Funny stuff

STI dropped 88 pts down to close at 3715 with a volume of 2.4 billion. Most of the stocks that had big selldown are those banking and property stocks. This is after citigroup announced subprime losses which dragged Dow to go down 324 points last night. So much for the rate cut huh?

I'm not seeing panic selling over here. Most have buyers stepping in at crucial support points. After chatting with HH, I realised how little I know about FA though I keep saying I wanted to find out more. Came at the right time...my work is starting to ease down and I have both the resolve and time to do what is necessary to learn more about this illusive FA. Knowledge begins when you realise you know nothing.

I've photocopied quite a number of resources about FA since May when I'm experiencing massive losses in the market and banned myself from trading. It's still with me, half read. Those range from definitions to applications, so I'll have lots of material to start me off. When I'm ready, I'll do some analysis and post it here. Confirm crap one, but who cares...look at my initial postings on charts. When I look back on it, I cringe too.

Talking about that, I made some notes to help me out when I first started entering the market last March/April. This are some things that I observed while in the market. Most are bullshit, haha!

This is just for laughs :)
[WARNING: Do not obey all these rules, some still apply though!]

1. Do not buy stocks quantity of around 1000 (1 lot), because the commission will eat up earnings significantly

2. Do not buy on emotion, analyse carefully before buying! You can always wait for an opportunity to enter again

3. Whenever there is a huge volume of pple trading the stocks, it will definitey FALL

4. When a stock rises above the 52 wk high price, it will most likely rise further

5. When a stock falls below the 52 wk high price, it will most likely fall further

6. Time your exit carefully. You can key in your sell orders the night before.

7. Stock prices follow demand and supply. Just look at the bid size and ask size to get a feel of whether the price will fall or rise. If bid size exceed ask size, price wil rise. If ask size exceed bid size, price will fall.

8. Buy stocks with valuation and price target set by known research companies. This way you will make sure that if your prediction is wrong, you can always wait out for the stocks to rise because of good fundamentals in the stock

9. Do not buy low and sell high. Don't exist. Try buy high and sell higher. Or sell low and buy lower.

10. Don't buy stocks around 9am, there is bound to be a price hike which will slow down. Get it after 930am after all the excitement has died down

11. Sell it in the morning though, due to the price hike

12. Buy stocks which cross blue line and have good fundamentals. This way if it doesn't go up, can consider holding on

13. Stocks which gives dividend will drop on ex-date, see Robinson, 2nd Nov06

I cringe when I read some of these pointers. So newbish :) Some points are more hilarious than others. I especially like pointer number 3 - Whenever there is a huge volume of pple trading the stocks, it will definitely FALL. Haha, crapshit lah, of course not true! Volume will decide the significance of the move, whether it will mve up or move down, it depends on the price pattern preceeding the big volume. No such thing as DEFINITELY FALL.

Pointer 7 is funny too - it's about bid size exceeding ask size, then price will rise. I think last time I don't even know how prices of stocks rise or fall. It's not the buy queue or sell queue that matters. It's the enthusiasm of the buyers to bid higher prices that causes the price to rise and the desperation of sellers to sell at lower prices that causes the price to fall. Buy and sell queue are just that...queues to buy at that particular buy/sell price. Of course, with market depth services, buy and sell queue can give a feel of the buyers waiting to support at a particular level, and the 'road block' that prevents the price from going up.

Funny right? It wasn't so last time, cos that's what I observed.

Dow down by 55 points. Portfolio gains around 3.4k (still decent). Have a great weekend ahead!

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Aftermath of FED rate cut

Hmm, didn't expect STI to close flat. STI down 2.14 pts to close at 3803 with 2.7 billion volume. Volume is quite high...i think tmr STI sure get sold down. Dow is already under fire now, it's down by 247 pts at the present.

Some news to share:

1. Lianbeng stole the limelight, it rose up 0.065 pts to close at 0.725. All the other construction stocks are still idling and not moving. From SGX query reply, Lianbeng said that it is presently in discussion on certain property development. More info would be known when it's available. Haha, share price always run out before announcements are made officially. Efficient market my foot.

2. Sembcorp marine announced that it is closing out unauthorised foreign exchange transactions to 11 banks. The (now) released loss is US$220 million, excluding the US$83 million which had been paid to one of the banks - a staggering US$303 million loss. I think enough to wipe out all the profits for the year already.

This is bad news. Selling pressure will be on for marine stocks because investors would be scared of more fx losses announced. Cosco didn't have a single FX loss, so at least it won't be affected so much, if at all. Sembcorp marine drop drop drop! I'll collect at $3.50 :)

3. Swiber will be releasing its financial results for the 3rd quarter ended 30 Sept on 14 Nov, during lunchtime break. Let's cross our fingers and hope no fx losses? haha :)

Oil prices and gold shot up a lot today. Aiya, that's the norm lah, when interest rate drops, people flock to commodities (physical assets) for security. Oil hit intra day high of USD 96 per barrel. All time high man, scary...

Dow 215 pts down now. Tmr is bargain day :)

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Fed announced a rate cut of 25 basis pt

Fed announced a rate cut of 25 basis points earlier this morning at 2:15 am (our time).

Ben mentioned that further rate cuts might not be in store as he feels that the risk of inflation is about equal to the risk of economic recession. Like he really knows what he is saying like that. In my opinion, another rate cut by end of this year is a possibility that cannot be ignored.

Short term fix, longer term trouble, everyone knows that. But in the wild dance along with the market, rationality is thrown away most of the time.

All the world's a stage,
And all the men and women merely players:
They have their exits and their entrances;
And one man in his time plays many parts,

To borrow from shakespeare, what will your part be this time?

Dow was up 137 pts (1% up), Nasdaq was up 42 pts (1.51%) and S&P500 was up 18 pts (1.20%). I think STI will be up by 1% (38 pts thereabout?) to show some face to big brother :) Have a great day trading breakout! I'm away till night, no way to monitor the market at all, haha

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2½ hrs to go for FED meeting results! Yongnam book close on 19th Nov, 5pm

As expected before fed meeting, STI closed flat at 3805 (7 points up) with a volume of 2.09 billion. Market was very quiet today. I can feel it because my watchlist looks like my browser hanged up...totally no movement at all.

Lianbeng was up 0.025 to close at 0.660. Being the new market leader in construction, I think the upmove should be indication of renewed interest in construction shares. Most of the construction shares are down though (but being the market leader, it should move first, no?)

Commodities ETF took a hit, it's down by 0.060, probably due to oil price going down (the ETF have 20+% of their weightage on crude oil). Don't know what to make of this as I'm still starting to analyse the whole commodities thingy.

Quite a number of announcements to share:

1. Ferrochina completes Superb team acquisition; and net profit for 3QFY07 increased by 87.7%. I like this stock, so let me analyse more before I jump in. It's one of the largest galvanised steel manufacturers in China, so it can give get a huge market share of its business. Add to the fact that developing China needs lots of steel for their infrastructure, I think this is one train I'll like to hop on to.

2. NOL net profit up 50%, but ytd only increased by 4%. Should see improvement in their results due to high container volumes and increasing freight rates. Looks good :)

3. Straits asia resource acquired Jembayan coal mine in East kalimantan. This is expected to double the Group's annual coal production in 2008. The coal quality is of higher grade and contains less sulphur, so it's actually of a higher quality. I think this should be positive news for straits investors. I am looking to jump in again when the opportunity arises. Still bullish on the general coal demand and prices.

4. Yongnam is going to close book at 5pm, 19th Nov, to determine the provisional alloctment of warrants to shareholders. This means they are going XR on 20th Nov when they open for trading. Any one with shares in the CDP when they announce XR will be entitled to buy the warrants. Of course for those who don't want to invest more into the warrants can trade their 'nil-paid' warrants on the open market before they cease trading. More information should be provided the next 1-2 weeks in the form of OIS (offer information statement). I'll peruse and post more if needed.

Hope IR contracts come out by then, I don't intend to put in more money for yongnam. Call me a short term investor :)

5. Cosco net profit rises by 87% (excludes one off exceptional gain due to disposal of old vessels in 06). All very healthy balance sheet :) Order book is still ballooning :) I want this stock! (may I add, at a reasonable valuation...now too high)

Tonight at 2:15am (our time), FED is going to announce if they are keeping the rates unchanged or reduce the rate by 25 or 50 basis point. A poll done today indicated 80% think that a 25 basis point cut is likely, the other 20% indicated no change in interest rate. In my opinion, the interest rate reduction had already been priced in. If the cut is 50 basis point, tmr global market tua cheong. 25 basis point - not much effect. If no reduction in interest rate - tmr a sea of red everywhere.

In either case, I'll not be around to monitor anything. Tmr I'm damn busy, so perhaps if the market is poised to rally, I'll probably place a sell queue on some of my holdings. Hmm...which ones? haha, i'll decided tmr, no point thinking now :)

Dow now at +50 pts, not up not down. Everyone waiting for something to happen at 2:15 am :)

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"Who chooseth me shall get as much as he deserves"

The second suitor chooses the silver chest and reads the following message:

Some there be that shadows kiss;
Such have but a shadow's bliss
There be fools alive iwis
Silvered o'er and so was this...

Taken from Merchant of Venice, the second suitor for Portia chooses the silver chest, and fails to see her picture inside the chest, but got the above inscription instead. A case of wrong timing?

I just discovered this guy called Ted butler, who gives very good insight to the silver market. The view that he presents is very interesting. This is part of my investment education on commodities, so I thought it'll be great to share this here.

Some personal thoughts on this article. I didn't that silver present such a big storage issue. Compared to a equivalent monetary value for gold and platinum, silver weighs a lot more (50 times more than gold to be exact). That is interesting because if I want to own physical silver asset, I would have to pay a lot more for storage and insurance (here again, I didn't know one have to buy insurance for storage... I guess that's common-sensical).

Here's the charts for silver.



Does TA work for commodities like silver? If it does, based on 10 yr silver chart, I see an ascending triangle pattern (bullish), possibly huge upside in the next 3-4 years. I'm talking about silver prices reaching USD 18 per ounce at least. There was a similar ascending triangle pattern seen around Dec 2003 to 2005, with silver price breaking out of resistance level near Dec 2005. Price shot up beyond the ascending triangle target price of USD 10 per ounce to reach a high of USD 14 per ounce.

If what Ted Butler said is true, then this would be the catalyst to drive silver price to the target price of USD 18 per ounce. Haha, based on TA again, good entry should be near supporting trendline near USD 12 to 13.

Old habits die hard. I find it difficult not to see patterns on charts :)
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TED BUTLER COMMENTARY

October 23, 2007

MONEY FOR NOTHING

(This essay was written by silver analyst Theodore Butler, an independent consultant. Investment Rarities does not necessarily endorse these views, which may or may not prove to be correct.)

On September 24, a Federal Judge in New York heard final oral arguments in the class-action settlement between Morgan Stanley and 22,000 of their clients involving costs associated with the storage of precious metals. The parties have agreed to settlement terms. Morgan Stanley will pay several million dollars and promises to revise their precious metals storage processes. However, there is no admission of any wrongdoing. Unfortunately, the class-action participants will receive very little and it will be, basically, business as usual as far as Morgan Stanley’s precious metals storage practices are concerned. All that’s left is for a final approval by the judge.

The issue specifically concerns whether Morgan Stanley and many other large financial organizations who claim to hold and store silver for their customers, actually possess the silver. This case came into existence as a direct result of a number of articles I wrote several years ago. I admit to a high level of satisfaction that the case confirmed a major contention of mine, in spite of doubts by many when I first wrote about it. (When I wrote the original articles, I did not use the name Morgan Stanley, and had no idea a legal case would be brought that involved them).

I have long maintained and written that there are two types of silver when it comes to professional storage, real silver and paper silver; cold hard metal versus imaginary or make-believe silver. I claimed that investors could be making a mistake in assuming that the metal held for them actually existed. I warned that free storage was a certain tip-off that no real metal existed, but even the payment of storage charges did not prove that real metal existed.

I offered a simple solution for any investor with stored silver to determine if the real metal existed or not. Most stored silver is in 1000-ounce bars, and they are always identified with serial numbers and a specific weight. If an investor was concerned, all he or she had to do was request the serial numbers and specific weights of the bars they owned.

A reader, who held silver in 1000 oz bars, requested Morgan Stanley provide him with the serial numbers and weights of his bars, on which he had paid storage and insurance fees for many years. He was given the run-around and not the serial numbers and weights. I am aware of this through e-mail exchanges with him. I told him that the only plausible reason they wouldn’t give him the information was because the bars did not exist. He contacted a lawyer and that ultimately resulted in the class-action settlement, after years of legal wrangling.

This, obviously, is a concern for those who buy quantities of silver that they can’t reasonably store at home, or in a safe-deposit box, and must use a storage program. A $100,000 worth of gold weighs 10 pounds and platinum weighs around 5 lbs. These are weights easily handled personally by most people. With silver, $100,000 worth weighs around 500 pounds, a weight not easily handled.

Safe storage is more of an issue unique to silver than any other precious metal. While Morgan Stanley issued statements that it was storing all types of precious metals, the largest single amount was silver. It was a client’s inquiry about his 1000 oz bars that precipitated the class-action suit. Logic would dictate that this is also the case with hundreds of other worldwide financial institutions that claim to store precious metals for their clients.

I found it appalling that Morgan Stanley would claim to store silver that didn’t exist and even have the chutzpah to charge for the storage. That would appear to be a clear case of fraud. I am even more appalled that the judge in the case, or any government regulator, would look the other way. The important lesson here is not that Morgan Stanley got caught with its hand in the cookie jar, but what silver investors can learn from this episode.

If you have an investment in 1000 oz silver bars which are stored for you and you don’t have serial numbers and specific weights, you don’t own real silver. If you have a pool account you don’t own real silver. It you have any account where you don’t have the clear ability to demand delivery at anytime with no additional fabrication charges, you don’t own real silver. Period. If the dealer you bought the silver from stores it for you, and it is not an independent storage facility that is holding it in your name, you are taking great risks.

If you have paid full value for your stored silver, including storage and insurance fees, and don’t have the serial numbers and weights on your 1000-ounce bars, you must rectify that circumstance immediately. By not actually buying and storing the real metal to back the customers’ purchase, financial firms can greatly enhance their bottom line profits through the free use of the customers’ funds. Morgan Stanley’s actions were not in any way unique in this practice. In fact, in the court documents summarizing the proposed settlement, one of Morgan Stanley’s defenses was that they were not doing anything unusual by charging storage on metal that didn’t exist, as this is a widespread industry practice.

On a purely financial basis, the institution is given cash by the client and does not have to return it until the client sells his silver, which may not be for years or decades. For the entire time the client does not sell, the firm has full use of his money on a zero cost of funds basis. Those firms who charged, and still charge, storage and insurance fees for the non-existent silver rake in even more from the client. Honest dealings aside, this is a very cash-flow positive business for these institutions. Even if silver doubles or triples in price, there is no margin call to the selling institution, as clients don’t issue margin calls. As long as clients don’t sell on a net basis, the issuing institution still doesn’t experience negative cash flow. In our short-term world, that is all that matters. If you or I arranged to do what hundreds of world financial institutions have done, we would quickly be put in jail, as it is fraud, pure and simple.

Due to its bulk, silver is often stored in large quantities and dollar amounts. Because the unbacked silver storage accounts have been in existence for decades, the amount of non-existent silver is very large. I would conservatively estimate that at least a billion ounces of this silver is on the books (although I feel the true amount is much larger).

I prefer to deal in documented facts and figures, and not to guess what the total amount might be, but there are no reporting requirements or clearinghouse data available. Were it not for the class-action settlement involving Morgan Stanley, I’m sure many would deny this situation existed at all. Fortunately, because of this case, no one can deny the practice of unbacked silver certificates exists.

Had the actual silver been purchased, as it should have been, when the clients deposited funds to pay for the metal, that would have been reflected in the price. In addition to deceiving the client, they short-circuited the normal supply and demand function of the free market. This was an unfair restraint of trade and the free market. To those who would say this is no big deal, ask yourself this – would you knowingly do business with a stock or bond broker who never actually bought what you instructed them to buy, but just treated your investment as a bookie and bet you were wrong? Would securities and banking regulators look the other way?

This is a short position, pure and simple. The firms and banks that have sold silver to clients without immediately going out and buying the real silver that the clients paid for are short the metal. That means the issuers are liable and responsible for any price rise in silver over the price to the client. For small and medium sized firms, this is a huge risk.

This is a short position separate and distinct from the short positions on the COMEX or from forward selling/leasing. This puts the combined short position for silver in the billions of ounces. To suggest this unbacked short position is somehow hedged (just as some contend, the forward selling/leasing position is somehow hedged) is nonsense. The documented commercial long position on the COMEX is so small that it couldn’t cover even one medium-sized issuer of unbacked silver certificates.

It is important to remember that this incredibly large, additional short position unique to silver has the same price effects that all large short positions have in any item. First, comes the artificial price-depressing impact it has when it is created, then comes the artificial price-enhancing effect when it is eventually closed out. What that means to investors is this – the price-depressing phase of short sales of unbacked silver storage programs is behind us. This is one more reason why silver is still so cheap. That’s good news because what could be better than buying a high-quality asset at a big discount to its real value?

Furthermore, the price-enhancing impact is still to come. The banks and firms that issued these unbacked silver certificates haven’t panicked and rushed to buy back silver to limit their liability and exposure. So far, their individual losses are manageable, and I’m sure they still believe silver will go down in price in the future and the problem will go away. While it’s true that these large institutions have a higher tolerance for financial pain than most, it’s also true when they do panic, they panic big. I believe they will panic at $30 or $50 or higher.

I am sure that eventually we will read about the great losses some institutions have suffered from very high silver prices because they sold silver to clients that they never actually purchased. People will scratch their heads and ask how those firms could do something so foolish, just like many today question how big firms could offer mortgages to borrowers of poor quality. The few who are aware of these facts in advance are afforded the opportunity to take advantage of the coming silver price explosion. This storage fiasco is another one of many factors we have pointed out about silver that has proven to be correct. We are just as certain that the price of silver must multiply many times over. Don’t let this once-in-a-lifetime opportunity pass you by.

(Editors note: This is another case where Ted Butler hit the ball out of the park. He’s the only person to ever write about phony storage. As a result, he was dismissed as a crank by numerous stockbrokers employed by the big firms. People have doubted most of his primary arguments about silver, but he has been right. When he talks about manipulation and short selling, there is every reason to believe it’s true. If his price predictions prove to be accurate, silver will be a fortune builder.)

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Swiber's chart

Was playing with chartnexus, practicing drawing my support/resistance/trendline when i came across this nice trendlines that can be drawn for Swiber.


One of my friends asked me about the validity of support and resistance. I think the above chart shows how most of the time, support acts as the underlying strength for the stock to bounce up while the resistance acts as the ceiling for the price. Of course, where the support/resistance is broken, more downside/upside will be expected.

Long term support for Swiber is around 3.560. I think it'll hold, based on other indicators. The short ascending triangle is not invalidated. Let's see how it develops from here.

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Oil price vs fed meeting --- oil price wins :)

STI drop a little today (which i feel is good). It closed down 21 pts at 3798 with a volume of 2.28 billion, down 0.56%. Property stocks continue the decline after govt announced that the deferred payment for property is going to be scrapped away.

Surprise development of Labroy marine. It was reported on ST today that the company had a foreign exchange (fx) loss of about 200 million. This was right after sembcorp marine announced a similar loss over. As this is the second company to be hit by the weaker US dollars, the pressure on shipbuilding stocks are rather high. Cosco and YZJ all undergo heavy selling, though I'm not sure if their selling is really due to this incident or just people trying to reduce their exposure before the FED rate meeting this coming few days (wed/thurs night).

I don't like the way that the director (or CEO? can't remember) saying that if the price is good, he'll just take the money and relax. Good for him, but doesn't he care about shareholders? Of course not I guess. I don't think the offer for labroy is good (it's around 2.89 something, current price is 2.800). Quite slack huh, the management level? To me, this is a sign of slacking management, not a stock that I'll like to be in. On the other hand, if my company is offered a similar amount, would I take it? Questions to be pondered over.

Flour increasing in price, wheat increasing in price, oil too...Inflation coming upon us? I think i've got to read more about commodities. It's part of my education as a worldly investor. Everytime I see the Lyxor Commodities ETF on my watchlist increasing by one bid per day. So good meh? I saw that the weightage of the fund is heavy on crude oil. Includes other commodities like soya beans, coffee, metals etc. Wonder if I can use TA to gauge the support/resistance for entry and exit points, esp since it's rather illiquid. One thing I don't like is that most of the ETF traded in SGX are based on USD, so that's the bad thing as I have to worry about 2 things: the trend of the commodities which the fund is based on ; and the exchange risk involved between USD and SGD. Hmm, looks like a look of things to look out for.

Dow down by 53 points.

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I like what Decipher is talking about in his blog on 29th Oct. Focus not on the paper gains and losses, do not focus so much on the prices, but look more closely on the big picture. By not looking so much at the price (and worse still - attributing the price that fluctuates daily to certain certain reasons like I really know why), I can sit back and analyse the more macro events happening. I think I'm going the right direction.

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STI up 48 pts to close at 3819 - testing 3900 soon

STI powers up another 48.23 pts to close at 3819 with a volume of 2.64 billion. Again, this time I felt left out in the rally. My stocks didn't really move up. I guess that means it's rotational play. Definitely not property I guess :)

Property stocks got a bit battered today after measures are taken by the govt to curb the hot property market. They scrapped off the deferred payment scheme for would-be buyers. This might be good for banks, because they would receive the money now instead of a few years later. I doubt this would curb speculators. Basically if you're a speculator, you might already want to invest and have the capacity to do so. Deferred or not, might not really matter to these groups of people. Anyway, bellwethers like CDL droppped heavily today.

The next stock I want to sell off to lock in my profits (if any) is GK Goh. I know it's undervalued (NAV as at 30 June 07 is 1.2522) and I bought it a a low price below the NAV, but somehow I'm not too optimistic about its prospect. Esp when I'm trying to reduce my holdings to make my realised losses smaller. Let's see if there's a chance to sell off this stock.

Some news to share:

1. Yongnam has commenced legal proceedings in the high court of KL against Ishi Power Sdn Bhd. The latter clamed that Jiwa Harmoni offshore, a wholly owned subsidiary of Yongnam, had been overpaid a sum of RM 4,056,283 for the project for the construction of 3 coal fired power plant over at Johor. Seems like Yongnam is quite confident of their stance. Quite a sizeable amount, 4 million RM.

2. This one is more interesting. Labroy Marine is offered a voluntary conditional cash offer by Dubai Drydocks World for a potential outlay of around US$1.63 billion. The acquisition is to consolidate Drydocks World's place among global ship repair and shipbuilding facilities and provide entry into global rig building business. Wow, I think tmr when Labory lifted trading halt, sure cheong like mad. But the whole procedure shouldn't take so fast, have to wait for shareholders meeting and such before the whole thing can go through. It's interesting to see how this develops.

Dow up 38 pts now. Rate cut prospect vs escalating oil price... who wins? So far, rate cut prospect wins :)

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YZJ chart

This is for Charlesming.

YZJ

This one is one hot stock that many people follow. Interesting indeed :)
(haha, noob alerted me that this stock do not have dual listing, which I subsequently changed, sorry!)



From the looks of it, seems like resistance at 2.74 is a really strong barrier. Ascending triangle formation is seen, which is a bullish pattern most of the time. Target price of 3.15 is set if the price breaks away from 2.74 resistance with high volume. The high volume is essential for a valid breakout. Chart is bearish if the lower trendline is broken.

From MACD, seems like it is going to reverse and move up trend already. Stochastic had already crossed over, so I think the price is more likely to break out of 2.74 resistance than break below the trendline. Weekly not too good because stochastics is already so high up. But I think it's still okay for the next 2 weeks, where the price will have to decide to move up or down.

From the weight of the evidence, I'll say there is a higher chance of it moving up to test 2.74 resistance. Hopefully it'll break and we can see a good price movement upwards. Pay attention to its weekly chart though.

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This is just the characteristic of this stock. It likes to move up a lot in the morning, but is seldom followed throughout the day. I heard someone mention this before. So if you're looking to sell, do it in the morning. If you're looking to buy upon breakout at 2.74, do it after the morning? haha, good luck!

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Market crash series - dot-com crash

Haha, it's been quite some time since I posted the market crash series. I think with every rally, each lesson learned in the market crash series becomes more and more relevant. It's true that history keeps repeating itself, that's because human nature seldom change. Greed and fear, 2 emotional devils that keep on haunting investors and traders alike had and will continue to cause bubbles due to irrational buying and value hunting due to irrational selling. It'll be good to learn what had happened in the past so as to derive some learning points out of it.

Surprisingly, everytime I posted the market crash series, it's somewhat relevant to the current situation now. I had taken the market crash series from this particular website and had posted it in chronological sequence. However, the lessons espoused in the posting is somewhat related to the current situation in the stock market. Currently, tech stocks (possibly led by apple's splendid results) are on the rise. Nasdaq had increased 1.94% last Fri. I'm reading his book called A mathematician plays the market and the author talks (rather obsessively) about his losses in Worldcom, a dot-com stocks listed in US. Just take a look at the postings today. Coincidental?

The tech bubble is one of the most recent crash which happened from March 11,2000 to October 9, 2002. Nicely replaced by the 'dot-com crash', it causes Nasdaq to lose 78% of its value when it fell from 5046.86 to 1114.11. I guess this was the era that creative in singapore was selling at $65? Many IPOs are released at this point, most with no earnings in sight. Nevertheless, investors keep buying up the prices, so it's not uncommon to see millionaires sprouting up everywhere.

Of course, many lost millions too when the party ended. Regressing to the mean I guess. Read and learn :)

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Nasdaq tech bubble


After the 1987 stock market crash, the global markets resumed their previous bull market trend. This powerful trend was driven by computer technology. Many of the technology stocks were listed on the Nasdaq exchange, which is an electronic marketplace.

In the early 1990’s, the personal computer was rapidly gaining acceptance for business and personal use. The computer was at last becoming more reasonably priced and more user-friendly. Computers were no longer the fodder of geeky hobbyists. They were veritable business tools, which were vital in gaining a competitive edge. Business applications were invented to aid the user in accounting, calculating taxes and word processing. Computers also began to compete with televisions as a form of entertainment, as PC video games flooded the marketplace. Corporations such as Microsoft prospered enormously as almost every computer system contained their operating system software.

During this time, the US computer industry focused more upon computer software versus hardware. This is because software was an extremely high margin product, due to it not being a physical product, like chips. Software companies produced a markup from selling licensed information, which costs very little to reproduce. Computer hardware became a commodity product, i.e. virtually indistinguishable from the product of any other competitor. Commodity products produce very little profits as each competitor constantly undercuts each other’s prices. Asian companies, with small manufacturing costs, produced virtually all of the hardware components at this point. Software, however, was protected as intellectual property with patents. Therefore, a product such as Microsoft Windows is a one of a kind product. This creates a strong barrier to entry, a benefit which is highly sought after in business.

The stock prices of software companies were marching ahead rapidly. Many small software companies were started by college students in garages, paying their employees with as much pizza and soda they desired. Every startup wanted to become “the Next Microsoft”.

Eventually, several of these start-up companies took the notice of serious venture capitalists, who were looking to finance these operations, take them public and reap massive profits. Soon the fledgling startups began to pay their hopeful employees with company shares. The premise was that when the company went public, the early shareholders would become instantly wealthy. The majority of the software companies were started in Silicon Valley, near San Francisco, which was a technology Mecca. The Nasdaq index of technology stocks was rising extremely fast, creating many millionaires.

Computers became further popularized in the mid 1990’s, as blockbuster PC games were created, such as Sim City and Duke Nukem. This fueled an increase in tech savvy youth, as computers went from “geek to chic”.

The Internet Age

Around 1994, a new frontier called the internet, was first being made available to the general public. In actuality, a primitive form of the internet had been around since 1969. This early internet was called DARPANet and was created by government agencies as an efficient way to exchange scientific and military information to computers in different locations. By the 1990’s the internet had evolved as a way to communicate using email, use chat rooms and view informational websites.

Almost immediately, businesses saw the internet as a profit opportunity. America Online made the internet available for the masses. The Yahoo search engine was started in 1994 as a directory for the universe of websites. Amazon became the first online bookstore in 1994. EBay was started in 1995 as an online auction site. As the internet moved from the hobbyist domain to a commercialized marketplace, online business owners became fantastically wealthy. Many technology companies were now selling stock in IPO’s. Most initial shareholders, including employees, became millionaires overnight. Companies continued to pay their employees in stock options, which profited greatly if the stock went up even slightly. By the late 1990’s, even secretaries had option portfolios valued in the millions! Many companies had BMW sign on bonuses! This is surely an example of irrational exuberance.

Tech Stock Mania

Several economists even postulated that we were in a “New Economy”, where inflation was virtually nonexistent and the stock market crashes were obsolete! Even worse, it was said that earnings were not relevant in picking stocks either! The “Old Economy” referred to industrial stocks, such as those in the Dow Jones Average. Another buzzword was “Paradigm Shift”, which is a synonym of “New Economy”. Investors were enamored by these buzzwords, as they deceptively described something that was sleek, sexy, and exciting.

From 1996 to 2000, the Nasdaq went from 600 to 5,000! Dot-com companies run by people who were barely in their 30's, were going public and raising hundreds of millions of dollars of capital. These companies didn’t even have much of a business plan, and certainly didn’t have any earnings, either! For example, Pets.com had no earnings yet came public and raised billions of dollars. Dot-coms wasted millions of dollars per night on frivolous parties. Hard work was never part of the picture for dot-commers. There are many stories of dot-com employees walking around barefoot in the office and playing foosball all day. At one point, a new millionaire was created every 60 seconds! Many of these instant millionaires thought that they were so brilliant, that all they had to do was play to make money. Never mistake a bull market for brains.

The Bubble Pops


By early 2000, reality started to sink in. Investors soon realized that the dot-com dream was really a bubble. Within months, the Nasdaq crashed from 5,000 to 2,000. Hundreds of stocks such as Pet.com, which were each worth billions, were off the map as quickly as they appeared. Panic selling ensued as investors lost trillions of dollars. The stock market kept crashing down to 800 in 2002. One high flier, Microstrategy, slid from $3500 per share to $4! Numerous accounting scandals came to light, showing how many companies artificially inflated earnings. Shareholders were crippled. In 2001, the economy entered a recession as the Fed repeatedly cut rates, trying to stop the bleeding. Millions of workers were now jobless and had lost their life savings.

Needless to say, the New Economy was a farce, and traditional economic principles still hold. What is sadly interesting is how bubbles will continue to occur in the future. When they do occur, foolish investors will say, “This time is different!”

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How i started learning technical analysis

For TH and those who wanted to find out a little more about technical analysis.

I started off with investopedia, a pretty comprehensive (lots of topics to start you off, but brief) website that teaches you lots of things briefly. It's enough to whet your appetite to find out more (if you want) and it's pretty easy reading. When starting off with investment, there's a mountain of jargons that you will come across, so this website is very good as it uses and explained all the terms you'll come across again and again.

I basically printed the basic fundamentals and kept it in my file for reference. Pls devour all the articles in this website. When you're ready for more, just read under the section "tutorials" and go on to the experienced investors and so on.

Investopedia is not strictly a webbie about technical analysis. It's a pretty general website about investing, so it's a good start.

I knew nothing about TA until I went into warrant trading for HSI. I was then interested in finding out how to buy at bottom and sell at the top. This is where the chart analysis website comes into place. Very good for learning technicals analysis (basics), chart patterns, candlesticks, and very importantly, support and resistance level.

Read and learn accordingly to the order. Practicing what you learnt is a must. You can learn to ride a bicycle by reading, same for TA too. Get a good charting software - highly recommended and free Chartnexus - and start drawing straight away. If you have questions, do feel free to ask me, i'll try to help if I can.

I basically learnt all that before going to decipher's course. Decipher helped me piece up all the bits and pieces together, so I understood the link between all the pieces of evidence. Oh, I also bought a TA book somewhere in between all these: the name of the book is by Martin Pring: Price pattern. Quite antique, but nevertheless useful.

1 year and a half later, this is where I stand now. Not very good, but no longer fearful of reading charts.

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Sold off straits too early

I'm human afterall. Even though I pyscho-ed myself not to feel the pain of selling a stock too early, it's still affecting me, honestly. But to be fair to me, it's not as painful as last time where I would even calculate how much 'gains' I would have made if I sell it today.

I'm talking about straits asia of course. Sold at 2.45 and got a big shock today when it went up 0.43 (16%) to close at $3.


Based on my amateurish TA views, the weight of evidence is to sell the stock. Weekly isn't that bullish too, but we all know what happened after I sold it. TA is about probability. I wanted to sell straits to reduce my realised losses. Based on my views, seems like there is a sell signal. I think no skill and no luck, hahah :)

I think what HH said is correct. Buy something that you do not need to sell. But of course, the stock must be valuable enough and stable enough not to go bankrupt after say 20 years? Must know how to do the proper analysis first.

Enough of that already, let's move on.

STI rallied 64 pts up to close at 3771 with a volume of 2.5 billion. DBS announced rather good results despite providing some allowance for their writeoff of their CDO. Bank stocks rallied strongly. Somehow, my stocks didn't really go along with STI. Either down a little or flat for the day. Haha, STI went partying without me :)

GK Goh announced that their wholly owned subsidiary, Solanum investment pte ltd had entered into a subscription agreement with DAS nominee pty ltd and Austock Group ltd to acquire 25 shares in an Australian company, Pemeca Pte Ltd for S$617,452. Pemeca would then become an associated company of Solanum. Not going to be impactful enough to create a stir in price I think.

Portfolio gains so far: 6.5 k
Dow is up 50 over pts.

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Though feeling a bit sore over my early selling off of Straits, my plans to reduce my stock holdings continue. I plan to cash out 50% of my invested capital (perhaps more), holding only the ones that I think are fundamentally sound over the next 2 months. My rationale is that I still have 20k realised losses and 26.5k paper profit. If something happened, I'm back to 20k losses again (perhaps even more!). Protect my capital first, and live to fight another day. If anything happened, I will at least be net zero.

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STI up 1.59%, up 58 pts

Quite a surprising turn of events. I'm half expecting Dow to have a big drop (-200 like that?) but it closed very well at -1 pt from -160 pts intraday. STI reacted accordingly and closed up 1.59% (58 pts) to close at 3707 with a volume of 2.49 billion. STI was actually sluggish throughout the morning session until after lunch where STI surged up strongly.

One stock which is very scary is Uniasia. Big selloff, big rally. Highly speculative with no story at all. SGX is still checking to see what is wrong with the huge volumes buy in and sell off (don't expect anything more than a cursory 'nothing's wrong'). Avoid unless you're the bravest.

Straits continued the bull run today. There's super big buy ups for this stock, it just keeps clearing the sell queue again and again. Intraday high at 2.68 but closed at 3.57. Today straits announced that it acquired additional coal licenses on Sebuku island. This is the second potential thermal coat acquisition announced by straits since listed in SGX. I think they are really cashing in onto the high demand and prices of coal. Cheong more I guess :)


Just like to say something about the charts for swiber. Looks like an ascending triangle with breakout level at 3.84. The resistance level 3.84 had been tested twice prevously but failed, perhaps this time there's more luck? If price breaks away from 3.84 with accompanying high volume, I think we can see a possible target price of 4.30. The scenario described will in invalidated if trendline support is broken. Let's see how this works out.

Europe quite green, Dow just opened. Currently at -7 pts.

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Charts for TH

This is for TH, who requested me for some advice on 3 stocks - Thakral, Lereno, Guanzhao IFB.

I wonder why you wanted to buy these stocks? There are no stories behind them, rather illiquid (low volume) too, definitely not on the sights of BB and speculators, I suppose. Do you buy them for their good fundamentals? I do not know how well their fundamentals are, so no comments on that. I do hope you didn't buy these sub-pennies because they are cheap and you can afford them. That's the worst reason to own a stocks, really.


Thakral (above) is a subpenny. Volume is too low and I doubt that TA (technical analysis) would be useful in this case. Nevertheless I think still okay. I would like to see 0.14 resistance taken out, and that the support at 0.12 holds. Anytime it crosses the upper trendline and past the resistance at 0.14, I'll be bullish. Conversely, if support at 0.12 fails and breaks below lower trendline, it'll be bearish.


Lereno's chart seems more optimistic. Looks set for more upside. Hope to see 0.165 taken out while 0.135 support holds. Must not break below long term support trendline at around 0.120, othewise it's bearish.


This one is also set for more upside. Ema 50 days must hold, otherwise can be bearish. Look out for testing of strong resistance at 0.435. If it breaks through, it's good, if not, back to square one.

With this bullrun, if you're not making money or losing money, something needs to be done. I suggest investing in yourself first, profits can wait when you're ready. Take care!

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Cosco won contracts yet again...this time it's USD 1.34 billion

Quite tired after an outing, so this is going to be brief.

STI was up 30 pts in the morning, riding behind the back of Dow's performance last night. But all that changed towards the afternoon, where we see STI breaking 3700 before closing down 46 pts (1.25%) at 3649 with a volume of 2.4 billion. The usual culprits are the banking stocks, which probably contributed to the big selloff in STI. I think investors might be worried about what kind of profit they will post after the subprime debacle that happened in August. I think the worst hit should be DBS.

Just one announcement to share:

1. Cosco clinched shipbuilding contracts totaling US$1.34 billion to build 29 bulk carriers from several foreign ship owners. Could this news over-ride the recent sembcorp marine announcement of selling cosco shares to cover their FX losses? Hard to say. But all I can say is that this market darling keeps on getting contracts to build ship, with order book hitting multi billion already.

Europe all red, Dow not doing too well, presently at -145 pts down.

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Sold off straits asia resource

Today I sold off straits aisa which I had been holding since 2nd May this year.

Looking back on my post on 2nd May, I bought straits because it had a breakaway gap when UBS issued a report with a target price of 1.31. Volume surged 1.5 times the average. Based on charts, straits broke out of symmetrical triangle on the upside with indicators supporting more upside. I bought at 1.13.

Today I sold it all off at 2.45. I would like to say I sold off straits because the daily RSI shows it hovering around overbought region (historically, seems to be followed by selloff after reaching above 70%) and stochastics trending down, coupled this with what I see from the weekly stochastics (blue going to cross below red - bearish sign). But actually that would be cheating myself. I sold simply because I want to sell off something today to protect my capital. All the reasons are rationalised AFTER I decide to sell off. I just looked at the charts to assure myself that my decision is correct.

Hahaha the last sentence above is a breakthrough for me - I come to terms with my own vulnerability and the fact that I'm pretty much an emotional buyer and seller with not much skills. As grey puts it, the realisation of ignorance is the beginning of knowledge. How true that simple and elegant line is :)

Here's the chart for future reference (not the closing price today but yesterday's)


For those still in it, I believe Straits still got steam to move on. Seems like it's consolidating and building base now. For it to see more price action, we need the price to build a solid base to launch off the next run. Weekly charts look bearish. But fundamentally, straits is in a good position to leverage on the higher commodities prices (straits deals with mainly coal) and ever surging demand. But the question is: it the price justified? Has it been factored in? These are questions that I do not have answers to.

Oh, straits is a cool 115% returns for me (excludes dividend of $135 in total). Inclusive of dividend gives me a total returns of 117% over 6 mths - that's roughly 19.6% returns per month. I would say it's one of my better investment this year.

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Market suddenly plunge to 3700 support, wonder what's up?

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I learned that I learned nothing about TA (technical analysis)

STI did pretty well, riding upon the back of Dow's performance last night. Dow was up 44 pts, helped pretty much by the fact that tech stocks did a rally. All riding on the back of Apple's solid results. HSI did a reverse of what happened yesterday, it went up 1000 pts. Remember I said about Jakarta dropping around 4%? Today it went up 4% too. STI went up 52 pts (1.45%) to close at 3695 with a volume of 2.1 billion.

Basically back to square one. Really? Not so. I think underlying strength must be strong so that most indices can bounce back to pre-sell level within a day. Remember the saying that bulls climb up the stairs but bears jump out of the window? Didn't happen this time - both bulls and bears took the escalator. So though prices went back to the same level, the sentiment might have changed. The charts for most stocks did look better now.

I shall refrain from commenting about prices of stock. Rationalising the up and down of stocks is getting pointless to me. When stock A goes, maybe they announce new contracts. When stock A goes down, investors took profit. Aiya, all nonsense...the real cause of the price action of stocks cannot be determined. It might even be a multi-variate problem instead of just one single factor, so what's the point of rationalising the movement? For all I know, it might even be just random noises that have no reasons at all. Realising the target price, support/resistance and trend is good enough for me to decide what to do.

There's be a definitely change in this blog. I'll be studying hard on fundamental analysis next to improve my base knowledge. Of course I'll blog my insight here as part of my journey. I'll probably never throw away technical analysis - it works just as well. Haha, it'll be learning new things again :) Just take a look at those newbie TA charts that I had when I first started my blog - it's quite different from what I had nowadays.

One thing I learnt is that the more I learn about TA (technical analysis), the less I know about it. Haha, I used to be so obsessed with all sorts of cross-over and all the funny indicators strictly. But the more I use them, the more I realise I don't know anything. From basic support/resistance and trendline, I ventured to funny oscillators and indicators and candlesticks, then I went back to the basic support-resistance-trendline-volume analysis. The simpler the better, really no need for those very complicated stuff. THAT is, I think, the journey that I went through. Though the results are the same (I'm still relying on those support/resistance) but the big roundabout journey makes ALL the difference. Somehow, knowing that you don't know anything makes me feel more confident and more open-minded.

Oh, I also used to read a lot of broker's report and HAD to read the newspaper for insights. It's like if I didn't read the latest news or had the latest broker's report, I felt unsafe. I remembered my confidence in my analysis depends on whether any brokerage report had around the same thinking. I scoured the newspaper for the latest stocks to buy, read The Edge magazine for the latest stock analysis, read all the forum people commenting in cna forum. Aiya, bullshit lah. No need all these. Doesn't make much difference in my trading profits. Might even make it worse actually.

I think I've grown to be less speculative for sure. I basically lost my risk appetite, haha :) I think I'm moving towards the right direction.

Dow is green green at 70 pts up now, Europe all green.

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STI fell 2.81% to touch ema50 days

STI fell 105 pts (2.81%) to close at 3642 pts with a volume of 2.5 billion shares transacted. HSI did better, dropping 1091 pts (3.70%). But I think jakarta did the best, dropping 4.31% among the asia pacific bourses. This is all in response to Dow's big drop last Fri of around 360 points.

Seriously, STI need to correct itself before the final push of the year end rally. STI had risen too fast in the first 2 weeks of Oct, so treat this as a good chance for things to cool down a little before we resume the rise. From today's action, I can see supportive buying at various levels. It's quite unlike the selloff around August where there is almost no buyers. I think that's a good sign at least.

This temporarily (I do hope so!) selling should carry on for this week, perhaps ending by early next week just before FED goes for their rate meeting around 30-31 Oct. From the looks of it, seems like Dow might be heading for a recession. We'll see how Bernanke balance the risk of inflation against the risk of recession. Might see another rate drop? Ironic isn't it? If they didn't cut, their economic would go into recession. If they intervene, it would also go into recession. Perhaps by intervening, the situation might be even worse than if it is given time to self correct. Aiya, I know nuts about econs...

Some news to share:

1. Big news over at sembcorp marine. One of their employees entered into various unauthorised foreign exchange transaction for the account of Jurong Shipyard (their newly incorporated subsidiary) and mislead the group in relation to the unauthorized transactions. The estimate of the unreleased loss arising from this is in the region of US$165 million . This does not include the sum of US$83 million in which Jurong shipyard paid to one of the banks before the unauthorised transaction were discovered.

Wow, corporate scandals...looks like another Nick leeson - the man that broke baring bank. Tmr Sembcorp marine will surely get punished.

2. CSC had proposed an acquisition of 60% equity stake in CLS holdings. CLS holdings is an investment holding company to be incorporated by CSC to hold the business and assets relating to the singapore operations of Kok Tong Group of companies which specalises in earthworks and owns a full range of excavation and earth-moving equipment.

This is supposed to strengthen CSC current core of foundation and geotechnical engineering works. Looks like CSC is expanding by eating smaller companies to perhaps monopolise the geotechnical engineering works. I personally do not know approve of such moves because they should concentrate on expanding vertically, not horizontally by eating up companies. They should perhaps expand overseas to capture the huge opportunities in china and middle east for one thing. I wonder if all these acquisition bring about any real impact to their coffer. Anyway, I'm in it for the IR thingy and hope to be out of it soon.

Europe tua lao, Dow gyrating up and down in huge swings. Currently down by 53 pts.

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All well that ends well

Just received a message from my previous broker that her operation staff in the backroom had mistakenly posted the oakwell engineering trade to my account (I wonder how that can actually happen). They have since squared off the position, which is what I've observed too. And of course, I do not have to pay up for the contra loss.

Oh well, looks like the whole incident is truly settled. Quite good customer service from poems, I must say.

I still remembered that long long time ago when I wanted to make my very first trade, there's something wrong with my internet account with DBS vickers such that I couldn't make any trades. I called their hotline which is apparently so hot that I couldn't even speak to anybody except the cold automated voice that prompts you to stupidly press some numbers so that it can show off its superiority. When I finally got through, I told the person I wanted to buy this stock.

In the past, I wasn't aware that the minimum board size is usually 1000 shares - that forms 1 lot (unless you buy those SIA20, which have a lot size of 20). I told that nameless person that I wanted to buy 100 shares. He just told me crudely if this is the first time I was buying shares. Yes. No need to suan me loh.

That spells out the customer service of dbs vickers. I bet if you call this number 6327 2288 which is their super hotline during market hours, you will still hear their irritating music that tells you that their hotline is too hot to handle. I even made it a point to call them around 1am so that I can speak to a person.

Yeah, haha, some stories to share :) All in all, poems haven't been giving me any major problems. Even during high volume times, poems can still function properly (much unlike dbs vickers).

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What happened to Dow? -224 pts (1.61%) now. Free falling man..

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Error trade settled? I hope so!

I think my error trade episode have more or less concluded. When I checked my old account where the error trade was done, I saw that it was sold away already. Bought 50 lots at 0.125 and sold it all at 0.120, that's a loss of around $309 (plus brokerage and what not). Who's going to pay for that? I'll not be me :)


I posted the above picture cos I thought it's funny. Sometimes shit can happens without you looking for it, it just drops onto your head just like that. You can be just minding our own business when suddenly goddess fortuna just decided to play a prank on you. What an important experience for me : ) I immediately made the necessary options to ensure that whatever trades made in the older account be linked to my email so that if there's any trade done (either with or without my knowing), I'll be informed of it. Oh, and I also got my old broker's handphone number just in case. Let's hope this won't happen to me again.

I need to think about my plans for yongnam. Presently, my investment horizon for yongnam is not very long; it's at most 6 months. Suddenly they throw in this warrants right issue and forces me to think harder about this stock. To me, it's still a speculative stock. The expiry of the warrants is stated to be 5 years, until maybe 2012. It's a VERY LONG time to hold construction stocks because I'm not even certain that Yongnam will be there in 5 years (too pessimistic ?) Is it too much to risk?

My initial plan is to reduce my holdings for construction stocks gradually as they release news of contract wins. I missed the good period to offload in the first 2 weeks of Oct as I was away on reservists. On hindsight, that would be an excellent time to offload my holdings. I'm not terribly impressed with any of the construction stocks as I found them dangerous to hold, especially during recession owing to their highly capital intensive kind of business (add to that their usually high debt asset ratio).

I might need more information from the OIS that will be sent to me after the shareholder's meeting to approve of this exercise. I think that will take some time, maybe towards Dec then we'll have further news of it. I'm not likely to hold to subscribe to the warrants...but then again, I'm open to it. Let's keep it in view for now.

STI dropped quite a lot today, sitting snugly on ema20 days. It dropped 62 (1.62%) pts to close at 3747 with a volume of 2.1 billion. Dow is scary, dropping 150 points as of now (that's nearly 1.1%). Why so much? Anniversary of black monday stock market crash also need to celebrate by crashing meh? haha :) Europe mostly red. More bad news is actually good, because it gives more reasons for FED to lower the rates on 30-31 Oct.

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My stocks didn't do too badly today despite the hefty drop in STI. Swiber and and straits even went up. I'm still overall on profit at 6.5k.

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