Saturday, March 28, 2009

The new Swiss "hostages" situation

Switzerland’s private banks have banned their top executives from traveling aboard for fearing they will be detained for interrogations. Last year US detented a senior UBS private banker and demanded for their list of American depositors as part of a tax evasion investigation. UBS has agreed to pay $780m (£548m) in fines and turn over some customer names to the US government as part of a landmark settlement in which the Swiss bank admitted it helped thousands of clients evade taxes.

The deferred prosecution agreement settles a long-running criminal investigation by the US Department of Justice into whether UBS helped wealthy US clients hide bank accounts from the Internal Revenue Service.

In the current crisis where many governments are eager to find new $$$, Swiss banks are said to hold an estimated a third of the world’s $11,000bn in clandestine personal wealth.

The restrictions come ahead of next week’s The Group of 20 summit when they will discuss a clampdown on tax havens. Switzerland, under pressure from other countries, has already agreed to ease its bank secrecy laws and accept international standards on tax transparency.

CPO 30/3/09 - Trendless

This market is a tough cookie. The bullish crude oil did not seem to help it to go up. Prices continue to test the previous highs but still it is still unable to break and close above them convincingly. Last week we saw Monday and Thursday when price managed to close above its recent highs but only see it closed back down. The flat ADX continues to confirm to us that this market is not trending yet.

So at this moment I would not do any position trading but just engage day trading. Since both the Stochastic and MACD are still positive, I would watch out for a D+ to go above its prior peak as marked out by the horizontal line or a closing price that can maintain above its prior highs for at least 2 consecutive days.

The weekly chart continues to confirm the lack of trend in the daily chart as the weekly ADX is still falling towards its 20 signal line. While the MACD is still rising and goes nearer towards its zero signal line, the Stochastic has already gone into the overbought zone and looks like it may cross down soon. I would advise you should sit aside and watch for a longer time before decide the next course of action.

But since this market has been testing the upside for so many times and so far failed to break up, I am getting worried that its next course of direction may be a big down move.

FKLI 30/3/09 - Corrections soon ?

The market has been taking hints from Dow Jones and continued its up move . But the moves have not been strong and it is confirmed by a flat ADX lingering at around 19's. Though the MACD has already crossed up and moving toward its zero signal line, but the Stochastic is now fast approaching its 80's overbought zone, so I would be take cautious and place stops tighter. The upper Bollinger Band minus 2 points of 878 would be prudent.

Of course I am not saying when prices get overbought that it will collapse soon. Whenever there is already a strong bullish trend in place (usually with high
ADX reading ) , in fact, when oscillators get overbought it is usually a sign that the market will even go further up with great strength. But as in our current case, the ADX is flat at 19's means there is no strong tend yet, so when oscillators get into the overbought zone, we have to be cautious.

In the weekly chart, the picture is still the same as last week's which the indicators are of contradiction to each others:- the MACD is still positive and rising but the Stochastic is still negative and falling. Whenever we see such signs, the market is telling us it is caught up in a range bound situation. The falling weekly ADX is also confirming such reading. So do NOT engage any significant trading positions until the chart tells us otherwise. If prices can close above or below its recent highs/lows would be a good signal.

Thursday, March 26, 2009

Crisis ! What crisis ?

While the daily media's bombardments are telling us the end of the world is near, but there are some people out there who are quietly sniggering their way to the banks during the current crisis. Alpha magazine recently listed the top earning hedge funds managers who averagely took home USD460 millions. 4 of them took 1 billions. Since the magazine started this list, this is their 3rd best year of performance.

Rank Name Firm Name 2008 Earnings
1 James Simons Renaissance Technologies Corp. $2.5 billion
2 John Paulson Paulson & Co. $2 billion
3 John Arnold Centaurus Energy $1.5 billion
4 George Soros Soros Fund Management $1.1 billion
5 Raymond Dalio Bridgewater Associates $780 million
6 Bruce Kovner Caxton Associates $640 million
7 David Shaw D.E. Shaw & Co. $275 million
8 Stanley Druckenmiller Duquesne Capital Management $260 million
9 (tie) David Harding Winton Capital Management $250 million
9 (tie) Alan Howard Brevan Howard Asset Management $250 million
9 (tie) John Taylor Jr. FX Concepts $250 million

Fools' gold ?

Over the past few months, there have been many 'experts' advising us how we should 'invest' in gold because they feel the whole global's economy is crumbling and paper currencies will all become banana notes. One such 'expert' even predict that gold would hit 2,500. (sound familiar ? remember another 'expert' predicted crude oi would hit 2,000 ?)

So many people has been under their influence and try to act accordingly. Recently we even have a few banks launching their gold funds and their marketing officers would just try to stuff those products to their ignorant customers' throat.

Of course as a technical analysis student, i would rather look at the gold charts and try my best to form an educated conclusion on which direction would gold takes next. But even before doing that, I already feel something is very strange as taking gold as a risk and inflationary hedging vehicle. My mother, like many women of her era (she was 89 when she passed away last year) used to "invest'" in gold bullion coins and she faithfully kept all her investment in her bank deposit box. So after her passing, I took out all her gold coins and asked the goldsmiths and bankers (which issued some of them) and asked for a quotation. I assure you that you do not want to know of their current days valuations. All I can tell you is :- they are NOT a hedge against inflation/ they are NOT great investment tools etc. In fact they are losses, ringgit to ringgit. That would be the kisah benar fundamental side of this much believed myth.

Now lets us examine the gold charts in order to see whether all those "experts" are correct in advising you to put your hard earned money into gold. First I shall look at the weekly chart and immediately I notice there is (1) a double tops chart formation (2 circled areas). A double tops formation is usually a major bearish formation which when a breakdown when occur, will usually go a great distance down. And to add more evidence that gold may be going into an extreme bearish phase is its (2) MACD which is forming a lower peak from its last peak. This is a classical bearish divergence sign. I would rate this double tops as a class 2 as oppose to a higher highs bearish divergence as a class 1 type. Nevertheless it is still a highly rewarding kind if you decide to enter a shorts position.

Next you would note (3) the Stochastic has already crossed down from its 80 signal line. If it ever crosses down its 50 signal line , we may see an even more intense selling emerging. (4) The D+ has also crossed below the D- which has now offered another sell signal. By following its inventor Wells Wilder's extreme entry trading rule, if next week prices go below this week's low, then the sell signal would be in effect.
(5) Last week's price has already closed below the 20 moving average which is usually a realiable support, hence another sell signal .I think the final line of defence would be its up sloping trendline which last price managed to bounce away from it. If next week price closes below this trendline, then we would have final sell signal.

BUT, as the ADX has now fallen below its 20 signal line, I would think this market would range bound for a while and even a few false breakouts before we can see its next major move. The downside move, if materialises, may see gold go to 500.00

At present, I am concerned about the weekly ADX because in the daily chart I am NOT getting all the major bearish signs yet. The rising daily ADX may conirm the current down move but there is no bearish divergence as prices recently have not formed any higher highs or double tops.

My conclusion would be: I am selling this market now and I do not think the 'experts' are correct with their views as at now. But if gold is to break up above its recent high, then maybe then it would warrent to take another reading of this chart.

Saturday, March 21, 2009

I watched "A World Without Thieves" twice

I watched "A World Without Thieves" twice over Astro channel 322. Andy Lau and Rene Liu play a pair of pickpockets cum hustlers. When Rene Lau discovered she is pregnant with Andy's child, she decided to help a country pumpkin to keep his hard earned money on a train where they are riding from other pickpockets, especially a highly regimented group headed by a "uncle Li." (portrayed by Mainland actor Ge Bao) Rene wants to do a good deed to bring some karma to her unborn baby. At the end Andy died trying in order to keep his words to Rene.

The movie shows some majestic China scenery and is a typical train themed movie. Since this movie was shot in China and has a Chinese background, the Hong Kong producers took great care to portray the Chines police in a good light and even the Chinese criminals seems to be of the more "educated" and "civilized" class. Generally all the characters are well written.

Though it was not a hit in the local cinema circuit but I find it highly enjoyable. I really enjoy the chief villain's constantly 出口成章 and his casual philosophic observations of life (you have to watch the Cantonese version, otherwise all these will be lost with the Mandarin's). Andy Lau is at his usual best. And Rene Lau who has been my silver screen's secret lover of some sort never fail to deliver. Watch her at the end of the movie where she was informed by the police inspector that her lover did not make it. She just keeps on stuffing food into mouth with all the gravies stains around her mouth while tears just dashes out. I just wanted to die with her.

The music at the end where the credits roll is great too. The strings are so heart pulling it build up fire at your Dantien (ask Qigong people what is that) , the producer is very disciplined as not to put in any drumming. I just have to buy this CD .

Friday, March 20, 2009

CPO - 23/3/09 Will CPO follows Crude Oil's bull ?

It was another week of this market going nowhere. The daily ADX has again sunk below its 20 signal line which is confirming this lack of trend in this market. Last Friday's solid white candlestick closing up above the upper Bollinger Band may be a good omen for the return of the bull as CPO may follow crude oil's breakup. And also take note that both the Stochastic and MACD have hooked up and we may see a positive cross up soon. So the coming week would be crucial as we need to see whether a follow up action will come forth.

The weekly chart is also confirming its lack of trend as the weekly ADX is still falling fast and may goes below its 20 signal line soon. The Bollinger band continues to tightening.

FKLI 23/3/09 - Is the market celebrating the new PM ?

Yes sir, I was wrong on this market last week when I expected more intense selling to emerge. But the market just hanged around for a while before getting back up again. You would had got stopped out at 857 (never get into any trade without determining where to place your stops). The Stochastic has crossed up above its 20 signal line while the MACD has also hooked up positively. Please take note the daily ADX has turned flat which is effectively telling us the prior bear trend has ceased , at least for the time being.

With prices crossed above the lower Bollinger Band and the Stochastic crossing up, I would placed in some long contracts and place my stops at 845. But I am not yet getting too bullish about this market especially the D+ is still below the D-..I would add on more positions when prices manage to close above the upper Bollinger Band which is also acting as its down sloping trend line resistance.

The weekly chart is displaying a picture of contradiction - the Stochastic is still negative and continue to fall while the MACD stays positive. This contradictions is also confirmed by the squeezing Bollinger Band which is foretelling us a major move may be coming. But with prices are also able to close back above the lower Bollinger Band, I think we can temporarily ignore the bear for the time being. Of course I am also doing nothing significant at this stage. I will be watching 902 for additional bullish signal.

The market may be acting up following the Dow Jones' current up move or our next PM's powerful friends may want to push up the market to compliment his impending arrival ?

Every AIG employee is a danger man

A leaked AIG corporate security memo to their staff:-

Lets sing again:- USD is another banana notes

During the past few years it is almost our daily dosage when we open up the newspaper or on our TV - practically every 'experts' had been telling how the once mighty USD is fast becoming another banana notes (Banana notes are those used by the Japanese occupational forces during the WW2. They became almost worthless after they lost the war) Then came the "surprise" bull rally in August 2008 where all the 'experts' again placing the blames on the "black swan" . Generally they all got stunned and remained stoned in silence.

One thing for sure - they could NOT "explain" to you why the USD rallied with the US fundamentals were in fact getting worse.

Lets be brutally frank about it, they are unable to see it coming. But not us who practice technical analysis. We saw the return of the bull , just as we also see the current demise of the USD in around late February (see my essay on GBP ) . Like they say:- the writings are on the wall. Yes sir. When I see bullish/divergences formed in the charts, I get cautious and start to tighten stops on my positions and I also start to look forward for major reversals. Of course as all things in life, nothing is 'guaranteed' as in the case of divergence. It does NOT say whenever they form, that market will guarantee to turn the big corner. BUT, I get more cautious.

Here I am taking a look at the USD Index chart where there is a bearish divergence formed between the prices and the MACD (higher price peaks and lower MACD peaks) plainly forewarning that the USD is about to get weak against a basket of other major currencies. Last few days , it broke down below the lower Bollinger Band which is confirming to us that this market is gone for good. MACD has also crossed down below its zero signal line giving us another confirmation of the bear.

I would pay attention to the rising ADX which is telling us a trend is forming.

In the weekly chart, a bearish divergence is also found at the MACD and the Stochastic. a divergence is usually found in the weekly chart when the market is staging a brand new major trend. We should be seeing some really big moves from here. Both the indicators have already crossed down thus offering initial sell signal. If by today closing and price goes below the lower Bollinger Band, it will be a major sell signal on the weekly chart. We could easily see it going back to 79.00.

Since the current crisis started, many 'experts' have lost their job. Maybe we can get them back up to their prior task of singing in chorus that the "USD is becoming the banana notes" song ?

Monday, March 16, 2009

CPO 16/3/09

This market still did not manage to break up above its recent 2 peaks. What we are having now looks like an ascending triangle which is usually bullish. But if it does not do a breakup soon, I am afraid that its strength may be fizzled out or worse, it may even turn bearish again. Please take note that its ADX has turned flat, indicating there is no direction. At the moment if you have already bought this market, keep 1903 as stop. If it is able to stage a breakup above its 3 prior peaks, then you should add on to your longs positions.

CPO chart is mirroring what is happening at the crude oil chart. Both seem to be waiting for something big to happen.

FKLI- 1/3/09

With last Friday closing price went beneath the weekly's lower Bollinger Band and the Stochastic crossing down, this market may see a new bear cycle. Since the weekly Bollinger Band has been squeezing, so we may expect this new round of selling to be intense.

The daily chart's Stochastic may has gone into the oversold zone but with the ADX rising fast to 18, we may to watch the MACD rather than the Stochastic. The MACD continue to fall and the gap between MACD and its moving average seems to be widening, so I would assume that the bears may be gaining more strength soon. If you have sold this market, keep 857 as stops.

Saturday, March 14, 2009

Is Dow Jones bottoming out ?

In my opinion - DJIA is getting warm. Looking at its daily chart, the high flying ADX has now begun to fall which usually mean its prior trend (bearish) has now ceased (at least for the short term). Also when we see the ADX is above both the D- and D+, it is usually a sign of the market is grossly oversold. This is a more accurate reading of an oversold market than the oscillator indicators like RSI or Stochastic going below 20's zone. The Stochastic has crossed up positively and now heading towards its 50 signal line. The most pleasing item is its MACD which has positively crossed up and go towards its zero signal line. But the most important thing that I like about this chart is its bullish divergence where DJIA prices has been falling to new lows but its MACD has failed to follow suit. Instead it has now formed higher troughs which is telling us the nasty bears are getting exhausted and running out of momentum.

I am not saying that DJIA has already confirmed the return of its bull phase,but I am saying that the signs are already getting clearer that the bull MAY be returning soon. To get a confirmation I would need to see DJIA closes above its upper Bollinger Band and D+ takes over the D-. Most important of all I would like to see it closes above its recent peak of 8315. If it can stay above that level, I think we can safely conclude that the current bear cycle has ended for the short term. 9400 and 10300 would be its upside targets.

Since there is nothing substantially bullish about DJIA's weekly chart, so I do NOT think this is the big bull but merely a technical rebound in a grossly oversold market. But it would still be very profitable to trade it.

Of course, "fundamentally" speaking I can offer no explanation as why the DJIA 's bear is ending. I will let the "experts' do that later after the bulls returned.

Friday, March 13, 2009

Public Bank Bhd - how low is the low ?

Public Bank's weekly chart

I am not very well verse with catching lows and bottoms. I have always been a breakout guy i.e. I only buy or sell when there is a breakout above or below a certain place (eg. BBand bottom or top/ moving average channels etc) But I have been trying to learn a bit and practice on this art of gauging where are the bottoms. Those of my mates who are into cycles studies are just increadible on this art.

Since many of my friends are ardent fans of Public Bank , so I try to apply what I have learnt realtime: by applying Fibonacci Retracement Ratio, the 75% retracement level will be found at 6.90 which is pretty close to its last peak at 6.82 on 18/2/05. Since these 2 levels are close to each others, I would pay closer attention to them as a major support. If that level fails to support the selling, then the next supports should be at 6.72, 6.38 and 5.76. Since I assume only God knows where the actual low will be, so I can only suggest to you to watch the Oscillators like RSI or Stochastic get really low (i.e. <20) then decide whether you want to try your luck to buy near those levels mentioned.

The last 3 levels are only good for the coming week. By next Friday , I would need to recalculate for the following support levels. Appended above is the stock's weekly chart where you would also notice a a clear bearish divergence with the MACD which is a classic sign that this stock is about to take a great tumble and you should NOT chase this stock after June 2008.

Thursday, March 12, 2009

Another buy & hold casualty

Public Bank and Public Bank foriegn have been strongly sold down the past few days. According to the 'experts' it is because of down ratings by those masters of universe.

No doubt that this bank's management remains as prudent as ever and their balance sheets are still solid as a rock, but the selling down by everybody does not seem justify their usual thinking of buy and hold on a 'fundamental good' stock. No ? I mean whatever happen to their claimed "anti gravity stocks" ?

Taking a look at the bank's daily chart, you would notice the selling already started in June last year. The current sell down is merely a continuation of its prior trend. By applying a simple MACD indicator onto the chart, you would notice there was a bearish divergence therein where prices kept on new high but the MACD was only achieving a flat peak. Whenever we see such a divergence, though it does NOT necessarily mean it is the end of the world , BUT we do need to take extra precautions. The normal trade practice is that to sell off 1/2 of your holdings first and monitoring the balance for quick exit.

Here I appy a simple exit rule:- when price closes below the lower Bollinger Band , I will get out. With this simple rule, the final exit is on the 4th of March on open and you would NOT want to look at it until a new buy signal flashes.

By learning and applying a simple technical analysis based trading system, even though nobody can guarantee you will become a millionaire, but definitely it will keep you out of trouble. Most importantly of all, you do not need to be mislaid by the 'experts' into the slaughterhouse. Yes sir. I like that.

Saturday, March 7, 2009

FKLI - big down moves soon ? 10/3/09

Last week I used 2 horizontal lines to mark out the recent range and commented that we should trade on any breakup or breakdown. This is exactly what happened, price went down below the prior range on last Monday and stays below it. The daily Stochastic continues to drop while the MACD has also fallen below its own zero signal line which add on the overall bearishness. You should also pay attention to the ADX which is now rising and fast approaching its 20 signal line. It is because its previous lowest value was at 9, the increase of its current value of 14 is warranting a trend may be in formation.If you have sold this market, place 875 as stops.

The weekly chart's Stochastic has already crossed down which may be taken as an initial sell signal. The MACD still remain positive for the time being. An important item to pay attention is that the weekly ADX has stopped falling and turned flat. This is signalling that the prior trend (up move) has ended. We should watch if price closes below the Bollinger Band bottom, then it is confirming another bear move is in business.

Last week I also mentioned about the Bollinger Band squeeze that it may be bring explosive move. So we should be careful that the explosive move may be a downward move. Price could fall to 780.

Friday, March 6, 2009

CPO - bearish ? I rather bet on the buy side

The last few days it began with Citibank, then follows by OSK and Goldman Sach - all of their people suddenly seem to come together for a meeting and decided that CPO is getting increasing bearish. As usual they cited all the fundamental figures and advise the public should keep away from the plantation stocks.

Whenever the 'experts' congregate and comment on a market and they all agree on a 'x' direction, I always sit up and take attention - BUT I would always look at the opposite 'Y' direction. Yes sir. I do not trust them and very often I am able to make some decent profit from taking that opposite directional trade. Of course I am saying that they are always wrong, but I would rather trust my own readings than from theirs.

So I take a serious look at the CPO's chart and this is what I read:-

The weekly chart's MACD and the Stochastic are still positive and moving upwards and most importantly is that prices maintain above the Bollinger Band top (since March, 2008). All these are telling us to be a little bit of bullish biased. BUT since the weekly ADX has been falling , so we do NOT want to become overly bullish yet. The current reading of D+ and D- is both at 23 so we can read that the bull force and bear force is equal.

So for the weekly chart, we need to watch it for another 1-2 weeks to see where this market is really going. Any weekly closing of above 2017 will be the first sign the bull is gaining strength.

As for the daily chart:-

The Stochastic has already crossed up positively. The MACD is turning its head but has not yet crossed up positively YET. Price managed to closed above the upper Bollinger Band which may be taken as an initial buying signal. The D+ is above the D- and it has managed to go above its prior peak (as marked out in the chart) All these 4 items are bullish.

I notice even the ADX which has been lying dead below its 20 signal line now has begun to raise its head. This may be telling us a new trend is in formation.

So, I would summarise from both the daily and weekly charts, CPO is still bullish biased than the other way around. If I have to place my trade now, I would have place in buy orders.

BUT, there is something inside both the daily and weekly charts that really get me all excited - and that is both their Bollinger Band have been squeezing. If you have followed my writing all these years, you would know a squeezing Bollinger Band usually bring forth explosive moves. So, watch this market closely.

Genting - another from heroes to zeroes

Genting - When I first went in and "invest" in KLSE, a bank manager told me this:-"it is the blue chip of all blue chips". Over the years, I think many people in the market tend to share that sentiment. I certainly am no fan of fundamental analysis, but I do know their dividends are nothing to shout about. But if you are one of those believers that it is the bluest of all that you intended to BUY & HOLD and hope to pass it to your children, then I am very sorry that to show you the chart of Genting.

Assuming that you are one of those amazing people who really can buy low (i.e. assuming you know where is the low) and bought around mid 2001 at around 1.80. And you practice buy and hold because you believe the above mentioned reasons , by today you would see your investment fall from its high of 9.00 to the current 3.28.

Of course Genting is still paying their kind of dividend , but then instead of making something like 8.00-1.80= 6.20, now you ware holding to a 1.48. And that 1.48 may just disappear soon too.

And how much dividend would you had received over this period? Assuming that you bought 1,000 shares - are those accumulated dividneds more than 6.20x1,000= 6,200 profit?

And what if you had applied a simple trading system base on technical system (buy when prices cross above Bollinger Band top and sell when prices close below Bollinger Band bottom) - please note how such a simple trading sytem would had effectively kept you out of this stock since 2008 (except one at August which you would had got out at a small loss) . Til now there is no new buy signal.

Yesterday Singapore's Lee Kuan Yew commented that Temasek may had gone in and buy the US banks 'too early'. Yes sir, it is all about timing. Knowing when to buy is important , but knowing when to sell is even more important because it ultimately mean banking in your real profit into your account rather than to allow paper profit turning into zeroes.

Tuesday, March 3, 2009

Dayang Ent. Hldgs - another blowout artistes ?

Dayang may be getting ready for a blowout soon. Its daily MACD is near its zero signal line and my proprietory Blowout indicator is below its zero signal line and its Bollinger Band has been squeezing beautifully for the past weeks. All are hinting fpr something BIG to come. Of course by BIG, we could NEVER sure whether it is a down or up, so I would watch 0.84 for a successful close before taking any action.

Go read the disclaimer



FBO 15441.0000 0.0950 1.0000 1.0000 FBO
Hunza 11780.0000 1.3000 1.0000 0.0000 HUNZPTY
PREMIUM 7360.0000 0.1750 1.0000 0.0000 PREMIUM
ASIA-BIOENERGY 3746.0000 0.2800 1.0000 1.0000 ASIABIO
Shell 3178.0000 9.1500 1.0000 1.0000 SHELL
BritishAmerican 2952.0000 44.7500 1.0000 0.0000 BAT
GuinnessAnchor 1491.0000 5.4500 1.0000 1.0000 GUINESS

Go read disclaimer






Monday, March 2, 2009

幸福是什麼 ?

> 幸福就是 2008 年 ....
> 元旦沒進烏魯木齊
> 二月沒去柳州
> 三月沒逛拉薩
> 四月沒到山東
> 五月沒在汶川
> 六月沒在貴州甕安
> 七月沒在上海當警察
> 八月沒在新疆當兵
> 九月沒有到山西襄汾看潰壩
> 當然最幸福就是今年沒進股市
> 否則寶馬進去,自行車出來
> 西服進去,三點式出來
> 老板進去,打工仔出來
> 站著進去,躺著出來
> 牽著狗進去,被狗牽出來
> 總之,就是地球進去也是乒乓球出來
> 其實那些都沒啥
> 更值得慶賀的
> 也就是天大的幸福
> 就是你已經長大了
> 不用天天喝三鹿了 !

Mad magazine going, going, gone ?

I was a devout MAD fan during my high school days (late 60's and early 70's). I placed an order with the local book shop to keep a copy for me each month. As I came out from school, somehow I lost interests in this magazine. Maybe it was because my interest was already heavily inclined towards soul music that I began to subscribe and read a few music magazines every month.

But it is still so sad to know that the Mad magazine has also fallen to bad times and they are downsizing (a fashionable phrase these days) by cutting their staffs and frequency of publishing from monthly to quarterly. Other formats like books are also ceased.

The picture shown here was a 1959 cover which was intended to be funny.But it turns out to be so irony on their current cutbacks.

Sunday, March 1, 2009

More good money after the bad ?

An alternative title:- "Will Citi be here next month?"

Malaysians have always held the kiashu land in awe. Many of us think they have the brightest brains and hence they can can do no wrongs. But now we know they often are just like us - talking loud and talking trash. Their GIC and Temasek had been doing 'greatly' not because they are smart but merely because the great bull market of the last decades had covered up their bad investment decisions. But now with the current great financial crisis, their black backsides are beginning to show :-

GIC and Temasek have put a combined total of more than US$30 billion of Singaporeans' wealth at risk — GIC has bet $6.9 billion on Citibank and $9.7 billion on UBS, while Temasek has bet $4.4 billion on Merrill Lynch and $9.2 billion on Standard Chartered.

ABOUT a year ago, when deputy chairman Tony Tan talked about the Government of Singapore Investment Corp’s (GIC) daring step into struggling American banking giant Citigroup, he pointed out how the deal to inject US$6.88 billion ($10.7 billion) contained “appropriate downside protection”. Memorably, he said that if one took care of the downside, the upside would take care of itself.
On Friday, GIC showed how it had mustered sufficient clout to receive sweeteners under a new Citi deal involving the United States government — but not without meeting with fresh risks.
In a move aimed at bolstering Citi’s capital base to win back market favour, the US government and several big investors will convert their preferred shares into common stock at US$3.25 apiece. For GIC, that’s a huge discount to the price of US$26.35 it would have had to pay for the conversion under the original terms of its January 2008 investment.
As a result, GIC’s stake will be about11 per cent — making it Citi’s No 2 shareholder after the US government raised its stake to 36 per cent from 8 per cent — without having to fork out extra cash. That is significantly higher than the 4-per-cent stake that GIC had first secured in what was once the world’s biggest financial institution.
“Due to the challenging economic climate, the profitability of US banks is likely to be impaired in the next two years,”GIC group chief investment officer Ng Kok Song said on Friday night. “Adequate capitalisation will help cushion against larger-than-expected losses, should they occur.”
At the same time, the new deal appears to have reduced GIC’s paper losses.

According to sources familiar with the transaction, GIC has an unrealised loss of about US$5.5 billion ($55,000,000,000.00), as its preferred shares are now worth a mere US$1.4 billion in the market. With the conversion, GIC would be holding common stock valued at about US$5.2 billion, based on Thursday’s closing price of US$2.46 per share. This translates to a paper loss of about US$1.68 billion.
But on the flip side, GIC will no longer be a preferred shareholder entitled to an annual dividend of 7 per cent — a relatively attractive rate given the jittery environment.
Citi said on Friday it would suspend its dividend programme. Should a liquidation occur, common stockholders will be last in line.
Also, the Singapore sovereign wealth fund will have to watch its investment swing with the gyrations in the stock market. A year ago, Citi’s stock was trading above US$20. Last week, it crashed to below US$2, a level not seen in 18 years.
GIC’s Mr Ng is looking long-term. The latest move, he said, would “enable Citigroup to exploit the earning power of its unique business franchise when the world economy recovers”.
Some market analysts frowned on the US government’s unprecedented decision to become the biggest shareholder of an American bank. “We’re talking about a form of nationalisation, and to the extent that the market is going to accept it,” Mr Peter Kenny, managing director of Knight Equity Markets in New Jersey, told the BBC.
The early-morning news out of New York caused financial stocks to fall, as investors fretted over which other banks might see similar action, which would dilute current shareholders.
How Citi will evolve as a corporate animal under major government ownership is a hot topic. Already, the bank is overhauling its board so it will have a majority of new independent directors, Citi said on Friday.
“It’s just unbelievable,” Mr David Rovelli, managing director of US equity trading at Canaccord Adams told Bloomberg.
He added: “The government is making up the rules as they go. A continued breakup is probably in the cards.”
Citi is declaring it is business as usual. “The transaction does not change Citi’s strategy, operations or governance,” the bank’s chief Vikram Pandit said on Friday.

CPO 3/3/09 - Explsoive move to come too?

This market is another tough cookie. Like I noted last week - the trend is gone and all we have a listless market. The daily ADX has turned flat again and stucked at the 20's level for days. Again we would concentrate on the Stochastic for any new signal. I would only treat the new signal as a minor one. As for the position traders, do nothing for the while now.

I have drawn out 2 horizontal lines to mark out the range. I will only get serious once we see a breakout.

The weekly chart is showing us all the classical trendless signs:- the
Bollinger Band's squeezes; the D+ and D- are wriggling each other in and out and a fast falling ADX. With price is still manage to stay above the upper Bollinger Band and both the MACD and Stochastic still positive and rising, so I remain cautiously bullish on this market too. But at this moment I would just wait.

Like KLOFFE, whatever CPO does next will be explosive.

FKLI 2/3/09 - Big moves to follow ?

The daily ADX continues to fall and last gone to 9's and the Bollinger Band continues to squeeze. If you are those position traders, I would advice you to stay aside first until a more significant signal come forth. But if you really want to trade , then you should watch what the Stochastic would do next for a new signal. But I must warn you that with such a lowly ADX, you most probably would find it difficult to make a decent profit from the trades.

I have marked out 2 horizontal lines to watch out for any breakouts before deciding which side of a trade to take.

On the weekly chart, both the Stochastic and the MACD continue to be positive and rising which should be telling us this market is
still bullish biased. But mirroring its daily chart, the weekly Bollinger Band has begun to squeeze. This is confirming to us that there is no trend in this market. If you have been following my past essays , you would know I always get excited whenever I see a Bollinger Band squeezing. This is because the squeeze usually forewarning us that a major move is in waiting. But at this time, I will sit quietly and wait. The wait will probably end when I see the weekly closing above the upper Bollinger Band of 903, but I would prefer it to close above its previous weekly high of 906.

On the coming week, DPM will announce his mini budget which I doubt very much he can deliver much surprises other than the usual public projects spending, a little cut here and there. But the local funds will most probably react to this. So sit tight, you should stick to what the charts are telling us for your next course of action
and ignore the market 'experts' analysis.