or Bad.

Each letter in the word CANSLIM stands for one of the seven chief characteristics that are commonly found in the greatest winning stocks. The C-A-N-S-L-I-M characteristics are often present prior to a stock making a significant rise in price, and making huge profits for the shareholders! The methods was a tremendous success in the US from the period 1960s to 1990s. If you take a closer scrutiny of the current local market conditions, you'll find that it mimicks that of the US marktet in the above timeframe.

C = Current quarterly earnings per share.

A = Annual earnings per share.

N = New product/management/price high.

S = Supply/Demand: Small Cap + Volume

L = Leader

I = Institutional Sponsorship

M = Market Direction

In terms of charting, i use a myriad of indicators and techiniques, such as MACD, Moving averages, stochastic, Support and resistance and Elliot wave analysis. I can spend a few days talking about it and i still will not be able to finish everyone.

Lastly, i use a method called Volume Spread Analysis. It is a simple easy to understand method which combines volume and price into basic supply and demand model.

That's all, folks... need to go out for fresh air!

Stock Alerts!

2005-08-02T16:33:00.000+08:00

I'm back! Can't think of anything to write so i shall give everyone some peanuts. I'm gonna act like i'm some sort of stock gurus and give some tips here... hee hee ^_^

Why am i doing this? ... All because of some asshole which downgraded Semb Marine and gave a ridiculous target of $1.8, causing the stock to go down to my trailing stop price ($2.56). KNNBCCB!! I made $800 less because of this. TAMADE! You know something?... There was a statistical study done that actually shows that if you do just the opposite of what those brokers tell you, you're actually perform better than the index and if you follow them.

1. OSIM

Have you heard of OSIM? No? You must be kidding... seems like everybody is buying their iSqueeze. Crazy! What are they trying to squeeze? I can do a better job with my hands if any ladies out there needs a squeeze.... heh heh. Anyway, the stock is looking real good with the 5 days EMA crossing above the 50 days EMA. It has also just recently broke it's $1.2 resistance level, a very strong level if you ask me. Taking a look at late july shows a very high volume day on a long up bar. This indicates very strong bullishness. The recent earnings reports also shows a very healthy increase in earnings.

Buy at $1.24, support is at $1.14 (sell if it drops below). Target price 1.4 by Oct.

2. Comfort Delgro

You take taxis? Do you know taxi fares has been adjusted?... Now, fares will jump by 10cents every 25 sec instead of the previous 30 sec. So, if you happen to get stuck in a jam for half an hour, you'll pay $6 more than before, ceteris paribus.

I see no point in recommending stocks that is a has-been. This stock has not made any significant move yet. It seems that institution and big investors are accumulating this stock. What we want to see here is a cross-over of the 5 day- 50 day Exponential moving average (EMA) for confirmation. A crossing of the $ 1.6 mark would achieve the same effect. There are strong resistance level at the 1.7, 1.75 and the 1.8 mark which shall see the stock hovering at these level for some time (1~3 months). There was a high volume on a very big up day in late July which is likely to be caused by institutional investor trying to jack up the price and push through the resistance. However, this was met with profit taking by retail investor immediately. The following days up to now seems to be accumulation of the stock. with prices see-sawing between 1.55 and 1.6 - signs of accumulation. When all stocks are accumulated (i.e. Supply has been taken off and demand is still strong), only one thing can happen to the stock. RISE!

3. SAT SVCS

This company supplies all the airline food and does all your airline and airport services. Yup... you've guessed it... Temasek Holdings got share one. Owned by the SG GARMEN! Dun pray pray. Look at the charts: Using Elliot Wave Analysis, it is quite obvious that this stock is in a Elliot Wave (EW) 5. Based on the fibonacci extension, the chart shows a target price of $2.46 within the month. The MACD pullback also coincides with EW4, 10% of original high.

4. Labroy

Marine stock. Build ships, tankers etc. With oil prices as high as $62 a barrel, air travel and air freight is definitely gonna be depressed. So... substitute effect says, people will use the cheaper means, which is.... TA TA, ships. Company financials are more than healthy, 3 consistent quarters of growth and increase in profits. Although prices have since jul increased by more than 25%, the potential for growth is still there. Can you see the ascending triangle with prices squeezed into a wedge? This is a sign of a potential breakout. Even as i am writing this, prices have shot up by 6 cents to 1.06. DAMNED! Will enter this tomorrow if opportunity arises

5. ASIA Pharmacy

China firm selling pharmaceutical products. Big market with huge potential. Drugs made are approved even by singapore's equivalent of FDA. With the yuan revaluation and heavy investment into China by hot money, this stock is well positioned to take the advantages. Have you got the hang of what i'm trying to do above? Yes?.... Ok... See yourself.. too tired to explain. Still have a medical appointment in the money and seminar whole day.

Btw, all the above charts are all time-stamped. So... dun you dare KBKB that i wrote this afterwards?

(Disclaimer: The author shall not bear any reponsibility for the loss of any peanuts or for the matter, even bananas. Do you own due dilligence and enter at your own risk)

What is Trading?

2005-08-02T01:12:00.000+08:00

Is this a trick question? So what exactly is trading?

Hmm... let me think... Trading is both an art and a science. The science of managing money (risk) and calculating odds, and the art of picking the right stock. Are you still with me? Too cheem?! Ok Ok.... Give up! Trading is basically gambling (better) but with the trader trying to make the odds on his/her side.

Mathematically speaking, it is about making your expected returns positive in the long run. How?... Take for e.g., if a monkey is able to predict (guess) correctly the market direction 50% of the time and if it cut losses at 20% and take profits at 20%, what is its expected returns?

0.5 (1.2) + 0.5 (0.8) = 1

What if the monkey take profits at 20% and cut losses at 10%?

0.5 (1.2) + 0.5 (0.9) = 1.05

This part is the Science! So now, the expectancy becomes positive. If you still dun get it, you're damn DENSE! Duh...

If the monkey gets better and better in choosing the right stocks, 75% accurate, its expected returns becomes 1.125. This is the Art!

: Hey enough! I work so hard... where are my peanuts?