Hong Kong HSI: Came out of the consolidation positively

The HSI managed to break out of the 25,000 points resistance level and stay above it and this means that the HSI has also come out of their consolidation. The HSI is currently at 25516.78 points.

The breakout of the consolidation period has a technical target of 29,000 points, if it can currently stay above 25,000 points currently. All momentum indicators are showing more strength because of the strong performance last week. Therefore, the HIS is expected to continue its upward journey in the longer term, but we may see some minor pull back once the HSI reaches the Fibonacci extension target at 27,700 points, which is the immediate resistance level. The immediate support level is at the 25,000 points level. By Benny Lee

Singapore STI: May test 3,300 resistance level

The FTSI broke the slight resistance level of 3,200 points last week and this shows that strong momentum that I wrote about last week is still strong. The FSTI closed at 3,189.20 points last Friday. Currently the FTSTI is above all the short to long term moving averages and this indicates a change in the down trend is taking place. Once the declining long term 90-day moving average starts to change its course, then a new trend, which is the up trend is developing.

The FTSTI still has to break 3,300 points resistance level to continue the up trend. The momentum of the trend is still quite strong with the ADX indicator rising and the RSI indicator staying above the 50 level. Support level maintains at 3,000 points, with a short term support level at 3,150 which is not that strong. By Benny Lee

KL Composite Index: Bulls are gaining the edge over the bears

The KLCI did test the 1,300 points resistance level as expected and the upward rally’s momentum seems to building up. The Relative Strength Index indicator (RSI) has gone above the half-mark level which indicates that the bulls are gaining the edge over the bears. Although the short term trend is up, the longer term trend is still down.

The KLCI is below the long term 90-day moving average and this average, together with its mid-term 60-day average is still declining. The KLCI is currently at 1,288.08 points.The KLCI is expected to climb higher with this kind of momentum, but may face resistance at 1,320 points , if based on a Fibonacci extension from the rally that started on 11th of March this year. The immediate support is currently at 1,260 points. By Benny Lee

Get Out of the Trading Comfort Zone

Many people who have traded have heard how important your psychology, or mindset is to your trading success. Books have been written, entire seminars presented and numerous tea breaks at traders club meetings across the world are devoted to the subject of the ‘psychology of trading’. Many traders would argue, I included, that your mind is the largest part of your overall trading success.

I always wonder however, how many people truly understand what it is they mean when they talk about it and its relationship with trading. In reality, your mindset controls anything you do and consequently, any endeavour you undertake. Trading is no different and it could be argued that it is even more applicable in trading as your money is involved, and that triggers many other emotions inside of us.

Numerous examples that confront the mind and our natural emotions include wanting to be right all the time and getting our own way, having our opinion matter and having some influence and control over what happens. In trading, these natural thoughts within many of us will place us in a position of disadvantage. These are just some examples of why our mindset and preparing our mind is so important to our overall success.

Furthermore, you would have thought previously about why some people are so successful in life and others are not. How many books have been written about having a positive attitude and taking action towards your goals? There is, and always has been, a single ingredient that separates people who are successful in life from people who are not. It is the mind and how we use it. Many people live their lives with an endless series of "what if" questions that they ask themselves.

An activity I will perform when I speak to a large group of traders about the mindset involves asking for a volunteer. I would have spent the last 10 minutes or so explaining how traders must often ‘think outside the box’. In other words, don’t think and act upon natural thoughts … think beyond normal thought. I say to the group, “OK, for my next session, I need the assistance of a volunteer from the audience just for a few minutes. Can someone come up here and join me please?” When I say this, I make sure that I look down at the floor and don’t make eye contact with anyone.

After asking, I continue to avoid eye contact with the audience as I pretend to fiddle with my notes or have a drink of water. About 15 seconds pass and no one has made a move. I then look up at the audience and again, I ask for a volunteer for my next session. The atmosphere begins to become slightly awkward as the people in the audience begin to wonder whether my next session will go ahead without a volunteer presenting themselves. I stand there and wait, not saying anything but still determined to wait long enough until someone volunteers. Almost out of pity, someone will inevitably stand up and declare themselves the volunteer and make their way to the front to join me.

As they join me and I introduce myself to them, I provide them a copy of my book with my compliments, thank them for volunteering and then ask them to return to their seat. Often the person will then receive a round of applause as he makes his way back to his seat. This simple activity illustrates how the vast majority of us are perfectly happy in our comfort zone. When I ask for someone to come up in front of everybody else and therefore expose themselves to the possibility of embarrassing themselves, everyone feels uncomfortable and hopes that I don’t look directly at them. Therefore, nobody wants to take action. Yet, to trade successfully and master the trader’s mind, we need to be prepared to think beyond natural thoughts and subsequently take action based on those thoughts.

Article by Stuart McPhee

Every Cloud has a Silver Lining

That's why ppl like Warren Buffet and George Soros makes lots of moolah in the financial market because they see opportunities in disasters. While everyone is worried about the end of the world, they find opportunities.

World's two greatest investors are betting on bio-tech firms especially those who spent a lot of money in vaccine-related research. Below is an excerpt from Yahoo's website:

James Altucher, who literally wrote the book on Buffett's trading, says the "Oracle of Omaha" is actually more focused on demographics than classic valuation metrics, contrary to popular mythology. What Buffett and Soros both see is a world with aging populations in the developing world, greater demand for vaccines in the emerging markets, and the potential for pandemic diseases that threaten all of humanity.

You can read more details here, including a short video that shows an interview with James Altucher.

Isn't this a principle that every trader must have? We have to look at the glass as half full, not half empty. When price falls and everyone panics, there is an opportunity... get the picture?

So, remember this trading principle; Every Cloud has a Silver Lining.

Article by Benny Lee

UCHITEC

Just a month ago, Uchi Technologies Bhd's (Uchitec) share price was hovering around RM1.80 for about 2 weeks and started to climb when April comes. Today, its share price is RM2.33, an increase of RM0.53 or 29.4% in a month.

Uchitec manufactures electronic control modules for various consumer appliance companies. Uchitec has expertise in electronic manufacturing services and is committed to product quality and timely delivery. Their clients include Moulinex, Phillips, Jura, Krups, AEG, Bosch, Siemens and Blaupunkt.

Today, SJ Securities initiates a buy call by giving an overweight recommendation. Based on the prospective EPS of 22.2 sen, SJ Securities have fairly valued Uchitec at RM2.89, pegging on a PER of 13x. SJ Securities think that Uchitec deserves a premium valuation because of its large market share and advanced technology. The stock is attractive with a high dividend yield of 8.9% and ROE exceeding 40%. For more information, go to Bursa's website to download their report.

Technically, when price advances 30%, it is deemed "overbought" in the short term and a pull back is expected. It seems to me that the "overweight" recommendation has been already discounted in the current price. The share price have been in a down trend since June last year and is clearly defined by a down trend line (Blue line R1 on the chart below). It is also being resisted by the 90 day long term moving average (Red line R2 on chart below).

With an overbought value and price near resistance, a pullback to at least RM 2.05 is expected. Price is expected to be supported at this level and if price falls below this level, then we are looking at a down trend continuation.


Uchitec Daily Chart as at 15 April 2008. Chart from NextVIEW Advisor

Article by Benny Lee

US DJI: more room for the DJI on the downside

The DJI hovered below the resistance line of 12,700 points last week but failed to break the resistance. Instead, the DJI started to fall on Friday to close at 12,325.42 points. The DJI has been in a consolidation mode since early this year when credit crisis started to worsen. From the chart, it looks like there is more room for the DJI on the downside. Therefore the DJI is expected to decline some more and may find support at 12,000 points level. By Benny Lee

Japan Nikkei 225: Downwards correction

The Japan market has been in a bear trend since October last year and is still in a down trend. Upward rallies have been stopped by the down trend resistance and currently, the Nikkei is near this resistance level. the Nikkei rallied upwards since mid of March in the short term and is now facing the resistance. Therefore, the Nikkei is expected to correct downwards. The down trend resistance level is at 13,400 points and the Nikkei should find support at 12,400 points. By Benny Lee

Singapore STI: Expected to Correct Downwards

The 60 points rally on Friday was marred by the performance of the DJI on friday where the DJI fell about 256 points. The STI closed at 3,126.87 on Friday. Today, it opened at 3,060.60 points is now at 3043.30 as at 12.30 noon. The STI tested the resistance level of 3,160 points last week. Since the STI is near the resistance level, the STI is expected to correct downwards and may find support at 2,970 points level, a 50% retracement from the mid-March rally to the peak last week. by Benny Lee

Kl Composite Index - Bearish Reversal expected

The KLCI was trading sideways in the past few weeks although regional markets have been rallying upwards until last week. The KLCI closed at 1232.84 as at 12.30 noon, falling 13.95 points from Friday's clos because of the decline in the US Dow Jones Industrial Average. The KLCI is near the short term down trend line (I use 30 day moving average for the short term trend) and also near a down trend line that has developed since early this year.

With KLCI near resistance level, a bearish reversal is expected and therefore the KLCI is expected to be bearish this week and should find support at 1,200 points level. by Benny Lee

Be Realistic

Unfortunately for many people who take up the endeavour of trading, they end up losing money. This is despite the existence of many reputable share trading education companies, an abundance of trading books available and the presence of solid trading rules that have stood the test of time. These rules are not secret to anyone either – almost any book will refer to some of them. Yet despite all this, many people still find it difficult to achieve long term profitable trading.

So what is it that separates the successful from those who fail? If you ask anybody who has studied trading for any period of time, they will answer ‘psychology’. Essentially, your mental ability to manage losses and profits and the good and the bad times in trading, manage risk, to not become too greedy and many others are all encapsulated under the heading of ‘trading psychology’. There have been numerous professional articles and books written on the subject of ‘the psychology of trading’ and therefore this article is not intended to elaborate any further on an already well debated and discussed topic, except for one area.

One thing that many people struggle to come to terms with is their expectations of their trading. Too many people have unrealistic expectations and expect to make triple digit returns consistently, for example.

Having high expectations of yourself is a good thing however, unrealistic expectations is not. Many traders when presented with the wonderful opportunities that the market offers can be very easily led to setting unrealistic goals for their trading. This can be devastating.

At various trader’s exhibitions and similar events, it is surprising to hear the number of people who demand trading systems that can produce several hundred percent return and won’t settle for anything less. These people sometimes then have the audacity to scoff at solid methodologies on offer that can reasonably expect to achieve a consistent 25 – 35% per year return.

Unfortunately for these people, their expectations are often too high and unrealistic. There will be times when they will suffer several losing trades in a row and when this occurs, they potentially will not be able to get back on track. With a slight drawdown in their trading capital and with their unrealistic goals in their mind, they will start to bend the rules and assume unacceptable levels of risk in order to regain the losses quickly and achieve their lofty goals.

Another problem that some traders face is even when they set themselves a realistic goal of 20% per year for example, they then expect to achieve that return in the first few weeks as opposed to taking a longer term view over the 12 months. 20% per year is only just over 1.5% per month yet some traders will expect to achieve that quickly and may adopt some of the poor habits similar to described earlier.

It is vital to set yourself goals with your trading but it is equally vital to ensure that those goals are measurable, and realistic.

Article by Stuart McPhee