Short term swing trades: HLFG

I plan on putting a few short term swing trades for posts.  Please note that the shorter the time frame in trading the more fickle the market is.  Sometimes trades work, sometimes they don't.  But I've always fancied a little day trading speculation.  But mind you that all this is mainly for speculation so please don't take the short term swing trades as a recommendation.  It's not.

As of current juncture in time, we'll just stick with the FBMKLCI.  I like three stocks at the present time.  Maybank, HLFG, Maxis.

I'll cover HLFG in detail

When some people look at HLFG, they see the big red bearish trend at the end of December.  Me on the other hand sees something different.

The breakout move at the beginning of the month seems to be holding.  It touched a low in February and now is trading just short of the 50 percent retracement.

I'd like to speculate that the share will make a move higher to at least RM17.65 from the current RM 16.92.  Stop me out around RM 16.20 if i'm wrong.

KLCI/FKLI and FCPO technical update

The FKLI is in the midst of perhaps beginning a down trend.  But not yet,  due to the large volatility over the beginning of the month.  The market will still likely continue to trade in line with other markets until April, so a rebound is possible depending on how most markets react.

At the same time, the market isn't oversold, so buyers may want to wait longer, especially with the prospect of barely positive GDP in the oncoming year.

FCPO is also in the same boat as the market had the same volatility as FKLI.  Range trade is still the order of the day with wide supports and resistances.  200 day moving average seems like interim support as the market tries to turn the widely followed technical indicator upward.

FKLI and FCPO technical analysis update

The FKLI is slowly gaining momentum and is currently in an uptrend after a shaky start to February.  As long as overseas markets remain robust, the trend will likely continue.  The gap fill to 1860 looks like the target for the uptrend.  

The market remains slow moving due to the volatility early in the year.  Large trend moves are unlikely for now as evidenced by the small ranged days the market had for the last two weeks.

FCPO is a topsy turvy pattern, flipping from bear to bull almost in an instant.  Frequently markets don't flip, from bull to bear or bear to bull in such a short timespan, so FCPO will likely quiet down as well.

The market is still ranged, and the recent move to RM 2,221 shows bears still have a say in prices.  Likely the market will still range between RM 2,340 and RM 2,220 for the next few weeks.

Tenaga Technical Analysis

Tenaga is certainly on an uptrend.  But where are the trend lines?



Two major trend lines are both near RM 13 a share and RM 12.  Supposedly the resistance level at RM 9-10 a share should have held the upside, but markets tend to blow past this area especially if news is big which was in the case of Tenaga at the end of 2013.

For support, likely the range of RM 11-13 a share is possible to hold.  But we need to discern whether the rebound is strong after breaching the bottom of the range.  If it is not, we could see much lower numbers.  Better wait and see whether Tenaga has the strength at support levels first before jumping in.

FKLI and FCPO technical update

The FKLI is a market that has many people baffled.  It shows signs of an upward movement yet is conflicting some traditional technical indicators such as the 200 day moving average.  A trend line within the 1800 to 1850 box was tested and seems to be holding for the sellers.  

If the market were to go below 1670, the low in February, it would probably find some support.  At any rate the market is in a difficult place right now, trying to break upward but just not having the same follow through.



FCPO is an even more difficult market to analyse.  The recent swings in prices have been going from bearish to bullish in just a manner of a few days.  All I can see is that the market is neutral, having tested the lowest trend line but may encounter some resistance on the way up.  Volatility doesn't happen this often usually, so rest assured this movement is a rare occurrence.

KLCI/FKLI and FCPO technical analysis update

FKLI futures broke out from a very strong support level at 1760 directly to an uptrend, but not all is well as we note the 200 day moving average is negative sloping and also 1800-1850 contains pretty difficult resistance.  In order for the market to set up to try and break 1850, simple supports must have held, baby steps, starting with 1770.

Today we seem to have gotten that support level holding with a clear break above 1790 after a test below.  The market is looking like it is on its way to testing 1850.  In my last update, I did state the market is most likely looking to move higher from 1750, but the nature of the rally seems to be a slow large range movement upward based on today's market information.  Movement is still decidedly upward for the short term though.  Ultimately I do expect the market to hit 1850 in the next few months.  Note* Although it may hit 1850, it may not follow through much higher.

FCPO is in a totally different camp.  A move past the 200 day moving average saw prices drop like a rock.  In order for FCPO to have a chance at reaching new yearly highs, the support at RM 2,080 must hold.  A move below that will set the tone for this year as somewhat bearish or ranged and choppy.



So far though, the immediate sentiment is bearish, so careful trading!

Sapura Kencana Technical Analysis SKpetro

Sapura Kencana was one of the darlings of the oil and gas industry.  Unfortunately with oil hitting all time lows, their outlook looks dim.  I won't mince words, bottom catching is usually a fools game, especially a stock with low dividends.  As goes the saying, if you look around the room and don't know who the sucker is, the sucker is you.

I'll just have you know, a few oil stocks have looked technically strong off a bottom, especially in the US, but technicals seem to have failed this industry as bottoms have not held up.  I won't be surprised if the same goes for SKpetro.  All in all I'd skip this stock, save your money for another rainy day.

But for you people who REALLY want to get into the stock, I don't mind thinking about a long position with play money of course :)

1.We seem to have found a bottom at RM 2 a share.  Is this a bottom that will hold up?  I think it may.  at RM 2.61 is a 30 percent rebound off the lows, and given the nature of the rebound at this particular price, I think the outlook would be good.  I'd cut and run from a long position at a price lower than RM 2 a share, but seeing how this is an oil and gas stock, bottoming technicals seem like having a 50-50 chance of holding.

SP Setia Technical Analysis from the begining

SP Setia is probably one of Malaysia's most loved property counters.  I'm going to try and attempt to do some technical analysis on this beast.  It's also one of those counters just when you think it is down and out, it just comes back rip roaring higher.

SP Setia is a company known for innovating in the property market.  Their developments are known for quality and even creation of a lifestyle.  Perhaps their most well known developments are in Shah Alam where they have a 2,500 acre development that has won rave reviews.

The national government investment arm, PNB has wanted to take SP Setia global with a redevelopment of the Londone Battersea Power Station.  It would make sense as living in UK's neighborhoods resembles something of a mish mash of houses put together.  SP setia community development could take London property to another level.

The share price isn't for the faint of heart.  Consolidations can last 3-4 years which tends to shake out the most steely focused investor.

1.  One of the pivotal periods in SP Setia's history was in 2002.  When the high broke above the red rectangle, it signaled a change of sentiment from the usual pump and dump stock plaguing so many counters in Malaysia.  About one year later, after a pullback, the stock jumped.   Investors could have goten in around 80-90 sen a share, above the stop out point at the low in 2001.

Asking investors to wait one year while the stock drops 40 percent is tough to swallow, especially form RM 1.30 to 80 sen a share, but those shareholders would have been rewarded with a double.  But with the double could have come a quadruple with a long consolidation period frrom 2004 to 2007.  Asking investors to wait 3 years while the share goes nowhere is a tough thing to do.  That is why this stock isn't exactly for the faint of heart.

2.  The next pivotal point is in 2010.  A break above RM 3.3 a share signals more bullishness.  But where is the downside?  Likely near RM 1.5 a share.  Investors need to wait for consolidation for a longer period in time due to the huge range of movement in prices.

It's five years since the break hgiher into RM 3.30 a share, but time has been long and a three to four year pullback seems to be the norm, but the risk is of course the stock were ot trade much lower to RM 1.5 a share.

For me, the risk is too much to bear, But I'd be a long around RM 2.10 a share.  But, for most money managers, this stock is just rough as their performance metrics are on a yearly basis.

I think the stock will go higher in the next 5 years, but in between then,who knows what will happen.  I'm bullish, but not willing to initiate a long at these levels nor able to stomach the long gestation periods the pullbacks always seem to bring.

FKLI/KLCI and FCPO technical Analysis update

The FKLI has seen a rebound as of late.  While nothing is set in stone, a few of the bombed out oil stocks are picking up, as well as the index.  Support seems reasonably good.  With the anticipated Eurozone QE program on the horizon, most equity markets seem to be picking up.

The trend line has adjusted downwards to the new support at the low set a few weeks ago.  At this point the market may or may not see new highs.  It's anyone's game.  But below 1730, the market will look weak.



FCPO looks reasonably strong if it stays above RM 2,297, but the uptrend is all but stalled for the current period given the last few down days.  Given the predominate downtrend over the last few years, the market probabilities lend towards the bearish side.

How to draw trend lines part 1

If someone were to ask me what should you know about technical analysis?  I would say if there was one thing and or one thing only, it would be know how to draw trend lines.

Trend lines are dynamic supports and resistances that change everyday.  A trend is set in motion by a big buyer or seller.  Thus, trend traders must know which direction the big buyer or seller is going.    Depending on the performance of the market against the trend line, the big buyer or seller will likely stop.

If you want to know how to draw trend lines CORRECTLY, because 90% of market technicians get it wrong, read the following.

Rules for Trend Lines

Rule 1:  trend lines start from either the top of a consolidation or the retest of the consolidation.

Rule 2:  trend lines start from the point of a break in a trend line that hasn't been retested.

Lets start with the basic method to draw a trend line from a consolidation:

How to draw a Trend line from consolidation

1.  Pick an area that is ALREADY in a rally.  We are not so concerned with the base of the consolidation, but just the top.  (for a bear market, we are concerned with the base, and not the top of the consolidation)

2.  Pick out a consolidation in the rally.  Then draw the start of a trend line from the top of the consolidation where the breakout occurred.  Connect each trend line to a significant support.  (there is no hard fast rule, just use your judgement to ascertain what is a good support)

3.  If the market drops below your breakout point, then the trend for that point is over.  It is now a new consolidation box.

4.  Keep your trendlines that are broken because they can act as support or resistance later.

Here is an example:

There are two consolidation boxes with the top consolidation box having no retest,  the bottom one has one retest.  Both have trend lines starting from the top of the consolidation box.  The only difference between the two is the bottom one starts the trend at a later time.  

The blue lines are the point where the trend is over and at that point area above the breakout becomes a huge consolidation area. 

FKLI and FCPO technical Update

The outlook for the FKLI has been erratic with sentiment just flipping from one direction to another.  It's a symptom of a hot and cold market with  a lot of uncertainty.  Trend reversals can be seen by the the trend lines flipping from bull to bear and bear to bull quite violently.  Now of course, the FKLI looks to be in this lower 1700s territory for the next few months.

FCPO is gaining ground over the last few weeks.   The sentiment is bullish with the directional trade indicator indicating more upside movement.  Most of the longs were shaken out a few weeks ago when the market traded crazily between RM 2,100 and RM2,200 a tonne.  Also we have had a v-spike test lower just two days ago which saw the market vault up yesterday.

Expect any spikes downward not to last very long as bullish sentiment is still with palm oil.

The ringgit outlook and just how bad can it get

Malaysia seems to have received a lot of accolades due to its resilient economy, having recovered  from the asian financial crisis without a bailout from the IMF.

I'm not so sure it's really well deserved, because when we look at the Ringgit, the currency isn't far away from all time lows versus the US dollar.  If you recall the peg rate, it was fixed at RM 3.8 to the US Dollar and we are now at RM 3.53 versus 1 USD.  Perhaps economists have not looked at Malaysia over a long enough time frame.  I'ts been roughly 10 years, surely the Ringgit is worth a lot more now than back in 1997, but according to the markets it's not.

The major problem I can see is confidence.  If most markets are doing well, inevitably international investors will invest in Malaysia, but it won't be a without reservations because at any time, Malaysia can re-instate capital controls.  

Ultimately, the capital controls of 1997 still haunt the country today.  Investment in Malaysia has never been quite the same since then.  In order to purge the stigma of capital controls, the government would need to be controlled by the opposition.

The current ruling coalition will always have investors anxious as they are the ones who instituted capital controls.  But even then, the saying goes "the genie is out of the bottle."  I think even the opposition will consider capital controls if they are desperate.

The Ringgit has two distinctive down trend lines.  It will need to get past these two trend lines with some authority.  It's likely that prices will dither around these levels for at least the next 6 months.  Note that the currency is 1 MYR will buy x amount of USD, hence the small values.

FCPO and FKLI technical update

Since the recent bottom near 1700 the market has rebounded quite strongly.  The rebound may have legs as an uptrend seems to be developing, The next major selling spot would be near 1850 by the looks of the charts.  It actually isn't that far away.  

FCPO has rebounded quite nicely and looks to continue its upward trajectory.  If you aren't sure why the market has rebounded, we can look to two things, the market has sold off extremely hard over the last two months, breaking a lot of technical areas and stops.  After all the selling, we are having a little rally.  The rally isn't just due to  short covering but fundamentals.



If you've never seen what a flooded palm oil palm oil plantation, you can look at this.

It's not exactly a little flood.  You need a boat to go harvest the palm oil fruit.  The rains are right now causing massive floods.  There is no way palm oil plantations can get a lot of the crop.

KLCI and FCPO technical update

The FKLI tested a failed down trend line by a big chunk.  So far it has rebounded quite meaningfully compared to the test, leading me to believe the market has found a temporary bottom.  Overnight markets are also helping.  Such is the life of an FKLI long trader.  It seems everyone is ready to sell overseas markets to the point they've sold too much.  When the US markets do better, the FKLI does better by a big chunk as well.

FCPO is trading in a holiday range.  I don't know what to make of it.  It's not exactly strong or weak, just muddling through.  The whole Russia issue doesn't seem to be going away.  FYI Russia buys a fair amount of palm oil, about 300 thousand tonnes a year.  I imagine palm oil is affected by the threat of capital controls to stem a severely weakened Ruble.

Air Asia Technical Analysis

Air Asia has received a lot of press lately as a company that would have a lot to gain as oil price trades in the 50s.  Personally, I think the stock has a lot going for itself.  The domestic low cost airline is a mature industry with clear and predictable volumes compared to the volatile demand Air Asia X is facing.  If they have an under capacity problem, it shouldn't be that severe and should easily be solved.  Finally, a weakening Ringgit does wonders for the tourist industry and should help contribute to Air Asia's bottom line.

But I do have a caveat.  The airline hardly pays a dividend.  At roughly 1.5% it's not a lot to go on.  So I wouldn't hold my breath on the company.  Airlines are notoriously bad on returns to shareholders.




Technically speaking, two uptrend lines have been violated pretty hard, so there probably will be a lot of resistance.  Maybe I'd prefer a buy lower at RM1.8 a share given the risk profile of this counter.   The price appears to be muddling around at the moment.

Long term FKLI chart and how trend lines work

I remember mentioning in a previous post about a long term trend line near 1700.  Here it is.  This trendline signifies a breakout from the FKLI previous decade high.  As you can see we have gone lower than the trend line. 

Trend lines are usually set by people who have clout in the market.  Sometimes these trades by big players don't pan out and thus the big player has to re-evaluate his position and is praying for the market to come back to his original trend line so he can cut his remaining position at a positive number.

Trend lines are more like guides than hard fast market rules.  Sometimes the market does dip below the trend line, but buyers push the market up to its trend line and beyond.  Hopefully it turns out this way but of course it all depends.  The lower it dips below the trend line, the more of a failure that trend line is.  I would be extremely concerned if the market dipped near 1600.  That point is a lot further than the big player who pushed the market higher would want.

Magnum Technical Analysis

Magnum stock is one I've always liked and personally purchase their products from time to time.  The stock pays consistent dividends.  The company plies its trade in the gaming industry and has reached a market size which enables it to compete with the big boy, Berjaya Sports Toto.  It's latest 4D jackpot is within the 20 million Ringgit prize pool which is a testament to its market strength.

Any time I get a chance to buy a stock like this on a discount, I'll take it any day.  There are only a few things which have always been recession resilient, alcohol, taxes, cigarettes, death industry, and gaming.  Of course most of these industries face the risk of government meddling, but assuming status quo, buy these industries on the cheap.

Gaming tends to also have a problem with over expansion world wide, but in the case of Malaysia I doubt it will ever experience that scenario, given the conservative religious majority.  Restrictions on new entrants and a resilient industry is a winner in my books.  The price of course is the major issue which leads me to some price analysis.

The stock is on an uptrend with a breakout in 2012.  It is now approaching that particular trend line sent at the start of 2012.  For me, a buy below 2.25 would be the best, but I would consider putting in a purchase at the trend line.

KLCI/FKLI and FCPO Technical Analysis

It's been a quiet weekend.  Not much news only that industrial production has expanded which is good, but the market has been bad regardless. 

The FKLI has stopped its downtrend with the rally a few days ago, buyers can take note of a breakout trend line at 1711, as well as a couple of failed trend lines to provide upside fuel.  At the moment the market is trading in line with regional markets which is somewhat good news in that the selling is getting exhausted for now.  Our market tends to follow regional cues when prices are in line with other markets.  Of course if other markets take a nosedive, we will likely follow.



FCPO has stopped its downtrend lower for a few days now.  But it's tough going for CPO at the moment as Friday saw some selling on a day which is usually quiet.  It may be a bad omen that sellers are willing to sell on a day people are supposed to be off.

IJM Corp Technical Analysis

IJM is one of those interesting conglomerates who has been outperforming the market as of late.  Wait a minute, a conglomerate that is outperforming the market?  I didn't know there was such a thing!  Jokes aside,  IJM has been doing quite stellar lately.  It could have fooled me as I thought it was a punter type of stock when I looked at it.

A closer look at the stock reveals two trend lines.  Although its history as a company has been volatile, the stock does seem to have found its footing as of late.  Perhaps its fortunes have been related to its property division which is doing quite well compared to others.  It's order book is strong as well for huge infrastructure projects.

I would have liked to see more consolidation in the stock, but sentiment has been incredibly bullish.  I'd fancy a buy lower near RM 4-5 a share.

KLCI and FCPO tech analysis with some failed trend lines

Lets take a look at FKLI.  If I was a betting man, I'd suggest the FKLI may be due for a short term rally or slow down in price.  We are approaching failed trend line at the bottom.

In FCPO I can't really discern much from the failed trend lines.  but despite the helter skelter trading sessions over the last few days we still are in a downtrend according to daily time frame.  RM 2,190 looks like top side resistance for now.