Tuesday, July 22, 2008

CAN SLIM Investment Strategy

CANSLIM investing carries some of the features of momentum investing with some further added to it. It was developed by William J. O'Neil and in his book "How to Make Money in Stocks". It represents a method of observing, buying and selling common stocks.

More than 500 stocks were picked by O'Neil through the use of a computer database. This was done over the period between 1953 and 1993. After making a thorough analysis of these stocks, O'Neil managed to identify seven characteristics that all of these stocks share. These traits are synthesized by the acronym CANSLIM.

Every criterion against which an investor should evaluate a stock is represented by a letter of the acronym. So, here are the seven common traits found by O'Neil:

C = Current Quarterly Earnings per Share should be up 25% or more and in many cases accelerating in recent quarters. Quarterly sales should also be up 25% or more or accelerating over prior quarters.

A = Annual Earnings should be up 25% or more in each of the last three years. Annual return on equity should be 17% or more.

N = New products, New management, New prices of higher level. A company should have a new product or service that's fueling earnings growth. The stock should be emerging from a proper chart pattern and about to make a new high in price

S = Supply and Demand.
Shares outstanding can be large or small, but trading volume should be big as the stock price increases.

L = Leader or Laggard?
Buy the leading stock in a leading industry. A stock's Relative Price Strength Rating should be 80 or higher.

I = Institutional Sponsorship
should be increasing. Invest in stocks showing increasing ownership by mutual funds in recent quarters.

M = Market Direction
should be in a confirmed up trend. The trend should be of an upward character.

More Info at: http://www.investors.com/learn/c.asp

Monday, July 21, 2008

The Making of "CSI: Malaysia"

Sodomy, murder, DNA tests make ‘CSI Malaysia’

JULY 21 — It's becoming the highest-rating programme in Asia: Malaysia's crime scene investigations.

Just like its wildly popular American counterparts, this crime drama — call it “CSI Malaysia” — features sex, murder, DNA samples, cover-ups and a colourful cast of characters wondering who's guilty of this or that.

At the centre of Malaysia's CSI franchise is Datuk Seri Anwar Ibrahim, a former deputy prime minister who did time on corruption and sodomy charges. Last week, Anwar was arrested on new sodomy claims. He accuses Deputy Prime Minister Datuk Seri Najib Razak — who denies sexual-misconduct allegations related to a 28-year-old Mongolian woman killed two years ago — of manufacturing the charges to discredit him.

The storyline is captivating this nation of 26 million people, most of whom are Muslim. It's sparking steamy and decidedly awkward debates about how one defines sodomy and whether it should be a crime. (It is under Malaysian law.)

Surreal subplots abound. Tun Dr Mahathir Mohamad, the man in power when Anwar was jailed a decade ago, has been fighting a very public war of words against his successor, Prime Minister Datuk Seri Abdullah Ahmad Badawi, over corruption allegations.

Events in Kuala Lumpur would be far more entertaining if they were confined to a television screen — and not denting the image of one of Asia's most promising economies.

Many Malaysians aren't quite sure what to think. Are the charges against Anwar trumped up to keep him from toppling the government? Is the male aide who claims to have had sex with Anwar telling the truth? If Anwar is innocent — he claims he has never engaged in sodomy — why not submit a DNA sample and clear himself? If you were Anwar, would you trust authorities not to taint the DNA test?

It was impossible to avoid this issue at a Bloomberg panel discussion on July 17, the day after Anwar was arrested (and the day on which he was released). On the panel were bigwigs from the likes of Malaysia Airline System Bhd, Maxis Communications Bhd and CIMB Investment Bank. You could see them shifting nervously in their seats as the issue of sodomy came up.

If Malaysians don't know what to make of Anwar's plight, you can imagine what foreign investors think. “Summer of Discontent”' is how Deutsche Bank AG analyst Teoh Su-Yin titled a recent report on Malaysian stocks.

Last week, it was hard to find an analyst predicting a quick resolution to Malaysia's fragile political backdrop. Nor could we find anyone in Kuala Lumpur who felt markets had fully priced in the negative impact of higher inflation on the economy and corporate earnings.

What's so frustrating about Malaysia is the obvious potential. Its natural-resource-rich economy has achieved great things in the 50 years since independence from Britain. Twenty-five years ago, this was a tropical backwater. Today, Malaysia's modern, skyscraper-filled capital is home to the world's tallest twin buildings: the Petronas Towers.

Yet the world is moving ahead at a rapid pace, hastened by the rise of China and India. It won't wait for Malaysia, and the current scandals preoccupying the government are coming at the worst possible time. Malaysia should be acting boldly to increase its global competitiveness.

Nations as diverse as China, India, Indonesia, Thailand and Vietnam are working to raise their global influence. Five years from now, any of these economies might harness specific advantages, from low costs to human capital to technology, to challenge Malaysia's growth prospects.

Malaysia should start by fixing a key weakness: a four-decade-old affirmative-action programme favouring the predominant Malay community. It limits investment, stifles competition and keeps the economy from becoming a meritocracy. It's a third-rail issue and isn't discussed seriously.

The leadership vacuum in Kuala Lumpur means Malaysia is squandering time its economy doesn't have. Its US$151 billion (RM498 billion) economy is becoming a smaller blip on investors' radar screens, and politics deserve much of the blame.

Abdullah is under pressure to quit after his coalition's worst-ever election result in March. Earlier this month, he announced plans to stay in power for two more years as his chosen successor, Najib, faces sexual-misconduct allegations. What has the makings of a trashy novel has become reality, and it's not clear Malaysia's leaders see that.

Malaysia, it seems, is being run for the sole benefit of those in charge. The nation has become more about Abdullah's party, Umno, than the welfare of its people. That's not being lost on overseas observers.

"Investors are already considering the situation as unstable," says Tricia Yeoh, director of the Centre for Public Policy Studies in Kuala Lumpur. "They are already reconsidering their options in the country. The new investors are possibly not looking at Malaysia as a viable option and previous investors would be thinking of extracting their funds to be put in more stable and viable locations."

Financiers may be perfectly happy to watch CSI at home. They are far less keen on exposing their money to a whodunit playing out on Malaysia's national stage. — Bloomberg

BullTrader Comment: Truly a sad episode this is happening in our country! Famous as laughing stock or famous of the CSI? Hope all this will be solved as soon as possible to instill confident of current investors and potential investors. Adding to the degrading economy will put Malaysia in more pressure on foreign investors radar. All this will trigger others negative effect on local economy. CSI: Malaysia is the silent killer! May God help Malaysia!

Saturday, July 19, 2008

ChatRoom: Where Are The Others?

It came across in my mind! Hey, where are the others? Of course showers, richman, observer, sms, klooi and michael are exempted from this wanted list. Haa...haa..haa.. :-)

Well, I just wanna to say "Hi, how's life going on?". I'm looking forward to the excitement that our market are taking control by the bull! When the bull will come? I expect a superBULL this time! Time will tell. :-)

Hoping to see you guys/gals again and we all can have fun making profit together in the market.

Best of luck to all of you!

Friday, July 18, 2008

FCPO: Hanging In Between

Those holding plantation stocks should be alert that the downside risk for the CPO Index is getting higher. Intermediate support line must perform well to achive a breakout run. Otherwise can buy this stocks at lower price. Good Luck!

FKLI Intraday EOD : 17-Jul-08

All set for LONG position.
Watch for the Asc triangle/IH&S formation.
SHORT when it "really break" support trend line 1100.
LONG position target: 1200.

Tuesday, July 15, 2008

Technical Analysis (TA)

What is technical analysis? Simply put, it’s the art of analyzing the price action and behavior of a stock. Each day, investors put their money where their mouth is by placing their bets and announcing to the world what they feel their stock is worth. Because human emotion and psychology have changed very little over time, the underlying thought processes, expectations and anxieties that the buyer or seller was experiencing when they made their decision remains more or less the same today as it has throughout history. The stocks change, but the human aspect of investors entering into relationships with stock remain immutable. Hope, fear, and greed, when it comes to an investor’s wallet or purse is what technical analysis (TA) can capture the essence of. TA pays little attention to factors beyond price and instead focuses more on the underlying movement because price it is the truest measure of investor sentiment. Price can often discount changes in the company and the economy before they are reported in the fundamentals or economics, and this can sometimes make it a leading indicator for a story that is yet to unfold.

Here are a few questions that you may asked yourselves over the years and how technical analysis may help you going forward:

1) When is the proper time to buy?
2) When is the right time to sell?
3) My company just announced great earnings, so why is the stock now going down?
4) I've held this stock for years and it has gone no where. What should I do?
5) Why did I ever buy this stock? It has done nothing but go down since I bought it!
6) I have big gains in my stock, but how will I know where to take my profits?
7) My stock falls and Wall Street analysts keep recommending it. Why?

The technicals can help you with the questions above by offering you a "rules based" approach to handling your investments. Price action occurs in real-time, right in front of you, and without the lagging effect that other forms of analysis are known to have. The great thing about analyzing price action after a little training is that you don't need to over think a situation. The thinking has been done already by everyone involved in the stock; everyone positioned at a different price point, each with their own expectations of what will happen next. All of their hopes, fears and opinions have already been reported in the price with a date and time stamp.

Technical Analysis produces too much turnover
Contrary to popular belief, there are forms of technical analysis that are designed to keep you in a stock for the long-term as long as the stock is trending in your favored direction. It is quite possible and quite common to buy a stock that moves to a new high that emerges from a long period of sideways consolidation and price congestion without the chart ever producing a sell signal. The discipline of point and figure charting is an example of this, and this style of charting goes back over 100 years in history.

Technical Analysis is just lines on a chart
The lines on a chart are a simple way of representing points at which masses of investors joined together to place their bets at a specific price point as if their accounts were traded together as one, and thus, they will tend to act together predictably when key price levels are breached to the downside or exceeded to the upside, in the case of a support and resistance levels. The psychology of those investors together and their reaction to the "lines on the charts" could shift the balance of supply and demand for a stock one way or another, up or down. This is why it is very important to pay attention to areas of a chart where it cracked and broke down and where it began its long decline because that level will be a key area of selling pressure and excess supply in your stock (resistance) when it moves back up to retest that level.

Buying and holding stock is the best way to invest
Because most of Wall Street is designed around the buy and hold mentality as well as the majority of the products that are available to the public, there is strong evidence in support of this as well as established track records of long-term stocks and successful mutual fund companies. But what many investors fail to realize is that in between the five or ten-year time horizon that they have resigned their portfolios to, their stocks will frequently fluctuate 20-30% or more up and down due to economic and market cycles and company specific issues. Not paying attention to and taking advantage of these short-term inefficiencies in the stock chart undercuts the primary reason they are in the market in the first place, which is to make money. Learning to capitalize on these up and down trends in price could make a world of difference in the investor's bottom line performance.

Looking at a chart is too subjective
To the untrained eye, charts are absolutely subjective and open to interpretation. A trained technical analyst goes through the same type of schooling in pattern recognition and analyzing charts as a M.D. would in analyzing an EKG or X-ray, or an architect would in scrutinizing blue prints for a big project he or she was working on. These professionals would also assess their situations and make judgment calls on the health of their patient or building prior to surgery or breaking ground. Technicians are schooled with thousands of examples of what works, and what will represent successful and unsuccessful price structure. What may appear disorderly and chaotic to the average investor looks like an art piece to a technician. Just as an art historian would sit and analyze a painting, scrutinizing every minor detail and imperfection, a technical analyst absorbs the pattern before him or her on the chart, reading the story of its life and where it came from, its psychological health, how it has cooperated with or disappointed its investors through the course of time, and where it is likely to go in the short and intermediate-term.

Fundamental analysis is the best way of selecting stocks
Our view is that all forms of analysis, economic, fundamental and technical are all on the same team and need to work together to assemble the most accurate picture that the market puts before us, but equal credence should be lent to following the price action as it happens. Both endeavors can make investors money but a disadvantage of following company numbers exclusively is that price targets are usually derived using financials that over time can be effected by economic forces such as interest rates, inflation, competition from other companies, and obsolescence of a product or product line. Also, when a price moves decisively downward without any reported news, some may view that as a buying opportunity when in fact, caution should be warranted until the time is right to re-enter. A technical analyst will see that as a warning sign and either sell the position, hedge it or move to the sidelines while giving the stock the benefit of the doubt that it will go down further until it proves otherwise. To re-emphasize, we believe that the best of both worlds lies in being able to match the story of the reported financials with the price chart and using both to aid in the decision making process.

Technical Analysis emphasizes the trading of lower quality stocks
This can't be the further from the truth, when in fact technicals and the most popular price patterns work very effectively with stocks that are liquid and trade substantially more shares on average than smaller companies. Larger and more liquid companies have more investors involved in them and thus, the patterns that develop in the stocks tend to be more reliable. Larger companies are more apt to be "bought and held" and thus the emotions and psychology of the investors involved will likely ebb and flow more predictably than say, a stock that is the idea of the day on trading websites that trades for $5 per share. However, if you saw a major shift in price on any stock it should be paid attention to because it can be a precursor to a big upside or downside move regardless of how big the market capitalization is, or how low the quality you perceive the company to be.

It's too difficult to make long-term calls with just a chart
Even the best and brightest of long-term calls are often times found to be inaccurate because they were made based on information currently at hand, which in the long run is usually imperfect. Many things can change in the economy and with companies to go out farther and farther out with market calls. Even companies themselves change their outlooks and opinions frequently, swaying and humbling even the most astute and intelligent of predictions. However, technical analysis can give you a longer-term focus by using weekly and monthly charts that filter out shorter-term noise in a stock's price chart. This helps you stay on the right side of the market's tracks and stick with your winners that are trending upward in price.

It's irresponsible to invest purely on price momentum
This argument is frequently brought up by those who base their buy and sell decisions on PE or gross margin expansion, intrinsic value targets or by those that are unfamiliar with the benefits of technical analysis. Were it not for price momentum, intrinsic value price targets would not be achieved on a price performance basis, excluding dividends. All investors, fundamental, technical or otherwise make money in the market for themselves or for shareholders and clients from a stock going from point A to point B. At some point, value stocks graduate to become growth stocks and growth becomes value, but many times when stocks are sold when their fundamentally derived price targets are achieved, that could be the time when earnings really begin to accelerate, potentially leaving a lot of profit on the table. For those that use TA to assist them in selling their positions (i.e. remaining in the stock until the chart dictates it is time to exit), they just might have a huge potential winner on their hands based on the momentum behind the stock which TA can help you capture a significant portion of. If you know how to capture those price moves and trends regardless of where the stock is in its life cycle as a company (growing or mature), you may have an added edge over many investors. Adding to that, investors that shunned price momentum would never have owned Microsoft, Cisco, Wal-Mart, or any of the other greatest winners in our time.

Technical analysis is for trading, not investing
It certainly can be used for short-term trading as well as for establishing longer-term positions, but our opinion is that the lines between the definitions of trading and investing are often blurred depending on where the investor took their position and how they respond to this position after they made their commitment. If the investor bought correctly, it is much easier to hold the stock for a longer period of time because they will be more comfortable with it, and this will help them ride out the shorter-term price fluctuations.

Wednesday, July 09, 2008

Lucky No: 0980 by Research House #2

CLSA Asia-Pacific Markets has cut its year-end target for the Kuala Lumpur Composite Index (KLCI) by 15 per cent to 980 points, believed to be the lowest estimate in the market.

The foreign research house also downgraded its rating on the Malaysian market to "underweight" from "neutral". It cited political uncertanities, inflationary pressures and an economic slowdown as major drags on market sentiment in the medium term.

"Investors have always viewed Malaysia as a politically stable country and a defensive market.

"However, the current political bickering portrays a negative perception to foreigners that will cause further de-rating," CLSA said in its report on strategy outlook yesterday.

In March, it had a year-end target of 1,150 points. The KLCI closed at 1,127.26 points yesterday.

Some research firms recently cut their year-end targets as well, but none had set them below 1,000 points. TA Securities cut its target by 200 points to 1,210 last month, while RHB Research slashed 257 points to 1,128 last week.

CLSA said it lowered its earnings forecasts and target prices for selected stocks to reflect a higher earnings risk. Its top "sell" calls include AMMB, Bursa Malaysia and SP Setia. "Banks, construction, property and consumer-related companies are the worst hit by rising operation and material costs, weaker sales and higher default rates.

"Independent power producers will be hit severely by the windfall tax," it said. It recommended buying gaming, telecommunications and plantation stocks since the former two have relatively defensive earnings.

CLSA also expects high crude palm oil prices to sustain plantation companies' earnings growth. Its top "buys" are DiGi, Kuala Lumpur Kepong and Resorts World.

CLSA said that while Malaysia's move to cut fuel subsidies will lead to short-term pain from higher inflation, in the long term, it will enhance productivity and energy efficiency.

It expects Malaysia's economic growth to slow to 3.3 per cent in 2009 from 5.3 per cent this year.

Thursday, July 03, 2008

Malaysia's Political Twist

Yet another twist to Malaysia's political upheaval

PETALING JAYA: Malaysia's political upheaval has taken another twist.

A private investigator hired by murder accused Abdul Razak Baginda has made a startling claim that police covered up information he gave them that would have linked Deputy Prime Minister Datuk Seri Najib Razak to the murder victim Altantuya Shaariibuu.

P Balasubramaniam, a former Special Branch policeman, said in a statutory declaration that Abdul Razak had told him that he met Altantuya through Najib and that the two had an intimate relationship. He also said that Abdul Razak also confided in him that the Mongolian woman, victim of a gruesome killing, had demanded US$500,000 (RM1.65 million) as part of her share of a submarine deal.

Balasubramaniam said he told the police everything when he was arrested and asked to give a statement in late 2006, but when his statement was finally recorded, the information regarding the relationship between the DPM and Altantuya was left out by the police.

Najib had previously denied knowing Altantuya.

Balasubramaniam spoke and released his 16-page statutory declaration at a press conference organised by the de facto opposition leader Datuk Seri Anwar Ibrahim, who himself is under police investigation after a former party worker had alleged he was sodomised by Anwar.

Anwar, who has accused Najib of being behind the sodomy accusation, has demanded an investigation into the alleged attempt by the police to suppress information about the relationship between the DPM and Altantuya.

Abdul Razak is a close adviser to Najib, and two others accused of the same murder are members of the DPM's security team.

Balasubramaniam also said he was with Abdul Razak when he was shown an SMS, allegedly from Najib, telling the former to stay cool as he was meeting the Inspector-General of Police Tan Sri Musa Hassan to resolve the matter.

Wednesday, July 02, 2008

Stock Direction by Research House #1

DJI Re-Visit : Chart Preview

Yesterday DJI hit new low and recover almost all its lost and close +32 points. This will generate a fresh bull for technical rebound. BUT the upside is cap within 11,800 - 12,300 zone (strong resistance). My target for downtrend would be in 9,500 - 10,000. It is a Bear for DJI as well as KLCI.


Good Luck!