Wednesday, April 29, 2009

The Hong Kong equity market has a strong bullish run last month in the first three weeks before a pull back last week. The HSI surged to as high as 15,977.13 points but fell 1,422 points or 8.9 percent to close at 14,555.11 points on Tuesday. On-month, the HSI is up 435 points or 3 per cent. The better-than-expected corporate results in the US have created confidence in the market for investors to continue buying shares. However, trading volume has started to decline slightly compared to the volume in March. Investors are being more cautious because the market has already climbed 24 percent from the low of 12,125.80 points in March.


Daily HSI chart as at 28 April 2009 using NextVIEW Advisor. Click on chart for larger view.

The longer term moving averages (60- and 90-day moving averages) have increased slightly last month indicating a bullish trend and the strength of the trend is still considered strong because the momentum indicators are still in convergence with the HSI. The averages are currently between 13,500 and 13,800 points. At current level, the HSI is still overbought until it comes back to the averages. Therefore, expect more downward movements in the markets this month unless the HSI breaks above the 15,900 points resistance level.

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.

Tuesday, April 28, 2009

The US equity market has been bullish last month but at a slower pace. In March the DJI increased 17.3 percent on-month but the increase in April is 3.8 percent. The DJI closed at 8025 points on Monday, falling 51.29 points amid declines in the Asian and European markets. The sentiment boost because of improvements in short term economic data in March has started to ease. The DJI failed to break above the intermediate down trend resistance line. The increase in the equity market does not reflect the improvements in the economy as analyst said that the economic recovery is still not within sight. Investors are being more cautious now.


Daily DJI chart as at 27 April 2009 using NextVIEW Advisor. Click on chart for larger view.

The DJI is currently hovering just above the short to long term 30 to 90 day moving averages. The long term trend is still bearish because the longer term 60- and 90-day average is still declining. The short term uptrend momentum has started to become weak. Since early April the RSI indicator is in divergence with the DJI. Resistance has become obviously strong. Therefore, expect the down trend to continue to the support level at 7,000 points if the DJI fails to go above the current resistance at 8,170 points.

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.

Markets catch the flu

No, this time it is not the bird flu or the flu markets get when US sneezes. The pigs who are normally slaughtered in the markets controlled by bulls and bears are having their revenge. The swine flu's death count in Mexico grew to about 150 people from 100. The stocks of airlines, hotels and other tour related companies suffered losses in the US. Starwood Hotels and Resorts Worldwide Inc fell 11 percent, cruise operator Carnival Corp. fell 13.5 percent and Delta Air Lines Inc. dived 14.3 percent. However, pharmaceutical companies see marginal increase. GlaxoSmithKline gained 7.6 percent.

The Dow fell 51.29 points , or 0.6 percent, to 8,025.00. Before the US market opened, stocks in the rest of the markets were also lower.

Monday, April 27, 2009

The FTSI was bullish in the first three weeks of last month and started to correct last week. The FTSI went as high as 1,947.30 points last week, near the 2,000 points resistance level from the double bottom chart pattern formation, before settling at 1,818.61 points today, after falling 34.24 points today. The FTSTI was up 107 points or 6 percent on month. The bullish factor was the better-than-expected financial and economic in the US, Singapore’s largest trading partner. There is still a concern over the sustainability of the economic improvement.


Daily FTSTI chart as at 27 April 2009 using NextVIEW Advisor. Click on chart for larger view.

The longer term moving averages (60 and 90 days moving average) have started to increase slightly last month indicating a bullish trend. There is a divergence between the momentum indicators and the FTSTI and this means that the uptrend is getting weaker. The averages are currently between 1,700 and 1,750 points. Therefore at 1,818.61 points, the FTSTI is still considered overbought expected to correct further downwards towards this range level. If price breaks above the resistance level at 1,950 points, then we may expect the FTSTI to continue the up trend.

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.

Trading volume has increase tremendously with volume exceeding RM1 billion shares daily last week. Last week’s daily average volume was RM1.49 billion shares, 80 percent higher than the previous corresponding week’s average. On Thursday, the trading volume was almost RM2 billion. It may look good when the price trend is supported by strong increasing volume, but a jump or extreme increase in volume with smaller upward movements in the market may signal an end of a rally.

Technically, the down trend correction has extended after it broke the 940 points level extension should last until 970 points. The short to long term 30 to 90 day moving averages have started to increase but price is currently at the 200-day moving average which is currently at 963.30 points. The 200-day moving average is normally used as an indicator to indicate the long term trend by long term hedge funds. Therefore the KLCI is currently at a long term resistance level and we should see a down movement next week.

The Relative Strength Index (RSI) and Momentum indicators continue to make new highs indicating a strong up trend and the bulls are in total control. The weekly MACD histogram and daily ADX indicator continues to climb indicating that the long term momentum is also still bullish. The KLCI is staying at the top band of the Bollinger Bands. The KLCI has been overbought for three weeks in the short term. The Stochastic indicator is still hovering at the overbought level of 80. These indicators are indicating very strong bullish strength. However, the weekly Stochastic reading is now oversold and the last time it was oversold was when the market peaked at 1,500 points.


Daily KLCI chart as at 16 April 2009 using NextVIEW Advisor Professional

The KLCI managed to stay in the uptrend by staying above the moving averages. The KLCI is 8 percent above the averages which is considered overbought. I have been cautiously bullish for the past few weeks but with price currently at resistance levels, I believe it is time for the KLCI to pullback downwards. When the market gets greedy (as can be seen in the high increase in volume), it is time to be fearful. This is a quote from legendary investor, Warren Buffet.

I have mentioned previously that if the KLCI breaks above the 940 points level, I have to make a change in the long term forecast. I am still not convinced that the long term down trend is over. The current upward rally is an extension of the downward correction which has a target of 970 points. I will only be convinced if the KLCI can go above this level and stay above it. In the meantime, the long term target is revised from 550 points to 600 points. The KLCI is currently near 970 points level and let’s watch if the KLCI still has the momentum to go higher and stay above it but in the short term, I am expecting the KLCI to move downwards to 900 points, where the averages are.

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.

Friday, April 24, 2009

The minor price fluctuations on this week’s chart imply that a test of the R1 resistance level should happen soon.

The market continues to move in a relatively narrow range. The pattern as viewed on last week’s chart had some downside implications. It seems the downside move to test S1 fulfilled that expectation.

At this moment S1 is key to what the market will do in the near term. My expectation is that the market will continue to range between S1 and R1. A penetration of S1 will force a reconsideration of this view.


Daily USD/CNY chart as at 23 April 2009 using NextVIEW Advisor. Click on chart for larger view.

TECHNICALS
Stochastic – down.
RSI – currently in negative territory, and flat.
EMA 200 – flat
EMA20 – beginning to flatten.

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Article and Commentary by Don Schellenberg. A trader and trading coach, he is a noted expert on Market Structure, Elliott Wave and Fibonacci. He trades the forex market.
The market easily penetrated the 1.3100 support level and moved down to test support level number two at 1.2945 (S2 on last week’s chart), eventually reaching a low of 1.2885 before turning upwards.

Now the level that was support around 1.3100 has become a potential level of resistance to the current up-move. Failure to close above 1.3100, and more importantly, above 1.3170, will send this market sideways or downwards to test the new support level (S1 on the chart), and perhaps much lower.

On the upside, a break above 1.3170 would likely send this currency pair upwards to test the declining 200SMA and down-sloping trend line. A near-term test towards the recent low of 1.2885 is at least a possibility within the next several days.


Daily EUR/USD chart as at 23 April 2009 using NextVIEW Advisor. Click on chart for larger view.

TECHNICALS
Stochastic – rising.
MACD – down
NextView RSI – flat, below its’ 50 level.
R1 – resistance zone between 1.3100-1.3170
R2 – 1.3300
S1 – nearby support at 1.2885
S2 – 1.2730

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Article and Commentary by Don Schellenberg. A trader and trading coach, he is a noted expert on Market Structure, Elliott Wave and Fibonacci. He trades the forex market.

Thursday, April 23, 2009

There are many ways to find opportunity in the market. The most common technical methods are:

• Search the market using a technical scan.

• Use stock selections identified by other sources, including brokerages, magazines, newspapers and other media. These are a starting point and provide a small group of pre-selected stocks which are subjected to further technical analysis.

• Do an eyeball search of the market. This means looking at the chart of many stocks and identifying those that show strong trends, breakouts or chart patterns.

It’s been several months since we undertook a full eyeball scan of the market. An eyeball scan helps the trader to develop a feel for the market. It develops an understanding of the normal behaviour of trends, breakouts and retracements. It makes it easier to identify abnormal situations. It assists in identifying the chart patterns which are currently enjoying a higher probability of success.

We use two types of eyeball approaches to assess the market.

• A casual eyeball. Whenever we look at a stock for whatever reason, we then also eyeball search through the other stocks in the same alphabetical folder. This takes 5 or 6 minutes. This is a haphazard approach, but over time it covers most of the stocks in the market. The danger in poorly performing markets is that the number of stocks you look at initially is limited because opportunities are limited. As a result it takes a lot longer to cover all the stocks. It’s easy to drift out of touch with the market.

• A systematic eyeball. This is a long process, ideally suited to a long weekend, or the Easter break. The objective is to eyeball every active stock in the market. Even at speed, this is 2 to 3 hours’ work and fatigue – and boredom – is a problem. Even for dedicated traders it’s not that exciting flipping through charts.

As significant market changes develop it is useful to complete a systematic eyeball scan. This week we take you through the steps.

Glance at each chart. If a pattern is not there then it is not there. If a good GMMA relationship is not quickly seen, then it’s not there. If trading is spotty, with little intraday volatility, then the stock is ignored. This may sound difficult, but in practice it’s easy. The chart shown in the screen shot above is a clear reject. Price activity is spotty. The GMMA relationships do not show a strong trend. There are no triangles, saucers or flag patterns in the price chart. It takes less than a second to reach this conclusion.

REJECTS



We look for these combinations of conditions for rejecting opportunities.

• Low level of trading activity. This is a spotty or erratic price chart
• Established downtrend with strong separation in the long term GMMA.
• No evidence of short term GMMA developing trend change activity.
• The GMMA MetaStock Expert display continues to show NO TRADE.

To read more articles and commentaries from Daryl Guppy, click HERE

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Daryl Guppy, well-known international financial technical analysis expert. Appears regularly on CNBCAsia and is known as "The Chart Man". He is an equity and derivatives trader and author of books including Share Trading, Trend Trading and The 36 Strategies of The Chinese For Financial Traders. He has developed several leading technical indicators used by investors in many markets. His weekly analysis newsletters get favorable comment in Asia and Australia.

Wednesday, April 22, 2009

The current market and economic situation is a generational change in wealth. It will destroy the wealth many people have – or hoped to have – accumulated. It will also deliver the foundations of new wealth to other people. Investors face two challenges: first, they have to protect the wealth they have; and second, they need to participate in the creation of new wealth.

The answer to both challenges requires the same tools – derivative or equities. Derivatives were blamed for the start of the current financial crisis. The US Subprime Slime came from over-the-counter derivatives. These failed for many reasons.

The failure infected the financial system because of the belief that when risk is divided, it is isolated and reduced. The failure of one divided section should not affect the other sections. However, risk can be spread out but it cannot be eliminated. Risk must always be closely managed: it was not the derivative tool that brought disaster but the wrong application of that tool.

One of the most significant advances in recent years was the development of derivative products for retail investors. Some products were developed and endorsed by the exchanges, such as warrants, mini-futures contracts and exchange-traded fund products.

Other developments were the standardisation of some off-exchange over-the-counter derivatives such as spread-betting and contracts for difference. These derivative tools offer leverage, but they demand excellent risk management.

Derivatives are a way to increase capital in uncertain and volatile markets. Their first advantage is leverage. A small amount of money can be used to generate a larger return. This creates investment and trading income, and adds to the capital that can be used for investing in equities. Another advantage is the derivatives’ ability to trade short. This can be used to hedge or protect existing investments.

However, when market regulators disallow short trading, they leave investors with no option except to lose money. Faced with this situation, many investors will sell their stock, compounding the market’s fall. We saw this in China where the market collapsed dramatically partly because investors could not sell short.

Potential new investors will also shy away because regulatory limitations force them to only trade from the long side. Given the higher risk of losing their money, they simply stay out of the market.

Both these consequences take the liquidity out of the market and accelerates the downward pressure, depriving companies of the capital they need to keep the economy moving.
Derivatives created and managed by the exchange, or those approved and regulated by the exchange, are essential tools for investors who want to add cash capital into a depressed market environment.

Without capital and liquidity, the equities market will struggle. Investors must feel confident they can make money before they will return to the market. Investors must generate new money before they have the required capital to re-enter the market. Derivatives, when used correctly, can generate capital which can then flow back into the equity market as investments.

The markets have changed too much for these instruments to be abolished. Regulators and users must learn their lessons and curb unrestricted over-the-counter derivatives growth.
On their own, neither derivatives nor equities can beat the depression. A combination of both can restore liquidity, generate wealth and hasten the recovery of these depressing markets.
Regulators and market participants need to create conditions suitable for the sensible application of these instruments to preserve, protect and encourage efficient capital markets.

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The above was the speech text delivered by NextVIEW Chief Executive Officer Stephen Lai at the launch of the Asia Trader and Investor Convention (ATIC) held in Kuala Lumpur on 14 & 15 March 2009.

Stephen became CEO of NextVIEW Pte Ltd in May 2002 and has played a critical role in transforming NextVIEW from a home grown market data provider into a regional player in the financial information industry with direct offices in 7 countries in Asia. Stephen has professional work experience as an investment manager with an international fund management firm and in sales and marketing with a global financial information vendor.
Price of Crude Palm Oil futures (FCPO) traded in bursa Malaysia breaks above the RM2,000 resistance level late March and surged to the current level of RM2,459 per metric ton, higher than the price I have expected which was RM2,260 and much bullish than other “seasoned” analysts I have mentioned in my previous article. Price is up for 5 consecutive weeks and has retraced 38.2% from the RM4,486 to RM1,331 down trend. So, will the uptrend be able to supported and sustained?

The rise in palm oil price is because of lower stock pile and higher exports. Stock inventory have declined for four months and is now at its 20-month low as the government encouraged planters to chop down trees above 25 years old in a replanting initiative. According to the Malaysian Palm Oil Board (MPOB), palm oil inventory fell about 13% in February to 1.4 million tonnes. Renowned analyst Dorab Ministry cautioned last month that if the Malaysian palm oil stocks fall below 1.5 million, it could a dislocation in the industry because of higher prices and delayed shipments.

For the first time this year, exports increased 0.2% in March, as compared to the previous month. Exports are expected to be higher in April. Export estimates for April 1 to 10 is up 3.7% on-month according to cargo surveyor SGS(M) Bhd. Intertek Agri Services is even more optimistic with an 8.2% increase. However, expect exports to slow down a little because demand may decrease because of unattractively high price. Price of crude FCPO has soared to about 71% from the low of RM1,400 while price of palm oil substitute soybean oil has increased only about 25% from the low of $30.00.

The price of FPCPO is currently in a very strong up trend. The short and long term 30- and 90-day moving average is still up and the short term trend showing strong momentum upwards. The Average Directional Index (ADX) and Relative Strength Index (RSI) indicators which measure trend momentum increased recently after declining since February. The daily average trading volume (30-day average) has increased to about 10% to 8820 contracts on-month and the open interest daily average increased 3% on-month.

The price is currently overbought. The 14-day Stochastic Oscillator is currently at 90.8, indicating that price is heavily overbought. It is 23% above the 15-week moving average, which is used to calculate the “perceived value” of a commodity. The 15-week average is currently at RM2,000 while the long term average (30-week average) is at RM1,815. The Stochastic crossover and a bearish reversal pattern on the daily chart indicate a possible immediate pullback.

Using a Fibonacci retracement study, price is currently at a resistance level. The 38.2% retracement I have mentioned in the first paragraph is a Fibonacci retracement level. The parallel trend line on the chart also shows that price is at an uptrend resistance level. This analysis supports a pullback or price reversal.


Daily FCPO chart as at 15 April 2009 using NextVIEW Advisor. Click on chart for larger view.

I am not expecting price to go above the current high of RM2,540 because of these technical fundamental indicators. The average value is about RM2,000 but because of the uptrend, I’d expect the average to increase to about RM2,100 in month’s time. Therefore, I’d expect price to pull back and trade between RM2,100 and RM2,500 with a downward bias for this month.

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Published in Palm Oil Fortune Magazine. Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.

Thursday, April 16, 2009

The Hong Kong market made a good rally in the past one month especially in the last week of the month following the rally in the US. The HSI climbed 3200 points or 28% from the low of 11344.58 last month to the current level at 14,545.69 and is up for four consecutive weeks. HSI climbed 2,512 points or 20% on-month. The market is generally speculating the recovery in the economy amid better corporate earnings and economic data in the US. Trading volume has increased substantially this month as compared to its previous months.


Weekly HSI chart as at 3 April 2009 using NextVIEW Advisor. Click on chart for larger view.

The HSI has just broken above the longer-term 90-day exponential moving average is currently holding on the be above it. The rally has caused momentum indicators like the RSI and MACD to show positive signs and that the bulls have taken over in the short term trend. However, the Stochastic indicator is currently heavily overbought. The stochastic went below the 70 line a few days ago and went above it again. With stronger volume but lesser movement in the market, the HSI is expected to correct downwards in the early part of the month and may generally be in a volatile trading range this month between 12,500 and 15,000 points.

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.
Markets around the world and rebounded in the middle of March following a rally in the US in March. Investors went bargain hunting as there was slight improvement in volume. The Malaysian market has always been defensive. The KLCI rebounded about 8% from the month low while most other major markets rose more than 20% from the low. The KLCI is now at the resistance level which is a one-month’s high. The benchmark index closed at 907.01, 38.27 points or 4% higher on-month. Malaysian PM Abdullah has just handed-over his premiership to his Deputy PM Najib and the stock market seems to be accepting it well.


Weekly KLCI chart as at 3 April 2009 using NextVIEW Advisor. Click on chart for larger view.

The KLCI is currently above the short to long term 30 to 90-day moving averages, which are currently converging. The KLCI has been below this moving average since February last year. The KLCI failed to stay above this average when it broke above these averages last month, so this is the second time this year. This is a technical indication that the market may have bottomed. The momentum has started bullish as well. RSI and Momentum indicators are favouring the bulls. Despite the bullish movement, expect resistance when the KLCI goes to about 920 points with a stronger and significant resistance at 940 points.

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.
The FTSTI rebounded strongly a month ago when the low was at 1455.47 points. It is currently at 1,820.87 points, a three months high and 25% from the low in March. Positive developments in the US have uplifted some investors’ confidence. The technical rebound was long overdue as the market kept on falling since the beginning of the year. The FTSTI is up 292.36 points or 19 per cent on-month. Market looks like it is bottoming-out as a double-bottom chart pattern is currently forming. The double bottom formation is a bullish reversal pattern and will only be confirmed if the index breaks above the neckline at 2,000 points.


Weekly FTSTI chart as at 3 April 2009 using NextVIEW Advisor
. Click on chart for larger view.

The FTSTI is now above the longer term 90-day moving average. It needs to stay above this moving average to turn the current long term trend to bullish. The momentum indicators like RSI and MACD indicates strong bullish strength. However, the Stochastic indicator is currently heavily oversold and the uncertain movement today with strong volume indicates that the index may start to pullback. Therefore expect market to correct downwards in the earlier part of this month before continuing its up trend to test the 2,000 points resistance.

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.
Better than expected corporate earnings and imports have led to positive market speculations that drive the DJI from a low of 6,600 points to the current level of 8,017.59 points. The market finally rebound after 2 months of bearish movement. The 21% increase from the low a month ago has provided positive vibes to investors’ sentiment all around the world. However, analysts are worried about the sharp increase which forms like a V shape on the chart may be unsustainable.


Weekly DJI chart as at 3 April 2009 using NextVIEW Advisor. Click on chart for larger view.

The DJI is currently right on the long-term 90-day exponential moving average. This may provide a resistance to the DJI and furthermore, the stochastic indicator indicates that the DJI is very overbought and the market is expected to pull-back from the current up trend rally soon. The RSI and MACD indicator indicates strong bullish momentum and there is a high chance that price can continue the up trend after a correction. The DJI needs to break and stay above this moving average to continue the up trend but at the moment, the market is still in a sideways consolidation and is expected to stay this way until further buying.

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.

Wednesday, April 15, 2009






Make your way to Suntec Singapore Hall 401 this Saturday and Sunday (18th and 19th April) or visit www.theatic.net