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