Regional Stock Market Indices Analysis - 28 April 2008

Kuala Lumpur KLCI: Bulls are gaining the edge over the bears in the KLCI

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.

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.

Thailand SETI: Upward momentum building up

The SETI closed on a weak note last week after it tested the 850 points resistance level. The SETI was expected to break the resistance because of strong momentum, but failed. This shows that the resistance level is strong. The SETI closed at832.19 points last Friday. However, the decline has not challenged the upward momentum and therefore the SETI still has the strength to break the 850 points resistance to test the 900 points resistance. The RSI indicator remains above 50 and the ADX indicator is still increasing. Current support level maintains at 800 points.

Hong Kong HSI: HSI has 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.

US DJI: Expected to climb higher

Like the Hong Kong’s HSI, the DJI has come out of its consolidation period after breaking the resistance level of 12,800 points in the week before last week (a week earlier before the HSI came out of consolidation) and it managed to stay above this level. I have mentioned last week that the breakout of the consolidation period has a price target at 13,700 points. The DJI is currently at 12,891.86 points.

It has to stay above 12,800 points to remain in the up trend (the short term trend). The long term trend is currently changing its trend to upwards because the DJI is above the 90-day moving average. It is not considered an up trend yet because the moving average is still declining. The immediate resistance level would be a psychological level at 13,000 points while immediate support is at 12,800 and stronger support level at 12,500 points.

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Regional Stock Market Indices Commentaries - 21 April 2008

Kuala Lumpur : KLCI Set to test 1,300 resistance level

The performance of KLCI in the past few weeks, particularly after the post-general election sell down have created a short term up trend, with higher lows and higher highs. The KLCI closed at 1267.65 points which about a month ago where the lowest level was 1157.47 points. However, the major trend is still down and the major resistance is at 1,360 points.

The up trend is supported by a good momentum and therefore it is expected to increase this week and test the intermediate resistance level at 1,300 points, which is defined by a mid-term 60 day moving average. If the KLCI is able to overcome this level, it may start to test the major resistance level and break the down trend. Support level is currently at 1,220 points.

Singapore: STI Gearing upwards

The FTSTI has tested the longer term 90-day moving average resistance level in early April and today it tests this level again. The FTSTI has been in a down trend since December last year. Today the FTSTI stands at 3,124.87 points. The momentum of the developing up trend is strong and therefore the FTSTI is gearing upwards to break higher above this resistance level and test the next resistance level at 3,300 points.

The tightening of the Bollinger Bands shows that the STI is expected to strongly move into a direction soon. Support level is currently at 3,000 points.

Thailand: SETI Upward momentum building up

Upward momentum is building up on the SETI. The SETI closed at 845.40 points, just slightly below the resistance level. The trend is currently sideways as the short to long term 30 to 90 day moving averages direction is sideway. With a strong momentum building up, the SETI is expected to break the resistance and move forward to next resistance level, which is the psychological 900 points level. Currently the support level is at 800 points.

Hong Kong: HSI set to positively come out of trading range

The HSI has been in a sideway market since late January between support level of 21,000 points and resistance level of 25,000 points. The HSI is currently at 24,197.78 points. Therefore it is near the resistance level. The current short term up trend is supported by a good momentum and therefore it is likely going to break the resistance level to the next resistance level at 28,000 points. The current support level is at 22,500 points.

US: DJI is expected to climb higher

The DJI ended on a very positive note last Friday, closing 228 points or 1.8% higher at 12,849.36 points. It also broke the down trend resistance level 12,800 points and stayed above it. Although the short term and intermediate trend has started to go into an up trend (increasing 30 and 60 day moving average), the long term trend is still down. The DJI has to stay at least above 12,700 points to turn into a long term up trend. Therefore, this level is set as the current support level.

With the resistance breakout on Friday, the DJI is expected to climb higher to test the next resistance level at 13,700 points.

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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

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MY - UCHI TECH BHD

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 courtesy of NextView

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Regional Stock Market Indices Update 14 April 2008

Ahhh... it's nice to go on a long holiday. My GPRS service (although it EDGE) from Maxis did not work well while I was in Sabah... Got frustrated everytime want to even load my blog! I think time to go 3G... which is better Celcom, Maxis?

Anyways, here are my views on the regional stock market indices this week:

Kuala Lumpur Composite Index (KLCI) - 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.

Singapore Straits Times Index (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.

Thailand SET Index (SETI) - a sideway range with a downward bias
The Thailand market is closed for the Songkran (new year) festival. The SETI closed on a slightly bullish note last week. It closed at 827.10 on Friday. The SETI has rallied upward since 20th March. The technical resistance for the SETI is at 840 points and the SETI should test this level before making a correction. With the current turn of events in the US, the SETI may not be able to do so. Therefore, a sideway range with a downward bias is expected for the SETI and support level is at 800 points.

Japan Nikkei 225 (Nikkei) - 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.

Hong Kong Hang Seng Index (HSI): correct downwards further
The HSI has broken the down trend line in early April but is still below the resistance level of 25,000 points. The HSI closed at 23,865.66 as at 12.30 noon. The HSI went as high as 24,681 points last week (Friday) and like most other markets opened lower today because of the US DJI performance. Since the HSI is still near resistance level, the HSI is expected to correct downwards further and should find support at 22,000 points.

US Dow Jones Industrial Index (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.

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