Sunday, September 30, 2007

Random thoughts about things

I'm home early to pack my bags to get ready for tmr's in-camp training. Also to blog in some reflections about all that had happened. It'll be quite some time before I can blog again.

I had read many books talking about whose vested interest it is to hold stocks and never let go. The rationale is usually that if you hold for long periods of time, the trend will ride out all the volatility and short term price flunctuations, giving you a returns of worthy of keeping it long term. The earliest STI data I can find is from 1st April, 1985, with STI close at 627 pts. The close on 28th Sept, 2007 is 3706. If anyone bought STI from 1st April and held till now, the investment would represent an increase of 490% over a span of 22 years. A simplified calculation yields a return of 22% per year (not including compounding).

Is that a great deal? Definitely, considering that banks give a interest of around 2.5% for fixed deposit? CPF gives 6% max? (my figures could be way off, I'm sorry!)

But seriously, the picture isn't as rosy as this. There is survivorship bias for STI component stocks. Those company that went bust or taken out of STI index components are not listed anymore, hence STI only reflects those companies that are still surviving, hence 'survivorship bias'. Secondly, this result for investing in stock market index is used to extend to holding unit trust/funds/stocks, which is totally wrong. Stocks can go from hero to zero, and if you're not careful and invested in such stocks, the results would have turned out entirely different from investing in index.

I think the key point here is to hold fundamentally sound stocks - stocks that had survived for long and will survive for long, regardless of the general market condition. Hence the need to understand how to do a fundamental analysis of a company. I'm technically rather than fundamentally inclined, and that is something that I have to change. Find a balance between FA and TA for myself.

Another thing that comes to my mind is when to start investing. It's never to young to get exposed and invest. However, one must take care of other needs before committing to the long business of investing. I suggest following the points below:

1. Start earning first

2. Start saving. Adjust your lifestyle so that there will be a percentage left after taking out necessary expenses like food, transport, etc. I aim to save 30 to 40% of my income.

3. Transfer medical risk to 3rd parties by buying insurance. Term or life or investment link policy, well that is the question. Depends on individual and investing 'savviness' I think.

4. Invest the remainder after setting aside a certain multiple of your monthly expenses to cover uncertainly over your earning power. I think being self-employed, setting aside 6 to 8 times my monthly expenses and putting it in an emergency fund with high liquidity works for me. Fixed deposit with short tenure and savings account will work out just fine. For me, I put it in POEMS money fund which gives me around 0.17 % per month (as opposed to 0.25% per year for savings account)

I believe it's not good to skip any of the points because I meant it in that exact order as I've listed. I know people who have the earnings, but spends a lot, hence there is no accumulation of wealth. I know others who do not earn enough yet buy a lot of insurance to cover themselves (I believe it's wise to secure the present first before worrying about the future). Maybe it's time to rethink one's priorities?

It's a pity that our education system do not teach people to do this, instead relying on CPF to take care of one's future needs. Over reliance on government? I think so. Can CPF able to sustain the high interest rate that it gave to members in the past? I think not, perhaps that's why the rates will be pegged onto long term bond rates. But is it fair to people who do not have a choice on where to put their savings to? Wouldn't it be fair to give these people more interest simply because they had no choice? Question with no ready answers at hand.

A lot of people still do not understand that putting money in the bank is not a viable option anymore, because banks cannot give higher interest than the rate of inflation as it's not sustainable. This kind of thinking is for older generations who see POSB as an icon - where it really pays to save (interest is SO much higher in the past). Nowadays, it pays to invest because saving is no longer adequate.

Haha, enough rattling for now :P

A few interesting websites:

Friday, September 28, 2007

STI close at 3706 with volume of 3.1 billion

STI went down to 3680, touch and test support and rebounded to close at 3706 (still above 3700), down 8.54 pts or 0.34%. Volume is 3.1 billion transacted.

I see this as a good sign. Stocks don't go up in one straight line, as Decipher always put it. It goes up then retrace, up again to break resistance and retrace again to test resistance turned support before going up. This way, each climb it takes is firmer because with each retracement, those who need to take profit will sell off while new buyers will jump in. Almost like a relay running, we need fresh buyers to push up stocks, otherwise it'll run out of steam.

There are rumors of China setting up a china global fund and some of the china stocks listed here (esp those midcap ones like synear and hongguo) might be the likely candidate. All speculation of course, but that's enough to send it spiralling upwards. Wonder if Pac andes will be counted in, it's technically based in Hongkong, but it's a good fund material - slow and steady.

Though I wasn't around to monitor the stocks, I feel the excitement when I came home and saw so many stocks breaking out of high. Is this the last leg of the bull run - the fiercest run up before major correction? No point wondering, ride the trend.

Swiber did very well, climbing up 0.120 to close at 3.460, well breaking resistance at 3.40. Breaking all time high at 3.520 is all the more likely. I would like to see it move up further then finding support around 3.40 to 3.45 before going up. After a protracted run up (the chart looks like one tu-tu train pushing through, really one straight line upwards), it'll be good to build base before moving. This is one stock that I've no worries when I go for my reservist next week.

Pac Andes broke out of bollinger band with high volume, almost 2.5 times average volume. Looks like more upside to come. I wonder what's the news that bring about this price action. Today, Pac andes close up 0.045 at 0.775 with quite heavy volume. From my amateurish TA calculation, the target price of this stock is 0.845. Time frame is next week? haha, a bit fantasizing huh? well, we'll see. 0.845 happens to be the resistance level too (coincides with gap resistance which happened on 27th July when we had a major selldown)

This is another stock that I have no worries about. Like swiber, my buy price is too low, providing me with a buffer for any adverse economic events. As Graham puts it, a margin of safety.

Straits asia seems to be build base. But the weekly charts look quite bullish. Hope to see it break my target price of 1.59 when I come back 2 weeks later from reservist. Not very worried about this. In fact, I'm quite happy with its price action so far, very resilient - even during the selldown.

Europe mainly red, Dow down by 16 pts. My portfolio losses stands now at 1.4 k.

I won't be blogging actively and monitoring the market during these 2 weeks because of my reservists. If any big news must write it on my chat box ok? haha :P I'll probably sneak in some time to check the market too (there's a computer centre at my camp), maybe i'll drop by in the evening after lunch when I'm free.

Take care guys and gals, be back soon! Hope to see STI cheong past 3800 when I'm back. Don't say it's impossible, impossible is nothing :P

Thursday, September 27, 2007

STI broke new high, close at 3714

Haha, quite a number of things I mentioned all came true, quite uncanny :P

Firstly, I wondered if STI would break 3700 barrier, well it really did! I didn't expect it to reach so soon. I can only say that opinions are often wrong but the market is always right. Doesn't pay well to argue with the market. Today STI closed at all time high of 3714 (up 64.5 pts representing 1.77% increase), with a volume of 2.95 billion. That volume alone is worth mentioning because I've never seen this high volume for at least 2 months.

With hindsight, we can always say that the subprime crisis that rocked global market is just a passing event - a mere drop in the scheme of events. STI dropped to 3000 level and recovered, all within the span of 2 months. Is holding the best strategy? I would say yes. The only stocks I sold is china transcom (after they announced very bad quarterly results - i regret because i sold at a loss...i could easily sell at a profit anytime now), the rest I didn't trim. In fact, I added more of Swiber which presently, netted me a net 17.7% with just 2 lots. Take note, this only works for counters with strong fundamentals, not those which are speculative. Look at those construction stocks - some of them haven't even reached the level before the crisis happened.

More of such lessons in another time. I really learnt quite some things in this episode. I dare say my psychology and discipline is much much better than June 06 or Feb 07's correction.

Some announcement to share:

1. Straits asia signs memorandum of understanding (MOU) to purchase thermal coal mining business in kalimantan. The transaction is expected to occur prior to the end of 2007 with the financing through a combination of debt and equity. Hmm, seems like Straits asia is going to do share placement and perhaps bond to secure the capital to finance the purchase. This is good because it would serve to double their coal production and expand their resources. Coal prices is on the rise (it'll probably rise more) given that china had turned from exporter to net importer because of its huge energy needs. More details would be announced when the sale and purchase agreements is finalised and executed.

I think that's good news. This might be the news catalyst to propel straits asia to break resistance around 1.60. Unlikely though, charts didn't point to more upside.

2. CSC announced some news about the acquisition of the property at 2 tanjong penjuru crescent from L&M geotechnic had been completed today. They also announced that the rights issue had been used in the following manner: 2 million to finance the acquisition and 3 million to acquire more foundation equipment for expansion of the group's fleet and capacity. Okay lah, neutral news.

Swiber still on war path, increased another 0.060 to close at 3.340 today. 3.40 is possible resistance, break that and we'll see it going all the way to its previous intraday high at 3.52 and beyond.

Yesterday just mentioned GK goh had a lot of selldown, today we see it cheong past bollinger band to close at 1.210.

Charts start to look good for GK goh after trading sideways for like 5 weeks. The price close above ema20 and 50 days, so it should be a good sign. MacD histogram shows 4r1g buy signal too. Other indicators point towards more upside too. Need more volume to justify it, if not might just be whipsaw action.

Europe all green, and Dow currently up by 17 points. Given the protracted run up, I'll expected tmr to have some profit taking. Hopefully STI would find support at 3680 (the best would be 3700 - but that's too much to ask?) before rising for more on Monday.

Wednesday, September 26, 2007

STI up 25 pts to close at 3650

STI close up 25 pts at 3650 with a volume of 2.26 billion. Fantastic run up :P Looks like we might be on track to reach 4100 by year end. In the morning session, STI was quite directionless, bouncing up and down. But in the afternoon session, STI had a sudden spike up. Next stop - 3685?

Swiber had wonderful news announced today. It entered cooperation agreements with petrovietnam construction joint stock company and vietsovpetro joint venture to tap oil and gas market in vietnam. Both companies that work with Swiber are state-linked companies and the agreement lasts for 3 years. Another one of those plans for swiber to establish a foothold in new region, in this case it's vietnam. Again, just waiting for a contract win to sweeten the deal. All is ready except the east wind :P

Swiber today closed up 0.040 at 3.280, with intraday high of 3.320.

GK goh had a lot of selldown today. Big lots of 200,000 and 600,000 are sold at 1.17. But the price seems to be holding well. Bollinger band is tightening but I don't know much about the direction of the impending upswing or downswing. Seems more likely to be up than down. This kind of stocks depend on the market. If it's bullish, GK Goh's investment would do well and a lot of retailers would trade, hence resulting in higher profits. Waiting for dividend from them :)

CSC closed at 0.340 (intraday high of 0.345). Seems to be decisively heading to breakout of bollinger band. We'll know tmr. I want to see CSC break above 0.345 and close above it with high volume (around 21 k volume).

Europe all green, dow at 80 pts. I noticed Dow's is getting less and less volatile, with percentage changes getting narrower. Will STI break all time high tmr? Possible :)

Going to reservist for 2 weeks from Oct 1st to 12th, so might not be able to post anything during that time, except maybe Sat and Sun. Have a strong feeling that I won't be able to observe the construction 'boom' the those counters during these period. I have absolutely no need to worry about my counters, unlike the last time that I went back - a good sign!

Some kind soul pls help me post STI's daily close, including the volume from this webbie. It'll help me a lot to feel the market when I hiatus for 2 weeks. Thks in advance pple!

Tuesday, September 25, 2007

Construction stocks coming next?

STI did pretty well today. In the morning, it rose steadily up, hitting as high as 3650 which is just 30 points short of pre-crisis level. But late selling off made STI close at 14.20 pts (0.39%) at 3624 with a volume of 2.32 billion (slightly more than yesterday).

Not sure if it's just my watchlist, but I think today a lot of penny runs. Construction stocks rallied strongly (and close strongly, yeah!) with rather high volume. CSC rallied up 0.015 pts to close at 0.335 (intraday high of 0.345) with a higher than average volume of 30 million. But still not happy that it didn't close at 0.340, which is decisively above the ema 50 days. Bollinger band is very accurate. While it does not predict when the breakout occurs, it does predict that the upside (or downside) will be large. Expecting more upside from CSC.

Yongnam also did pretty well by closing at 0.410, up 0.010 with intraday high of 0.425. Lianbeng XD today so it closed down a little, but overall, construction had a field day today! Charts look very good for a couple of construction stocks, so I do expect some big things to happen soon. This week? haha :)

Straits asia reached my target of 1.590 intraday, but wasn't around to see it. Might be seeing it reaching 1.65 resistance soon. Maybe time to take profit off this stock :P Let's see. I really like swiber slow and steady climb :P reminds me of jiutian and cosco when it made it spectacular run. Haha, glad to be in this, but I musn't fall in love with it. There's still a time to sell off but I doubt it's soon. Expecting more contract announcement from Swiber from now till end of the year.

Today is such a wonderful day when lots of stocks breakout. Charts are pretty everywhere. STI found support at 3600 when it refused to head lower. Rumors of this bullishness is that it's nearing october, so funds are window dressing to give the impression to new or existing investors that their portfolio is in the green. Well, good for us :P

Dow at 2.28 pts up now, Europe all red :) Some charts to share:


Straits asia

Monday, September 24, 2007

STI rallied strongly up 96 pts to close at 3639

STI is very bullish today, closing 96 pts up (2.73%) at 3639 with a volume of 2.29 billion shares. The rise should be largely attributed to SGX rally. It rose $2 to close at $13.70. Really spectacular rise over such a short span of time!

I wonder what's up with the regional bourses. HK also did very well by closing up 651 pts (2.52%). All over asia pacific is a sea of green, with HK and STI doing exceptionally well. It wasn't as if Dow did very well last fri, so not too sure why the sudden bullishness.

A big news to share. Jackson Tai, CEO of DBS bank resigned. I wonder what's up with him? Moving on or scapegoat to bear responsibility over the bank's mis-communication over the subprime exposure? Hmm, not sure too.

A lot of volume buying in for Genting today. Easily rose up the top 10 volume stocks today with its huge buy ups. Starcruise, Genting's sister company, also went up to top 10 volume stocks. Something must be up, and those in the know already reacted to it. I'm looking forward to more news to be officially announced. Contracts awarding to companies? No idea.

Straits and swiber did well today (to be fair, which stock didn't?). Straits broke free of 1.50 and went to intraday high of 1.56 before closing down at 1.490. Half a mind to sell off when it hits my target price of 1.59. Swiber still has a little more to gain to return to July level. I like the price action of swiber - slow and steady, no big rise nor big fall. This are the type of price increment that is sustainable and last longer that does one-shot-hit-the-sky type.

Looking forward to break even for my porfolio!

Dow is now at 27 pts, Europe a mix of red and green. Below are just my thoughts on these two stocks: yongnam and csc.



Saturday, September 22, 2007

STI down 10.24 pts with volume of 1.77 billion

STI is quite resilient today. In the morning it dropped quite badly, but picked up towards market close. It ended 10.24 pts down (0.29%) with a volume of 1.77 billion.

Lianbeng don't know what happened, towards market close suddenly there are huge lots of buy ups that pushed the price to close at 0.480. The charts for Lianbeng is very nice, can look forward to more run up in the price for sure. I sold it at 0.450, oh well, missed another 0.030 profit. Unavoidably lah, it's quite hard to sell exactly at top or buy exactly at bottom. Hmm, I hope this run up means something big coming for construction stocks? I saw yongnam and chip eng seng mirroring Lianbeng's rally too.

Straits asia resource chart looks very nice too. Very predictable price action - just bouncing in between trendlines. I think it broke out of this symmetrical triangle and the price is retracing before another run up again. Breakout level should be at 1.43, so it should act as a support level for now. Break below that, breakout is invalidated. Even if didn't break below 1.43, at least must see that the volume increasing together with follow through buying up. My target is still 1.59.

Quite a number of construction counters in my watchlist have the 4r1g buy signal. Yongnam is one of them (CSC is another, but the chart is not as nice as yongnam). Nicely sandwiched between the downtrend and uptrend lines (green). I'm looking for either breaking of the upper trendline or the lower trendline. From other indicators, seem like upside breakout is more likely. Support level at 0.380 and possible resistance at 0.415 and 0.440. This can cheong very fast, just a whiff of contracts can send all the construction stocks to dizzy heights.

I've more confident of Yongnam prospects that lianbeng, hence i'm keeping Yongnam a little longer. CSC, when can I dump you? haha!

Europe is mainly green while Dow is up 93 points. My happy that I've trimmed my portfolio yet again this week.

Still got quite a lot more to trim! Current losses stand at 7.1k. My current portfolio consists of Pac andes, Swiber, CSC, Yongnam, Straits asia and GK Goh. CSC and yongnam is speculative, so i'll be looking to sell (hopefully) by end of this year. Have a great weekend!

Thursday, September 20, 2007

STI dropped 41 pts to close at 3552

STI dropped 41 pts (1.17%) to close at 3552 with a volume of 1.91 billion (much much lower than yesterday's 2.5 billion). Quite a quiet market today. I don't like it that STI hit resistance at 3600 and went down. Support around 3570 didn't hold towards market close.

Construction didn't make it today. Okay, maybe it's not a fair statement to make, since almost every other stocks also fell. I just felt that pennies fell harder, at least from my watchlist.

I queued to sell lianbeng at 0.450 before I left for work in the morning. I've rode the Lianbeng wave for quite some time already. Bought it on 21st May at 0.350 and held throughout the selldown in August before letting go today. Not bad lah, 25% returns in 4 months. I don't like share placements because short term it's going to be selling pressure on the stock. I've seen it too often. Anyway, time to let others take the risk, I take my profit off the table first.

This is in line with my general plan to reduce my speculative stocks gradually. Next in line would be either Yongnam and CSC.

Swiber broke through $3 barrier and rallied to intrahigh of 3.180 before closing +0.060 at 3.060. It's been such a long time since I saw Swiber close decisively above $3, so quite happy! With this brief rally, MACD shows a 4red1green buy signal. But it's not very convincing since other indicators are somewhat at odds with the signal. Anyway, most breakout failed today given the lethargic strength of this run.

Pac andes didn't disappoint, went up 0.015 to close at 0.745. Nice charts with MACD blue line touching red and bouncing off. High volume these few days too. Let's see how the price action is like tmr.

Dow is now at -12, Europe all red (around -0.5% average).

Wednesday, September 19, 2007

STI up 3.47% to close at 3594: Aftermath of FED rate cut

Dow surged strongly yesternight after FED surprised the market with a bigger than expected reduction in the interest rate. FED reduced interest rate by 50 basis point. Dow surged up 335 pts, representing an increase of 2.51%.

STI reacted strongly in the morning when it opened for trading. It gapped up to 3600 (3.47%) before profit taking starts to take place. STI closed 116 pts up (3.35%) to close at 3594, just 6 pts short of clearing 3600. We are nearing the pre-subprime crisis level. The highest ever reached in a period before the selldown was 3685. Should STI clear 3600, 3685 would be the major resistance. Clear that, and we're on our merry way to 4100 (as predicted by Joseph's cycle). Volume of 2.5 billion is quite alright, but was nowhere near the last time when STI near 3600. I remembered volume of 3-4 billion is quite common then.

I think STI resistance should be at 3600 and 3640.

Oh, that's a double whammy interest rate cut. Maybe even triple whammy too. What am I talking about? HK monetary authority announced early this morning that it reduced the interest rate by 50 basis point (to 6.25%) too, following closely FED rate cut. Philippines also hinted on following FED's move by cutting interest rate too. Haha, to me, that's bad monetary policy. Thankfully Bank of Japan didn't reduce interest rate too, otherwise no need to yen unwinding, it's yen loading! Providing more liquidity to artificially sustain the economic is one surefire way to create a bubble. Oh, que sara sara, whatever will be will be (but let me sell off first) ;P

HK responded by closing up 977 pts. Shanghai is always the odd one out. When worldwide market crashed, SSE is the only one up. But today, it's the other way. It fell to close down 0.55%, I'm not sure why too. Worldwide market responded strongly by rallying up.

Europe is up 2-3%, possibly in response to FED's cut. The important thing to take note of is the how the banks results will be like in the coming earnings reporting seasons. Should be happening in Oct for US, which is real soon. That should provide real cannon fodder for shortist if the profit of the banks are severely affected by subprime issues.

Stocks in SGX soared strongly in the morning, when the kancheong spiders went in to buy. Profit taking took place around 30 mins (even before) after market opens, before slowly trading up again. I thought it's real important to put in the intraday chart for STI so that I will have a good reference material should FED reduce interest rate in the future. So here it is:

Notice what happens if you buy first thing in the morning. It is always followed by a sharp drop as speculators cash in to take profit. If buying have to be done on such a strong rally day, it should be done after the kancheong spiders had bought up and the stock price are sold down subsequently. VERY IMPORTANT LESSONS: I remembered countless times where I bought in when I should be selling. The latest of such emotional buying is CSC when it announced it won the IR piling contract!

Construction stocks are still lagging. Lianbeng trading halt today. After market close, it announced that it had a share placement exercise of 40,000,000 new shares offered at a price of S$0.425 per placement share. This offer price represents a discount of around 1.21% from current price. Okay lah, at least the offer price isn't damn cheap, so won't see such a fierce selldown that almost always occurs when a company do a share placement. Yongnam also did such things before.

The proceeds raised is used for the Lincoln lodge site acquired by Phileap Pte Ltd, a joint venture company in which Lianbeng had a 25% equity stake in. The rest is used for working capital needs. Don't like share placements...

Straits asia seem to have broken out of symmetrical triangle. My target price for straits is 1.59 based on flagpole. Other indicators seem to be able to support the subsequent movement after breakout. We should see more upside for straits asia these few days, unless breakout failed of course.

Dow is up 90 points now.

FED cut interest rate by 50 basis point - from 5.25% to 4.75%

Fed cuts interest rate by 50 basis point :P

Straight away cheong up :P There's one point it shot up +214, then it came down again. Oh well, got to wake up early to see the action. Basketball, FED really surprised me with its 50 basis point cut. I expected (and the market expected) 25 basis cut, but really...this is something :P

Tmr CHEONG AH! Let's see how it closes :P

Tuesday, September 18, 2007

Eve of FED meeting

Haha, important day is here - FED meeting :P From the looks of Dow now (+97), seems we're set for at least a rate cut of 25 basis point.

STI closed neutral after gapping down. Okay lah, I expected worse and it didn't come out so bad. STI close 1.44 up at 3477 with a volume of 1.9 billion. If rate hike drops, property counters should cheong. That's what is happening, just take a look at the top counters today, all the 'land land' stocks all rallied, haha :P

Europe not bad, around 1% gains. Dow now is at +84. Must wake up early tomorrow to see action :P I think FED results out at 215 pm Singapore time, anybody staying to watch the live action unfold?

Good luck tmr!

Monday, September 17, 2007

STI dropped 60 pts to close at 3476, ahead of FED meeting

Woah...STI dropped 60 pts to close at 3476, representing a percentage drop of 1.70% with a volume of 2 billion. Knew something isn't right with the way STI climbed end of last week, with lots of breakout failing.

Theme of the week? FED rate. Rumors are flying here and there about 3 scenarios:
1. FED keep interest rate unchanged
2. FED drops interest rate by 25 basis pts
3. FED drops interest rate by 50 basis pts

Scenario 1 would see a temporary global selldown because from what I think, we've already assumed FED to cut rate by 25 basis points. If they didn't, we would lose all the gains we've made last week and perhaps more. Let's really hope that didn't happen.

Scenario 2 - where FED drops rate by 25 basis points - is market expectation. If it happens, it's neutral on the stock market. Shortist might short the market - sell on news. Longist better don't buy, because might be buying on high, might get trapped.

Scenario 3 - beyond market expectation. This might just be the catalyst to trigger the last wave of this super bull run before we sink into oblivion (haha, sorry for being so pessimistic). Some say that the last leg of the bull run is the strongest and I believe so. Like day and night, the darkest hours of the night herald the coming of the brightest. In this case, the after the brightest time of the day, it would signal the coming of the darkest time of the night. Yin and yang, bull and bear, all natural cycles.

Quite a number of stocks went down - and hard - erasing most of last week's gain if not all. Construction seem to be hit harder than most i've seen. Really, still no new news about contracts? Haha, how can speculative stocks run without the speculation? I don't think tmr is a big cheer day for STI too. At most we'll be trending sideways, the worst we'll still be dropping. That's because 3500 broke without much effort - chey, I thought 3500 is our new support level. Maybe it's just the circumstances - with 2 days before the FED rate meeting, nobody dares to pick up fallen angels.

Over the weekend, I read some really scary news about bank runs in UK. Bank runs means that a lot of retailers withdrew their cash from their accounts in fear of the bank going bankrupt. If the bank does not have sufficient liquidity to provide this massive withdrawals, it'll go bankrupt and cause even more withdrawals elsewhere. Banks would fall like dominoes one after another because banks also borrow from one another. Credit and trust - the world is lacking in these nowadays.

Dow dropping now, it's -47 now. Europe tanking down, around more than 1% drop on average. Looks like I might have to wait a little longer to break even again. Oh well :P

Friday, September 14, 2007

STI at 3536 at low volume - warning signs?

Must say I'm rather surprised by how STI performs nowadays. Rain or shine, Dow plus or negative, it's more likely to see STI performing well than not. Today STI went up 32 pts to close at 3536 (up 0.91%) with a volume of 1.9 billion (warning sign).

Is foreign funds entering STI again after our massive selldown in Aug? Strong underlying strength in STI is all I can see. It's interesting that even though China raised interest rates by 27 basis pt, HSI and Shanghai did not do any drastic drop today. Or maybe they already did when China announced their inflation and trade surplus data recently. So will Monday see HSI and Shanghai going red? A lot of questions but no ready answers.

Swiber announced another important strategy to establish their foothold in Brunei. It signed an MOU with Rahaman, a company in Brunei to form a joint venture company named JVC (with Swiber taking 51% ownership). Rahaman is a Brunei based company involved in oil and gas commodity and trading business. With JVC, Swiber will have another avenue (apart from Swiber's brunei branch) to source and secure onshore and offshore oil and gas projects in the regions. MOST importantly, the Brunei-incorporated JVC will allow Swiber to bid for projects that are ELIGIBLE ONLY to Brunei incorporated companies.

Damn smart, their management. This effectively creates a very good economic moat that will cause Swiber to get strong earnings for long periods of time. Fantastic! As I've said in many posts, all that needs to catalyst Swiber to new levels is the sweet deal of contracts winnings in these new regions.

Straits asia is quite remarkable today. Today it went XD (gosh, I didn't even know!) and instead of falling on XD to reflect the value of the stock after it gave cash away to investors, the price went up even higher. The price went to intraday high of 1.42 (already mentioned in previous post that 1.42 is a significant resistance). Closed up 0.070, really powerful. I wonder what's up with this stock, no announcement.

Dow is down 20 pts presently, Europe all red (around 0.7%). Total portfolio losses now stand at 9.3k. When I'm a bit more free, I'll update my portfolio. Basically I haven't changed much since I didn't do anything much during the selldown.

Thursday, September 13, 2007

STI down 1369 to close at 3504

STI dropped intraday to around 3490 before rebounding and testing 3500. Considering tested? I don't know. STI closed down 1.69 (0.05%) to close at 3504, which is still above 3500. I would consider that a good sign that intraday, even though support is broken, the closing price (the most important price) is still above 3500. Volume transacted is 2.36 billion, slightly lower than yesterdays.

I wasn't able to monitor the market at all today, so judging from the market summary provided by sgx, seems like banks had a little selldown today. Seems alright...nothing to worry about. Selling wasn't broadbased and wasn't fierce. Construction almost lost back everything it gained - not a surprise while draggy authorities refuse to release any construction contracts announcements.

A few announcements caught my eye:

1. Swiber appointed new VP for its Brunei operation. That person is a brunei resident with 'extensive working experience in Brunei'. I especially like the way Swiber keeps getting experienced and well-connected key appointment holders to spearhead their expansion plans into new regions. They really spare no effort to recruit the best person to open the ground for thier new operations. All the troops are ready, so I guess we're just waiting for the key ingredient - contracts winnings in these new regions :) Stay tuned for more swiber announcements :P

2. Noble Group, global supply chain manager of agricultural, industrial and energy products, has been named to the Forbes Fabulous 50. The list includes studies of companies with long term profitability, sales and earnings growth, stock price appreciation and projected earnings for EVERY company in regions with revenue or market cap of $5 billion and above. Guess which other companies in SGX are in?

It's Neptune Orient lines (NOL) and Sembcorp industries. No surprise for sembcorp because that mega company really established a foothold in quite a number of industries (somemore is govt linked). NOL is the surprise here. Looks like I must re-look this stock again as I admit I never really like the shipping business. But looking at the way NOL cheong and cheong, my opinion must be wrong. Shipping freight rates increment is the reason why NOL is climbing higher and higher (correct me if I'm wrong L.S). These companies are high profile because if I'm a fund manager who wants to beat STI (hence won't buy into STI index straight away), I'll be looking at these kind of companies. Hmm, food for thought.

Dow is behaving very well tonight. I wonder why and wonder if this is just a bull trap. Anyway, no point thinking so much. Dow is currently at +123 pts, while Europe almost all green (gains are quite substantial - around 0.8% like that).

Wednesday, September 12, 2007

STI broke above 3500 and closed above it

Yesterday Dow closed 180 pts up. The theme nowadays is whether FED will cut rate. Seriously, from what i see, the market had already assumed that the rate cut had taken place (not a bad assumption), so if the expected rate cut didn't occur, that might actually be the catalyst for a selldown for Dow.

Not that it actually matters nowadays. Seems like asian bourses had diverged away from Dow. Two factors are pulling STI - China and US. HSI will follow china and we tend to follow HSI when it opens at 10am too. Yes, STI is such a directionless headless entity.

Today, STI opens at plus 30 over pts, and closed up 11 pts (0.33%) at 3506 with a volume of 2.5 billion. A good sign because we've gone past 3400 resistance level and into 3500. Seems like 3500 is a good support level for STI for now (untested yet). Before the selldown in August, STI was trading like 3700 max, so we're actually nearing that level again. We might be able to see it go to that level and I figured that a lot depends on next week all important 18th Sept.

A number of stocks are rallying strongly. Unionmet don't know what the hell happened, went up 0.125 to close at 0.370 (almost like 50% increment). Imagine you put in $1000, by today you get $1500 :) But seriously, easy come easy go, such a strong and fast trading pattern just means that when times are bad, the selldown will also be fast and furious. Reason is that speculators are the ones that drive up the stock, so when something bad happens, they will be the first to lock in profits or to cut their losses. Add to that, it'll be the target of shortist who saw such a fast rise with no proper base to support the level. I wouldn't want to be in Unionmet when shortist attack it, can heart attack one.

Swiber kee sieow today, cheong up 0.090 (intraday high of 3.040). No news from them though. I think it's the marine/offshore/oil sector thing. As I've said yesterday, every tom dick and harry stocks also want to get into this booming sector. Good for me lah, I'm quite exposed in Swiber.

Construction also not too bad today, with CES hogging the limelight. There's a few counters that are strong in my opinion, from what I can see from its buying action. Yongnam, CES, Koh bros and Lianbeng seems pretty steady, with the price very strongly supported. Even when times are lean, the price support holds so that's good. Second tier ones I would include CSC and BBR. I might miss out others because frankly, these are the only construction counters that I had in my watchlist. CSC and BBR forever hovering around the same price, cannot go up cannot come down, so quite frustrated watching it.

Europe not too bad, mostly green. Dow is up 30 pts at the moment. Below is my sharing of the intraday chart for Dow tonight. Looks too perfect to draw a channel trending :P

Tuesday, September 11, 2007

STI up 1.53% to close at 3494

STI is surprisingly resilient against whatever US side is doing nowadays. Good sign or bad sign? I don't know. STI just keeps powering up and up. Even when China announced that its inflation reached sky high and that trade surplus is at all time high, STI droppped a little and went up further.

In the end, Shanghai dropped 4.51%, HK was affected slightly by droppign 0.20%, while STI was up 52.70 pts (up 1.53%) to close at 3494 with a volume of 2.8 billion (higher than yst's 2.5 billion).

Today we saw pennies having sort of a revival. Constrution had a brief rally also, before closing neutral/slighly higher. Wilmar had a field day today, supposedly after Goldman sachs upgraded its target price from 4.20 to 4.60. It went up 0.220 with intraday high of 3.480. Damn, always wanted to get wilmar, but somehow didn't get it.

Quite a couple of announcements to share:

1. Tiong Woon got its first contract of S$64.8 million on shipbuilding and signals the start of its shipbuilding expansion plans. The contract is to construct a derrick pipelya barge scheduled for delivery in Dec 08. This stock breaks my heart...I had it when it was 0.375, sold it at a loss of 0.270 and now the price is 1.040. Tmr it should gap up higher because of this significant contract announcement.

2. Bus fares are goin up by 1 to 2 cts starting on 1st Oct. SMRT trains remain the same. Right, this is what happens when a public service is run as a corporation with profits first. Blah blah blah...maybe should look into SMRT as my transportation hedge. Buying some SMRT shares would hedge the forever ongoing price hikes. Pays good dividend too, steady and slow :P Check it out!

3. Swissco placed a S$15 million order for 2 more offshore support vessels. Haha, seems like offshore marine oil sector is booming like crazy. Swiber expanded its fleet aggressively, Swissco too. Even Tiong woon wants a piece of the pie with barge building. I'm sufficiently exposed to this sector with my stake in Swiber, so I wouldn't want to go into Swissco. Cheaper than swiber though, haha :)

Looks like Europe and Dow is taking the lead from Asian bourses. Europe is ALL green (around 1% up) while Dow is currently at 100 pts up. Volatile trading session for Dow and anything goes these few session until 18th Sept. So got rate cut or not? :)

Monday, September 10, 2007

STI recovered from 2.7% drop to 1.35% drop

STI diverged away from Dow! It's been like that for the past week and today it showed similar pattern. Dow tanked last fri, but today, STI opened -2.7% but closed just 1.35% (a drop of 47 pts) at 3441 with a volume of 2.4 billion.

What's really amazing is the strength shown by Shanghai and HK. Together with India, these are about the only bourses that still closed green in spite of the poor showing by US. Most counters recovered by 930am after kan cheong spider selldown in the first minutes of the market. Good thing I didn't buy put warrants, haha!

Expected swiber to selloff because last Fri it did went up a lot, but surprise surprise, it didn't drop too much. Construction counters had a brief rally before dropping back to opening price again. There's always news of CES getting contracts, haha, but never is confirmed until the announcement are out. Or at least the counters went trading halt after a huge buyup.

Dow is behaving well tonight. Presently, Dow is trading at +40 pts up, with europe mainly red (around 0.50%).

Nick Leeson: The man who broke the bank

Haha, interestingly, today I was grappling with the decision whether or not to buy put warrants for either STI or HSI after Dow suffered a 250 points drop when the job data came out last Fri. Last night, I had already identified the support level and the warrants for trading and put them all in my watchlist. Wanted to get in the first thing in the morning and cash it out intraday.

However, I did not do it eventually. Reasons are:

1. Risky speculative trades - I know my own technical analysis's not fantastic. So why am I risking a few thousands just to earn a few hundreds? Yes, it's good money that can be earned in like half a day? But the risk is there. I'm losing money mainly because of my warrants trading earlier part of this year, and I WON'T forget that.

2. The market did not respond as badly as I think it will. Opinions are often wrong, but the market is always right. Firstly, the drop straight to support level of 3400 for STI is expected. It is now hovering at that level, perhaps waiting for confirmation from HSI which opens at 10am. In fact, most counters are fighting back their lows from kan cheong spiders who sold off first thing in the morning.

3. I was negative because I've been reading too many negative postings in cna forum and other blogs. If I enter a trade based on this, I'm trading emotionally with reasons that are not my own. I'm just following the crowd. If anything, I should be acting contrarian and buy calls to anticipate the much confirmed rate cut by FED next week on sept 18th. Of course, nothing is guaranteed, except death.

It's interesting that the article below, about Nick Leeson, is about derivatives too. Derivatives is a double edged sword, it can result in quick profits and quicker losses. Take care!


In February of 1995, one man single-handedly bankrupted the bank that financed the Napoleonic Wars, Louisiana Purchase and the Erie Canal. Founded in 1762, Barings Bank was Britain’s oldest merchant bank and Queen Elizabeth’s personal bank. Once a behemoth in the banking industry, Barings was brought to its knees by a rogue trader in a Singapore office. The trader, Nick Leeson, was employed by Barings to profit from low risk arbitrage opportunities between derivatives contracts on the Singapore Mercantile Exchange and Japan’s Osaka Exchange. A scandal ensued when Leeson left a $1.4 billion hole in Barings’ balance sheet due to his unauthorized derivatives speculation, causing the 233-year-old bank’s demise.

Nick Leeson grew up in London’s Watford suburb, and worked for Morgan Stanley after graduating university. Shortly after, Leeson joined Barings and was transferred to Jakarta, Indonesia to sort through back-office mess involving £100 million of share certificates. Nick Leeson enhanced his reputation within Barings when he successfully rectified the situation in 10 months (Risk Glossary).

In 1992, after his initial success, Nick Leeson was transferred to Barings Securities in Singapore and was promoted to general manager, with the authority to hire traders and back office staff. Leeson’s experience with trading was limited, but he took an exam that qualified him to trade on the Singapore Mercantile Exchange (SIMEX) alongside his traders. According to Risk Glossary:

"Leeson and his traders had authority to perform two types of trading:

1. Transacting futures and options orders for clients or for other firms within the Barings organization, and

2. Arbitraging price differences between Nikkei futures traded on the SIMEX and Japan's Osaka exchange.

Arbitrage is an inherently low risk strategy and was intended for Leeson and his team to garner a series of small profits, rather than spectacular gains."

As a general manager, Nick Leeson oversaw both trading and back office functions, eliminating the necessary checks and balances usually found within trading organizations. In addition, Barings’ senior management came from a merchant banking background, causing them to underestimate the risks involved with trading, while not providing any individual who was directly responsible for monitoring Leeson’s trading activities (eRisk). Aided by his lack of supervision, the 28-year-old Nick Leeson promptly started unauthorized speculation in futures on Nikkei 225 stock index and Japanese government bonds (Risk Glossary). These trades were outright trades, or directional bets on a market. This highly leveraged strategy can provide fantastic gains or utterly devastating losses; a stark contrast to the relatively conservative arbitrage that Barings had intended for Leeson.

Nick Leeson opened a secret trading account numbered 88888 to facilitate his furtive trading. Risk Glossary says of Leeson:

He lost money from the beginning. Increasing his bets only made him lose more money. By the end of 1992, the 88888 account was under water by about GBP 2MM. A year later, this had mushroomed to GBP 23MM. By the end of 1994, Leeson's 88888 account had lost a total of GBP 208MM. Barings management remained blithely unaware.

As a trader, Leeson had extremely bad luck. By mid February 1995, he had accumulated an enormous position—half the open interest in the Nikkei future and 85% of the open interest in the JGB [Japanese Government Bond] future. The market was aware of this and probably traded against him. Prior to 1995, however, he just made consistently bad bets. The fact that he was so unlucky shouldn't be too much of a surprise. If he hadn't been so misfortunate, we probably wouldn't have ever heard of him.

Betting on the recovery of the Japanese stock market, Nick Leeson suffered monumental losses as the market continued its descent. In January 1995, a powerful earthquake shook Japan, dropping the Nikkei 1000 points while pulling Barings even further into the red. As an inexperienced trader, Leeson frantically purchased even more Nikkei futures contracts in hopes to gain back the money already lost. The most successful traders, however, are quick to admit their mistakes and cut losses.

Surprisingly, Nick Leeson effectively managed to avert suspicion from senior management through his sly use of account number 88888 for hiding losses, while he posted profits in other trading accounts. In 1994, Leeson fabricated £28.55 million in false profits, securing his reputation as a star trader and gaining bonuses for Barings’ employees (Risk Glossary). Despite the staggering secret losses, Leeson lived the life of a high roller, complete with his $9,000 per month apartment and earning a bonus of £130,000 on his salary of £50,000, according to “How Leeson Broke the Bank.”

The horrific losses accrued by Nick Leeson were due to his financial gambling, as he placed his trades based upon his emotions rather than by taking calculated risks. After the collapse of Barings, a worldwide outrage ensued, decrying the use of derivatives. The truth, however, is that derivatives are only as dangerous as the hands they are placed in. In this case, Nick Leeson was reckless and dishonest. Derivatives can be tremendously useful if used for hedging and controlling risk or even careful trading.

After a series of lies, cover ups and falsified documents, Leeson and his wife fled Singapore for Kuala Lumpur, Malaysia. By then, Barings’ senior management had discovered Nick Leeson’s elaborate scheme. The total damage suffered by Barings was £827 million, or $1.4 billion. In February 1995, England’s oldest, most established bank was unable to meet SIMEX’s margin call, and was declared bankrupt. Leeson and his wife were arrested in Frankfurt, Germany on March 3 rd , 1995. That same day, the Dutch bank, ING, purchased Barings for a mere £1 and assumed all of its liabilities (eRisk).

Nick Leeson was placed on trial in Singapore and was convicted of fraud. He was sentenced to six and a half years in a Singaporean prison, where he contracted cancer (Risk Glossary). He survived his cancer, and while imprisoned, wrote an autobiography called “Rogue Trader”, detailing his role in the Barings scandal. “Rogue Trader” was eventually made into a movie of the same name. Nick Leeson was released from prison in July 1999 for good behavior.

Friday, September 07, 2007

STI still up?

STI close up again, this time by 22.9 pts (0.66%) up to close at 3488 with a rather respectable volume of 3.15 billion. I wasn't able to watch the market at all throughout the day, but I saw that the rally is rather broadbased.

Construction seems to have a brief rally. Quite a number of them hit rather high intraday before dropping to close slightly up or neutral. Hmm, seems like I'm wrong for Straits asia, the price just drops and drops. Will evaluate it maybe end of this week to see if there's anything I should do.

Swiber had a field day today, rising up 0.140 (intraday high of 3.060). I wonder what's up with Swiber? Is it because of the rather positive announcement made yesterday regarding the acquisition of the derrick crane? Possibly.

With this brief rally, my portfolio losses went to 8.9k. Quite good, haha :P

Watch out, dow wasn't doing so well tonight. -194 pts down as of now, Europe big mega drop of around 2%). I wonder what's up??

Thursday, September 06, 2007

STI technical glitch part 2

Haha, funny things became funnier :P

STI had technical glitch again. According to an announcement made by SGX after market close at 630pm, they said that STI did not accurately reflect the value between 9am to 1030am today. Upon rectification, it was corrected at 1031am. They added that the cause of today's glitch is different from yesterday's. Yesterday's is due to isolated software issue following the corporate action of a component stock in STI. But todays' incident was caused by the omission of a step in the overnight system recovery procedure.

Seriously, whatever. VP apologised for this back to back error that happens within a day of each other. Even reuters advised clients not to take STI at face value this morning. World class huh? Will SGX be fined by higher authorities for these mistakes that caused investors to lose confidence and money? I'm such a skeptical cynic...I think not.

Enough of that. STI closed 21 pts up (0.61%) to close at 3466 with volume of 2.4 billion (higher than yst). Quite something isn't it? STI is so bullishly strong, despite whatever Dow is showing. I think we diverged away from Dow already and is currently moving on our own trend, which is up. Haha, no point looking at Dow nowadays for direction. Maybe until 18th Sept where the FED will decide the all important decision to cut or keep interest rates.

Swiber announced a couple of news. First is the acquisition of a derrick crane, one of the largest heavy lift cranes in asia pacific regions. I like the fact that swiber is aggressively expanding its fleet size to get ready to launch its expansion plans. The crane is expected to be delivered in 3rd quarter FY09, long way from now. Should expect more exciting times ahead for Swiber.

Another news is about the sales of shares from one BB to another. I read with interest that citibank nominees had purchased 38,800,000 shares to raise its stack from 4.91% to 14.05%. These shares are apparently bought from Radiant city limited, which sold all its 9.14% to 0%. The transaction is carried out on 4th Sept. I do not know what to make of this. Probably no big deal, considering that swiber did not drop a lot. Just some big married deals.

GK Goh made an announcement regarding the claim against former subsidiary. The claim is served by PT Pertamina Dana Ventura against CIMB-GK securities indonesia. However, the claim is not successful and PT Pertamina had withdrawn its apeal. The court decision will thus be binding and final on all parites regarding the suit. Yeah, no need to pay damages/claims to PT Pertamina :P Will it rise in price tmr? haha, not very likely, because this stock is very thinly traded.

Dow up 79 pts now. But really, STI don't seem to follow Dow anymore. Third time lucky, STI glitch again tmr? hahaha!

Wednesday, September 05, 2007

Inaccuracies in STI

Funny things happens.

Today, STI wasn't tracked properly. According to an announcement made by SGX at around 6pm plus, they said that they had investigated and found that STI did not accurately reflect the value of its components in the morning. The index was 3,376 at 1230pm, when it should have been 3,437 (a huge difference of 1.27%!). This error was rectified at the start of the afternoon trading session. The reason? The error was traced back to an isolated computational error from the corporate action of a component stock.

World class financial hub huh? It's too much to expect SGX to slap some punishment on itself, but not even an apology from them? I remember SGX slapped some fines on a certain brokerage firm when it caused STI to plunge because they are selling DBS at 20cts or something. Yeah, life's unfair. Live it or quit it.

Saved some asses today. I know some people had bought put warrants. This small episode saved their put warrants from going down so fast. They have the whole morning to sell off their warrants and buy call warrants to arbitrage the error. Wanted to buy call warrants too, but wasn't tempted enough to buy. Really had enough fun for warrants, so won't touch it even though it's such a golden opportunity. Mainly it's because I don't have time to monitor, and time is the essence when trading warrants.

Anyway, STI closed above the resistance level when it closed up 69 pts (2%). Volume is still low but at least it's higher than yesterday's at 2.1 billion. A lot of STI components like property and banks went up a lot. My watchlist was mainly green, but the rally wasn't that broadbased. Maybe it's just me. Construction quite lethargic today, not here not there. Lianbeng losing its momentum. It's like that lah, if there's still no contracts and they keep dragging their feet, construction stocks will drift lower and lower.

A BB bought up yongnam though. JP morgan bought back yongnam, increasing its percentage level from 8.50% to 9.33%. I said "bought back" because I remembered they sold off their stack during the market downturn. I posted it on 24th August that JP morgan pared down their stack from 9.38% to 8.50%. So, no big deal. Sell first during market downturn and buy more when market is recovering.

Straits asia's chart looks not bad leh. From weekly, looks like a symmetrical triangle, coupled with low volume. Though support at 1.380 is broken since I last mentioned this, it didn't go down lower but instead started to rebound from there (on daily).

Looks set to break out of triangle on the upside, from both weekly and daily. I did a fibo retracement and found a possible resistance at 1.42 level. Should be quite a significant resistance because the price of the stocks hit and tested it 4 times around 1.42, acting as both support and resistance level. Should see some action by this week or latest middle of next week.

Dow futures quite red, -76 as of now. Europe is pretty bad too, averaging around 1% drop. Looks like Dow cannot make it tonight. Let's hope to see STI close a higher low, so we can head up higher :P

Tuesday, September 04, 2007

STI still didn't break 3400 resistance

Today is the 2nd day that we see STI trying to break resistance at 3400 but failed. STI closed down 10.2 pts (0.30%) at 3376 with a volume of 1.8 billion (slighly higher than yst's 1.6 billion). Since STI tried to break resistance at 3400 but didn't succeed, it shows 2 things. First, 3400 is a significant and strong resistance, so should we ever break it, it's a bullish sign. Second, since we failed to move up, we can only move down. I should expect STI to move down.

STI support is around 3320, which coincides with 50% fibo retracement, so I should expect a good support there. Resistance level at 3400 happens to be near 38.2% fibo retracement. That might explain the why STI failure to close above it.

I guess things are shaky all the way till 18th Sept, where the much anticipated rate cut by FED is to be announced (if at all). If history can shed some light on the future, here it is:

I've shown this way back in previous posting, but thought it's good to see this again. Historically from 1985, STI had its worst months in August. This year isn't any different. Sept is going to be down on average too, though the magnitude of the drop in STI isn't that great compared to August. This is to prepare for the big rally that happens usually in October to January period.

Dow futures is now at -17, Europe is a mix of red and green.

Swiber announced more plans to sell and leaseback its vessels. It executed 2 letters of intent with R.S. Platou Finans Shipping A.S to sell and lease back a total of 5 vessels. The sale and leaseback is for a period of 8 to 10 years, with Swiber having the option to purchase back the vessels after a certain period.

Stocks on my watchlist took a slight beating today. Probably taking profit off the table, not shortist action, judging by the volume. The volume nowadays is so low. If a stock have more than 30 k volume transacted, it'll be in the top volume list already. Construction went down because there is no more positive news flow to excite speculators. What the hell is the relevant authorities doing? Saying contracts announcement from June to july to august...and now is already sept!

Let's hope Dow don't diarrhea tonight after its Labour day holiday.

Monday, September 03, 2007

STI stayed neutral

What a lazy day at the market today...

STI is nearly flat, it dropped 7 pts down (0.20% drop) to close at 3386, with a very low volume of 1.6 billion. Must be a lot of people selling off their holdings because of last Fri big rally. Tonight Dow is closed because of holiday, so no leaders to lead us tmr. Europe is currently green (slightly only), so let's see if tmr we follow Europe or we follow HK/China.

Construction as strong as ever. With rumors of contract announcement flying around these few weeks, it's hard to short down on these stocks. Overall, market is just damn quiet. Can even hear a pin drop.

Nothing much to comment too. Have a great trading week!