How To Make 7 Fantastic Cognac-Based Cocktails To Impress Just About Anyone >> >> Link

Friday, November 28, 2008

Futures Trading Open Interest / 综合指数 2008年 11月 27日 / Composite Index 27/11/2008

Futures Trading Open Interest By Zhuge Liang




What Open Interest Tells Us
A contract has both a buyer and a seller, so the two market players combine to make one contract. The open-interest position that is reported each day represents the increase or decrease in the number of contracts for that day, and it is shown as a positive or negative number. An increase in open interest along with an increase in price is said to confirm an upward trend. Similarly, an increase in open interest along with a decrease in price confirms a downward trend. An increase or decrease in prices while open interest remains flat or declining may indicate a possible trend reversal.




Rules of Open Interest
Now, there are certain rules to open interest that must be understood and remembered.

1. If prices are rising and open interest is increasing at a rate faster than its five-year seasonal average, this is a bullish sign. More participants are entering the market, involving additional buying, and any purchases are generally aggressive in nature.



2. If the open-interest numbers flatten following a rising trend in both price and open interest, take this as a warning sign of an impending top.




3. High open interest at market tops is a bearish signal if the price drop is sudden, since this will force many 'weak' longs to liquidate. Occasionally, such conditions set off a self-feeding, downward spiral.



4. An unusually high or record open interest in a bull market is a danger signal. When a rising trend of open interest begins to reverse, expect a bear trend to get underway.



5. A breakout from a trading range will be much stronger if open interest rises during the consolidation. This is because many traders will be caught on the wrong side of the market when the breakout finally takes place. When the price moves out of the trading range, these traders are forced to abandon their positions. It is possible to take this rule one step further and say the greater the rise in open interest during the consolidation, the greater the potential for the subsequent move.



6. Rising prices and a decline in open interest at a rate greater than the seasonal norm is bearish. This market condition develops because short covering and not fundamental demand is fueling the rising price trend. In these circumstances money is flowing out of the market. Consequently, when the short covering has run its course, prices will decline.



7. If prices are declining and the open interest rises more than the seasonal average, this indicates that new short positions are being opened. As long as this process continues it is a bearish factor, but once the shorts begin to cover it turns bullish.



8. A decline in both price and open interest indicates liquidation by discouraged traders with long positions.. As long as this trend continues, it is a bearish sign. Once open interest stabilizes at a low level, the liquidation is over and prices are then in a position to rally.




In a nutshell



FKLI > WHAT DIRECTIONS DOES IT LOOKS 2U NOW?



************************************************************************



综合指数 2008年 11月 27日

如图中箭头A所示,综合指数反弹上扬,惟综指精确的在布林中频带(Bollinger Middle Band)这动态阻力线遇到阻力,这表示布林中频带将继续的成为综指接下来的阻力线。无论如何,若综指能上扬突破布林中频带的话,那综指将有望摆脱进一步下调的困境。

如图所示,布林频带(Bollinger Band)收窄12%,这表示目前综指基本上还是处于横摆巩固的格局,这意味着综指正在酝酿着一个新的趋势,惟这趋势将在布林频带再度打开时才浮现出来。

如图中箭头B所示,成交量暴涨94.5%,使到成交量上扬至40天成交量移动平均线(VMA)的水平,无论如何,投资者不得不注意有大约20%的成交量是牵涉到一家公司的股票,所以我们还是谨慎的看待成交量达到了40天平均值的讯号。

无论如何,若成交量接下来能继续的维持在40天的话,那在综指转强时将表示综指的上扬趋势有望继续的维持动力。不过若成交量接下来跌破了40天平均值的话,那综指则会再度陷入调整巩固的格局里。
如图中C圈指示,随机指标(Stochastic)上扬突破了30%,这表示综指的短期走势出现了技术反弹。不过若综指要确认出现短期上扬趋势的话,那随机指标就得上扬突破70%的水平。

总的来说,综指开始出现了技术反弹的迹象,惟这技术反弹会否转为短期的上扬趋势就要看综指是否能在布林频带配合打开时上扬突破布林中频带这动态阻力线。


***********************************************************************************
Composite Index Daily Technical Analysis 27/11/2008
As indicated by A, the KLCI rebounded on Thursday, but precisely resisted by the Bollinger Middle Band, which is still the dynamic resistance for the KLCI. If the KLCI should break above the Bollinger Middle Band, the immediate outlook for the KLCI would improve.

As shown on the chart above, the Bollinger Bands Width contracted another 12%, suggesting a lower volatility of the KLCI continues, which implies a consolidation. Meanwhile, the contraction of the Bollinger Bands Width also suggests that the KLCI is preparing for new direction, and the new direction shall be revealed once the Bollinger Bands Width re-expands.

As indicated by B, total market volume increased 94.5%, with volume above the 40-day VMA level. However, readers have to take note that roughly 20% of the total market volume are related from a single company, and therefore, the signal of volume above the 40-day VMA level is less significant at the moment.

Nevertheless, if volume should remain above the 40-day VMA level, it could help lift the market sentiment thus a better chance for the KLCI to break away from its consolidation.

As circled at C, the Stochastic breaks above 30% level on Thursday, leaving the short term bearish region, and signaling a technical rebound. However, in order to signal a short term bullish signal, the Stochastic would have to break above 70% level.

In short, the rebound on Thursday is a positive sign, but still, we need to wait until the Bollinger Bands Width to expands with the KLCI above the Bollinger Middle Band to confirm any bullish signal.

HAPPY TRADING & GOODLUCK2ALL

********************************************************************


Update:

RESORTS @ 12.30pm 28 Nov 2008




KUB Andrew's Pitchfork TA

Thursday, November 27, 2008

Some Thoughts About Traders and Risk Managements

Some Thoughts About Traders and Risk Managements By Zhuge Liang

* What is a Trader? - If you ask a trader what is a good market, he will tell you that it's a market that has good volatility; a good market is one that moves. If you ask an investor what is a good market, he will tell you that it's a rising market. Lots of people try to succeed as traders with the mindset of investors. It doesn't work



* Risk Management - If you lose 10% of your trading account, you need to make 11.1% on the remaining capital to get back to even. If you lose 20% of your account, you need to make 25% on the remaining capital to return to breakeven. At a 30% loss, you have to make 37.5% to become whole; at 40% loss, you have to make 67% to return to even. Once you've lost half your trading capital, you need to double the remainder to replenish your account. Much of trading success is limiting losses and avoiding those fat tails of risk.

PLAN YOUR TRADE & TRADE YOUR PLAN

Cable / Composite Index 26/11/2008 / 综合指数 2008年 11月 26日

Cable By ZHUGE LIANG

A slang used among forex traders referring to the exchange rate between the U.S. dollar and the British pound sterling. Because it is the norm in forex for most major currencies to be quoted against the U.S. dollar on a regular basis, "cable" is a commonly used term.

"Cable" can also be used to refer simply to the British pound sterling

For example, you may hear someone dealing with the forex market saying, "The cable is up today," or, "The cable has been trending lower lately."

The origins of this term are attributed to the fact that in the 1800s, the dollar/pound sterling exchange rate was transmitted via transatlantic cable. Forex brokers are sometimes referred to as "cable dealers".


Composite Index Daily Technical Analysis 26/11/2008

On Wednesday, the Bollinger Bands Width of the KLCI contracted 2%, suggesting lower volatility, thus implying a consolidation for the KLCI which ended today 3.81 points lower. However, the KLCI is still below the Bollinger Middle Band, therefore, the immediate outlook is still cautiously bearish biased. Therefore, breaking above the Bollinger Middle Band is compulsory for the KLCI for any further progress.

Support for the KLCI is still at 800 mark while the 887 Fibonacci Retracement is still the resistance for the KLCI. According to the chart, the KLCI is still within the confine of it's downtrend channel, and therefore, the downtrend remains intact.

As indicated by B, total market declined another 22.2%, and the volume remains below the 40-day VMA level. This suggests that the overall market participation is relatively low as investors are still on the side lines. Nevertheless, the low volume is usually typical for the KLCI is still consolidating.

As circled at C, the Stochastic is still below 30% level, in which the short term bearish signal remains intact. In short, unless the Stochastic could break above 30% level successfully, the market movement for the short term is likely to be bearish biased. If the Stochastic should also break above 70% level, it would be a short term bullish signal for the KLCI.

综合指数 2008年 11月 26日

如图中箭头A所示,布林频带(Bollinger Band)收窄2%,所以综合指数继续的以窄幅波动,微跌了3.81点。无论如何,由于综指始终是处于布林中频带(Bollinger Middle Band)以下,所以综指继续有转弱的风险,除非综指回弹至布林中频带以上。

综指当前的支持水平继续的落在800点的胜图自动费氏线,阻力水平则为止在887点的胜图自动费氏线。我们也可以从图中看到综指近期继续一直都是处于一个下降趋势轨道(Descending Channel)内,所以综指一路都是缓缓下滑,直到综指能成功上扬突破此下降轨道。

如图中箭头B所示,成交量进一步滑落22.2%,所以成交量继续的低于40天成交量移动平均线(VMA),这显示投资者继续的在对市场后市不明朗的情形下继续的离场观望。通常在布林频带收窄时,成交量低于40天成交量移动平均线是一个典型的状况,这表示市场目前是处于一个调整巩固的格局。

如图中C圈指示,随机指标(Stochastic)目前还是处于30%以下,这表示综指的短期走势继续的属于弱势中。无论如何,若随机指标开始上扬突破30%时,那将是综指出现技术反弹的先兆,不过随机指标是必须上扬至70%的水平,综指的短期走势才能确认为形成上扬的格局。

Wednesday, November 26, 2008

Technical Versus Fundamental Forecasting / 综合指数 2008年 11月 25日 / Composite Index 25/11/2008

Technical Versus Fundamental Forecasting by Zhuge Liang


Just as in economics, fundamental analysis looks at economic forces of supply and demand that cause prices to “move higher, lower, or stay the same.” Technical analysis/charting focuses on the study of market action. People disagree about which of these two approaches is better. But remember, both approaches attempt to solve the same problem – the “direction prices are likely to move. They just approach the problem from different directions”.


“The fundamentalist studies the cause of market movement, while the technical analyst/chartist studies the effect. The technician, of course, believes that the effect is all that he or she wants or needs to know and that the reasons, or the causes, are unnecessary. The fundamentalist always has to know why.”

Pictures, and therefore charts, really do tell a thousand words. Quite simply, I would much rather process what the chart is telling me in the blink of an eye, than read those thousand words.


综合指数 2008年 11月 25日


亚太股市普遍上回弹,综合指数也不例外,上扬4.79点。如图中箭头A所示,综指当前的阻力水平是887点的胜图自动费氏线,支持水平则依然是800点的胜图自动费氏线,由于这也是综指跌破头肩顶颈线(Head & Shoulders’ Neckline)的下调目标,所以支持力量预料倍增。

如图所示,布林频带(Bollinger Band)并未打开反而收窄10%,所以综指避开了进一步下跌的困境,惟综指始终是处于布林中频带(Bollinger Middle Band)以下,所以综指还未能算是出现转强的讯号。通常综指是必须先上扬突破布林中频带,综指才能算是开始有出现转强的迹象。

如图中箭头B所示,成交量稍微减少1.3%,使到成交量仍然低于40天的成交量移动平均线(VMA)的水平。无论如何,成交量低于40天的平均值在布林频带收窄时是正常的,这是因为在综指横摆巩固或调整时,投资者在走势并不明朗时选择离场观望所致的。

如图中C圈指示,随机指标(Stochastic)在周一跌破10%而发出短期超卖,这使到综指出现了技术反弹。如周一提到一样,综指目前这只能算是一个纯技术反弹,直到随机指标能成功上扬突破30%为止。

总的来说,综指出现了技术反弹,在加上布林频带收窄而使到综指走势避免进一步的恶化。综指接下来的后市将继续的受到国际市场的影响,不过若综指能上扬突破布林中频带的话,那综指后市才有出现转强的讯号了。

Composite Index Daily Technical Analysis 25/11/2008

On Tuesday, the KLCI rebounded 4.79 points as overall Asian markets ended higher. As indicated by A, the resistance for the KLCI is still at 887 Fibonacci Retracement while support remains at 800 Fibonacci Retracement. Since the 800 level is the target of the Head and Shoulders after breaking its neck line, it would be an important support level for the KLCI.

As shown on the chart, the Bollinger Bands Width contracted 10%, suggesting the KLCI fluctuation is getting lower, thus a signal suggesting a consolidation. But still, the KLCI would have to break above the Bollinger Middle Band in order to regain its positive position.

As indicated by B, total market volume declined 1.3%, with volume remain below the 40-day VMA level. Since the KLCI is consolidating, the lower volume is generally considered normal. However, if the KLCI should attempt to break above the 887 resistance or the Bollinger Middle Band dynamic resistance, more volume is needed to confirm its breakout.

After breaking below 10% level, the Stochastic rebounded as the short term movement of the KLCI was over-sold. But still, the Stochastic has to break above the 30% level successfully in order to break away from the short term bearish region.

Generally, the contraction of the Bollinger Bands Width has temporary paused the KLCI from falling futher. Still, the performance of the KLCI is highly affected by the performance of other major markets across the world. We shall continue to monitor the Bollinger Middle Band, as it would be the initial signal of any positive sign for the KLCI.

HAPPY INVESTING

Tuesday, November 25, 2008

Is Now a Good Time to Invest in the Stock Market? / Composite Index 24/11/2008 / 综合指数 2008年 11月 24日

Is Now a Good Time to Invest in the Stock Market? By Zhuge Liang

According to mkt survey, less than 2 million Malaysian citizens own shares. That is less than 10% of our population @26 million++You may even own shares without realising: many pensions, insurance policies and KWSP which are invested in the stock market, to name a few.

Shares are popular with investors because of the high returns that they can potentially yield. Typical returns are higher than interest on regular savings accounts. That said, the nature of shares is that you also risk losing the money you have invested if the value of the shares falls.

Even those who know little about shares will have probably heard about the turmoil surrounding various global stock markets. As investors look to protect themselves from potential losses, many are ‘panic selling’ causing the stock markets’ overall value to decrease.

With that in mind – is now a good time to invest in the stock market? The answer to that is much the same as when the stock markets were thriving: maybe. Investing in shares is always a risk, but with the right preparation and guidance, you can minimise the risk of making a loss, and you can potentially make a good return.

The upside of the current situation in the current stock markets is that shares are cheap. You will get a lot more for your money now than you would have when the stock market was booming.

But that doesn’t mean you are necessarily buying lesser-quality shares in the long run. A number of people have made massive amounts of money by investing wisely in the stock market, buying up cheap shares with then rise hugely in value. The nature of the stock market means that if investors become confident again and start buying, and/or if the companies have an upturn in fortunes, share prices can rise.

On the other hand, if share prices to continue to fall, you will not see any returns on your shares until the value has risen. Much of the time, low share prices are an indicator that a company is struggling – and if a company goes bust, you will automatically lose any money you have invested in that company.

The best course of action is to seek independent advice from a stockbroker or other financial adviser, who will be able to tell you which shares are expected to do well, the levels of risk associated with each company, etc. There is always an element of risk when investing, especially in times like this – but with the right advice and sound judgement, shares could bring much higher returns than your average savings account.

Okay, if someone who buys now is called a fool; what about those who bought when KLCI was @1400? 1300? What shall we call them?

HAPPY INVESTING

Composite Index Daily Technical Analysis 24/11/2008

As indicated by A, the KLCI remains below the Bollinger Middle Band as the Bollinger Bands Width expanded 21% on Monday, therefore, the KLCI bearish movement continues, ended 1.3% lower. As long as the Bollinger Bands Width should continue to expands, more downside movement for the KLCI is expected. If the Bollinger Bands Width should contracts again, it would be a signal suggesting a consolidation for the KLCI. Support for the KLCI is still at 800 Fibonacci Retracement while the resistance is still at 887 Fibonacci Retracement.

As shown on the chart, the KLCI is still trending in the downtrend channel of T1 and T2 lines, and therefore, unless a valid break out above the T1 line, the outlook shall remains bearish biased.

As indicated by B, total market volume declined 34.8%, and volume is still below the 40-day VMA level, suggesting a rather quiet trading day.
As long as the volume should stay below the 40-day VMA level, chances for the KLCI to pick some strength would be low. But still, as KLCI is falling with rather lower volume, it implies that the selling pressure was not tremendous.

As circled at C, the Stochastic is still falling while breaking below 10% level, which entered a short term over-sold region. This suggests the current movement for the KLCI is indeed weak, but might have started to gone over-sold. Therefore, there might be a chance of a technical rebound in the near future. But still, as long as the Stochastic is below 30% level, the market movement for the short term is still bearish biased.

综合指数 2008年 11月 24日

如图中箭头A所示,由于布林频带(Bollinger Band)打开了21%,而综合指数始终处于布林中频带(Bollinger Middle Band)以下,所以综指进一步下滑1.3%。通常综指将继续的维持在这转弱的格局里,直到布林频带打开的幅度缓和下来或布林频带开始收窄为止。

如图所示,综指当前的支持水平依然是800点的胜图自动费氏线,阻力水平则维持在887点的23.6%胜图自动费氏线。另外综指目前也继续的处于由T1及T2组成下降轨道(Descending Channel)内,这表示综指继续有转弱的迹象,直到综指所以突破此下降轨道为止。

如图中箭头B所示,成交量锐减34.8%,使到成交量再度跌破了40天的成交量移动平均线(VMA)的水平,则表示投资者纷纷采取离场观望的态度,等待市场进一步的明朗化。无论如何,由于成交量偏低,这也表示综指的跌势不太严重。

如图中C圈指示,随机指标(Stochastic)跌破了10%的水平,这表示综指的短期走势有超卖的迹象,这暗示综指有出现短期技术反弹的可能。无论如何,这只是一个纯技术性的反弹,因为随机指标是必须成功的上扬突破30%,综指才有望确认出现短期的上扬趋势。

Monday, November 24, 2008

Somali Pirates in Discussions to Acquire Citigroup

Somali Pirates in Discussions to Acquire Citigroup By Zhuge Liang

November 24 (Bursa - Chat Blogspot) -- The Somali pirates, renegade Somalis known for hijacking ships for ransom in the Gulf of Aden, are negotiating a purchase of Citigroup.





The pirates would buy Citigroup with new debt and their existing cash stockpiles, earned most recently from hijacking numerous ships, including most recently a $200 million Saudi Arabian oil tanker. The Somali pirates are offering up to $0.10 per share for Citigroup, pirate spokesman Sugule Ali said earlier today. The negotiations have entered the final stage, Ali said.

"You may not like our price, but we are not in the business of paying for things. Be happy we are in the mood to offer the shareholders anything," said Ali.








The pirates will finance part of the purchase by selling new Pirate Ransom Backed Securities. The PRBS's are backed by the cash flows from future ransom payments from hijackings in the Gulf of Aden. Moody's and S&P have already issued their top investment grade ratings for the PRBS's.



Head pirate, Ubi Khalid Aduka, said: "We need a bank so that we have a place to keep all of our ransom money. Thankfully, the dislocations in the capital markets has allowed us to purchase Citigroup at an attractive valuation and to take advantage of TARP capital to grow the business even faster."

Aduka added, "We don't call ourselves pirates. We are coastguards and this will just allow us to guard our coasts better."

Events update


*CITI IN TALKS WITH SOMALI PIRATES FOR POSSIBLE CAPITAL INFUSION

*WILL REQUIRE ALL CITI EMPLOYEES TO WEAR PATCH OVER ONE EYE

*SOMALIAN PIRATES APPLY TO BECOME BANK TO ACCESS TARP

*PAULSON: TARP PIRATE EQUITY IS AN `INVESTMENT,' WILL PAY OFF

*KASHKARI SAYS `SOMALI PIRATES ARE 'FUNDAMENTALLY SOUND' '

*MOODY'S UPGRADE SOMALI PIRATES TO AAA

*HUD SAYS SOMALI DHOW FORECLOSURE PROGRAM HAD `VERY LOW' PARTICPATION

*FED OFFICIALS: AGGRESSIVE EASING WOULD CUT SOMALI PIRATE RISK

*FED AGREED NOV 23 TO TAKE `WHATEVER STEPS' NEEDED FOR SOMALI PIRATES CITI ACCQUISITION

Having a plan / 综合指数 2008年 11月 21日 / Composite Index 21/11/2008

HAVING A PLAN BY ZHUGE LIANG

What is your plan for tomorrow, next week, next month...? Can you make money in the worst case scenario? Will you be able to make money if the KLCI goes up 100 points, drops 100 points or remain the same. If you fail to plan, you are planning to fail. Don't be irresponsible with your money..

PLAN YOUR TRADE & TRADE YOUR PLAN

In football, you don't just go out and hope your opponents to beat themselves. You prepare dilligently for every game, for every season and always have a strategy. If A happens I would do X, if B happens I would do Y and if C happens I would do Z >>>>>> any which way but lose.

Trading is not very different. Market are made from people. Every day you go out and compete against guys and gals, who have more experience, better skills, bigger capital and access to more sophisticated technology. What are the odds you could beat them without having a strategy, without having a plan to follow?


You should not care where the market is going. All you should care about is what you are going to do if the market goes there.


WITHOUT ANY TRADING STRATEGIES, YOU ARE AS GOOD AS A MOVING TARGET IN A SHOOTING GALLERY.



HAPPY TRADING & GOODLUCK2ALL



综合指数 2008年 11月 21日

如图中箭头A所示,综合指数早盘一度受美国道琼斯创下68个月新低的影响下而滑落,无论如何,综指随后反弹,微扬1.56点。综指当前的阻力水平继续的维持在887点,支持水平则是800点的胜图自动费氏线。
如图所示,综指始终处于布林中频带(Bollinger Middle Band)以下,这意味综指还是有走软的迹象,所幸的是布林频带(Bollinger Band)只打开9%,并未真正明显的打开。换句话说,若布林频带接下来明显的打开,而综指还是未能上扬至布林中频带以上的话,那综指将确认形成一个跌势。
如图中箭头B所示,成交量再度上扬至40天的成交量移动平均线(VMA)水平以上,这表示投资者乘亚太区域股市股市纷纷回弹时进场交易。通常若成交量能维持在40天平均值以上的话,那这对综指出现在反弹或转强时是有利的。
如图中C圈指示,随机指标(Stochastic)目前还是低于30%,这显示综指的短期走势仍然是属于跌势中。无论如何,当综指出现技术回弹时,随机指标将是第一个发出讯号的,那就是当随机指标上扬突破平30%,这就是综指短期走势转强的迹象,所以随机指标将继续的成为我们关注的指标。
总的来说,综指目前仍然是处于T1及T2的跌势中,不过若随机指标接下来能上扬突破30%,而综指也能上扬至布林中频带以上的话,那综指的后市将有望看高一线。

Composite Index Daily Technical Analysis 21/11/2008
As indicated by A, the KLCI opened lower again in the early session as affected by the over night losses in the US markets. However, the KLCI managed to regain its early losses and closed 1.56 points higher. Resistance for the KLCI remains at the 887 WinChart Automatic Fibonacci Retracement while the support is still at 800 points.

As shown on the chart, the KLCI remains below the Bollinger Middle Band, and therefore, the immediate outlook for the KLCI is still on the negative side. On Friday, the Bollinger Bands Width only expanded 9%, which is still not significant, but if the Bollinger Bands Width should continue to expands with the KLCI below the Bollinger Middle Band, more downside risk for the KLCI is expected.

As indicated by B, total market volume increased and returned to above the 40-day VMA level. This suggests some increase of some buying interests as the Asian markets rebound in the afternoon. Generally, if the KLCI should continue to rebound with volume above the 40-day VMA level, it would be a positive sign for the KLCI.

As circled at C, the Stochastic remains below 30% level, suggesting the short term movement for the KLCI is still bearish biased. However, if the Stochastic should break above 30% level, it would be a signal suggesting a beginning of a technical rebound.

In short, the KLCI remains in the T1 and T2 downtrend channel, but if the Stochastic should break above 30% level, with the KLCI returning to above the Bollinger Middle Band, chances for the KLCI in breaking above the downtrend channel is generally higher.


Saturday, November 22, 2008

Some Historical Bear Market Perspective

Some Historical Bear Market Perspective By Zhuge Liang

Dow Jones October 1929

Over a 23 day period, the Dow lost 49% of its value, but that was just the start of the bear market during which the Dow would eventually lose 89% of its value (386.10 to 40.56). How many people do you think called the October 1929 low of 195 "the bottom" only to get decimated by the continued weakness over the next 3 years?

Today we remain in a bear market and ALL rallies should be treated as guilty until proven innocent, meaning you need to maintain a super strong defense. Feel bullish at your own peril..

Do not be too quick to call last Thursday's low "the bottom", there are serious flaws in the US economic system and a lot of closets with ugly contents are still being opened.

Dow Jones 1929-1933
Notice how insignificant October 1929 becomes when viewed on a larger timeframe



Dow Jones October 1987


S&P 500 (SPY) 2000-2003


Friday, November 21, 2008

Identifying Capitulation: How to Tell We've Hit Bottom / 综合指数 2008年 11月 20日 / Composite Index 20/11/2008

Identifying Capitulation: How to Tell We've Hit Bottom by Zhuge Liang

Are we there yet? This is the key question and it relates to finding the bottom of the market.

In many ways it's a pointless question. Even if we could identify the turning point in the market with a high level of certainty, there are very few people with the courage to enter at these low points.

The more important thing to look for are the features that will help to identify, first, the end of the market fall and second, the development of a market recovery. These two events may be separated by a few weeks, few months, or by many months.

There are two important features that identify climax selling. The first is the rapid acceleration in the speed of the market fall. Like a Kamikaze dive-bomber, the market first rolls over slowly and then plunges in a vertical dive. This is fear at work.

The second feature is a massive increase in volume. This is panic.

Ordinary people are desperate to get out of the market. Generally the funds and institutions got out of the long-side of the market many months ago. The selling in January and February was dominated by institutions and funds. The current panic selling is thousands of small orders from retail investors desperate to get out of the market.

During the bear market collapse, volumes decline. Fewer people want to buy stock so volatility increases because small trades have a disproportionate impact in a shallow market.

This selling climax shakes out all the weak hands in the market. It kills the margin speculators. It wipes out those who have finally lost patience. It removes the speculative money in the market because people think the risk is too great. This is also called capitulation.

Everybody gives up – and it influences the thinking of a generation. My parents, who lived through the depression, could never entirely shake the idea that the market was a dangerous place.

The activity in the Dow Jones Industrial Average and other global markets shows an acceleration of downwards momentum. The massive increase in volume has not yet developed and this suggests the market bottom is not yet established. There is a high probability that markets will see a selling climax in the next 3 to 5 days.

But here is the important difference. The recovery rally after climax selling is temporary. It is part of a longer-term consolidation pattern that may last months, or even a year, and make more new lows before a new sustainable uptrend can develop. The potential shape of the recovery will be shown in the charts. The bull market rebound rally follows a temporary selloff. A bear market rebound rally follows climax selling. It is a relief rally, but it is not part of a sustainable trend change.

After a bear market, volumes remain low. When you lose trillions of dollars it takes a long time for spare change to start rattling around the economy again. Spare change drives the bull market because money is available for speculations.

In the immediate bear market recovery period the market is dominated by professionals. Finance industry professionals are already being laid off. The least effective are the first to be let go. Only the best will survive the employment washout in the industry and these will be the ones defining the behavior of the consolidation and recovery market. When you trade in these market conditions you are most likely trading against these professional survivors.

Education, not money, plus an abundance of patience are the most important premiums after the bear market.


综合指数 2008年 11月 20日

如图中箭头A所示,综合指数在受到美国道琼斯指数暴跌的拖累下出现跳空开低,形成了一个缺口(Gap),综指最终下滑了12.33点或1.4%。由于综指未能突破887点的胜图自动费氏线的水平,所以887点依然是综指接下来的阻力水平,支持水平则依然是800点的胜图自动费氏线(Fibonacci Retracement)。

如图所示,虽然布林频带(Bollinger Bands)没有继续的打开,但是由于综指正处于布林中频带之下,所以布林中频带(Bollinger MidBand)继续是综指的动态阻力水平(Dynamic Resistance)。换句话说,若布林频带接下来开始打开,而综指还是处于布林中频带之下的话,那综指综指将有确认形成跌势的讯号了。

如图中箭头B所示,成交量虽然稍微增加1.6%,惟成交量还是低于40天的成交量移动平均线(VMA)以下,这是因为综指目前还是算是调整巩固的格局,所以布林频带继续也继续的处于收窄的情形。无论如何,若综指接下来出现大幅度的下跌,而成交量却达到40天平均值以上,这表示综指的跌势严重。

如图中C圈指示,随机指标(Stochastic)继续的处于30%水平以下,所以综指短期的走势继续的属于疲弱中。通常若随机指标一日还是未能突破30%水平的话,那么综指短期的走势将继续有下跌的风险。


Composite Index Daily Technical Analysis 20/11/2008

As indicated by A, the KLCI opened down with a gap, as the Dow Jones Industrial Average performed poorly, the KLCI ended 12.33 points or 1.4% lower. Since the KLCI failed to break above the 887 Fibonacci Retracement, the 887 level is still the resistance for the KLCI while the support is still at 800 points.

As shown on the chart, the Bollinger Bands Width did not really expand, but since the KLCI is still below the Bollinger Middle Band, the immediate outlook for the FBM2nd Board Index is still bearish biased. If the Bollinger Bands Width should expands with the KLCI below the Bollinger Middle Band, more downside risk for the KLCI is expected. The Bollinger Middle Band is still the dynamic resistance for the KLCI.

As indicated by B, total market volume increased 1.6%, but still below the 40-day VMA level. Again, it is usually normal to see a relatively lower volume during the KLCI consolidation. But if the KLCI should start falling with higher volume, it would suggests an increased of selling pressure, which would further dampen the market sentiment.

As circled at C, the Stochastic is still below 30% level, which is the short term bearish region. Therefore, as long as the Stochastic is still below 30% level, the market movement for the short term is still bearish biased.



Thursday, November 20, 2008

About Winning, About Losing / 综合指数 2008年 11月 19日 / Composite Index 19/11/2008

About Winning, About Losing By Zhuge Liang

People lose money at the stock market for very simple reasons:

1. They don't have a method at all. They rely on other people opinions.

2. People don't have a winning method. The method they are trading has a negative expectancy. Being disciplined about stop losses and position sizing won't help, if you are trading a losing method. Expectancy changes with volatility. When your method stops providing satisfying results, you either find another that is working in the current market conditions or stay on the side until things change.

3. Those who have a winning strategy often don't use it. They get emotional and forget about their strategy.

“Good trading is 10% technology and 90% psychology.. People defeat themselves. It doesn’t matter how often you repeat basic trading principles when almost no one will practice them”

Everybody knows the four cardinal rules of trading, but so few people follow them — 1) Trade with the trend. 2) Cut losses short. 3) Let profits run. 4) Manage risk.

There is a big difference between knowing something and applying it. Most people don't use what they know.


综合指数 2008年 11月 19日

如图中箭头A所示,综合指数再度的失去方向,继续的呈横摆巩固,惟综指最终也稍微下跌0.6%,这使到887点的23.6%胜图自动费氏线继续的成为综指当前的阻力水平,综指接下来的支持水平则是800点的胜图自动费氏线。
如图所示,布林中频带(Bollinger Middle Band)其实是综指当前的动态阻力线,所以综指若一日未能上扬突破布林中频带的话,那综指始终还是不能出现转强上扬的走势。另一方面,布林中频带有开始转向下迹象,这表示综指也有暗示转弱的迹象。
无论如何,这一切都要等到布林频带(Bollinger Band)再度明显的打开时,才能确认综指真正的下一个趋势。换句话说,若综指未能短期内上扬突破布林中频带的话,当布林频带开始打开时,综指将有下跌的风险。
如图中箭头B所示,马股成交量稍微增加4.7%,不过成交量还是未能达到40天成交量移动平均线(VMA)的水平,这表示整体市场还是处于一个淡静的格局,这是因为综指出现横摆巩固,投资者纷纷等待更明朗的讯号,才决定入场交易。
如图中C圈所示,随机指标(Stochastic)依然是处于30%以下,这表示综指的短期走势还是处于一个弱势中。通常随机指标将是综指转强的第一个讯号,就是当随机指标上扬突破30%的时候。无论如何,若随机指标继续的维持在30%以下的话,那综指的短期后市依然看第一线



Composite Index Daily Technical Analysis 19/11/2008

As indicated by A, the KLCI continues its sideways movement while the direction is still unclear, closing 0.6% lower to 877.65 points. Therefore, the 887 Fibonacci Retracement is still the resistance for the KLCI while the 800 mark is still the support level for the KLCI.

As shown on the chart, the Bollinger middle band is still the dynamic resistance for the KLCI, and as long as the KLCI is still below the Bollinger Middle Band, the immediate outlook is still bearish biased. Meanwhile, the Bollinger Bands Width is likely to expand, and therefore, the is certainly a risk for the KLCI.

Nevertheless, we still need to wait until the Bollinger Bands Width expands in order to determine the KLCI movement.. If the KLCI should remain below the Bollinger Middle Band as the Bollinger Bands Width expands, it would be a bearish signal for the KLCI.

As indicated by B, total market volume increased 4.7%, but still remain below the 40-day VMA level, suggesting that the overall market is still relatively quiet. But still, it is rather normal to have relatively lower volume during the sideways consolidation.

As circled at C, the Stochastic is still below 30% level, which is the short term bearish signal. As long as the Stochastic is still below 30% level, the market movement for the short term is still bearish biased.

HAPPY TRADING & GOODLUCK2ALL

Wednesday, November 19, 2008

A Little Investment Secret ... It's All About YOU / 综合指数 2008年 11月 18日 / Composite Index 18/11/2008

A Little Investment Secret ... It's All About YOU ......By Zhuge Liang

The rollercoaster ride continues. We shriek as the market pitches and heels – but the ride’s not over yet. This rollercoaster ride isn't fun anymore. While my kids might like the thrill of fear, I'm no fan of it. And I’m guessing the average investor’s not liking it either.
Well, here's a little secret that’s built investment empires through the years. Employ this piece of advice and you’ll find yourself in control rather than wandering aimlessly, listening to so-called experts telling you what to do.

YOU decide what to do.

Make investment decisions based on what's important to you. What do you believe? You decide. After all, it's only your financial future here at stake, right? And in the end, no one else will care more for your finances then YOU.

That's the secret. You decide.

Decide what’s important to you and then listen to yourself. And be skeptical. Understand that every voice you hear has a framework, which, may or may not suit your needs. Take for example, Warren Buffett.

Warren Buffett Watch

Oh, to be Warren Buffett. He has made and lost billions. One day's market move for Berkshire Hathaway often totals in the billions of dollars. When he says to buy, do you think he is concerned about what will happen next week or next year? Nope. He's looking at fundamental value, and he can afford to take a hit for a long time frame. He can afford to wait and simply stroll down to Dairy Queen for an ice cream.

What about you? How long can you wait? Warren Buffet says to be greedy when other people panic. Well that sounds great except that he lost $10 billion last month but still has $30 billion to fall back on. So let’s get to the real question -- Do you agree with the philosophy that says you can be patient and wait for value to emerge? Are you able to have a Walls Cornetto drumstick and let it pass?

Decide and follow your best judgment. Don't avoid making decisions -- that can be a disaster. Like a deer caught frozen in the headlights of an oncoming car, investing from this perspective makes little sense and will likely get you the same result -- trust me it doesn't work out well for the deer.

综合指数 2008年 11月 18日

如图中箭头A所示,虽然国际市场继续受到经济衰退的阴影下滑落,惟综合指数还是未跟随外围影响而大跌,继续的维持在横摆巩固的格局中。综指一度上探887点的胜图自动费氏线,不过综指还是未能成功突破此阻力,这表示887点继续的成为综指接下来的阻力水平,综指当前的支持水平则是800点的胜图自动费氏线。

如图所示,布林频带(Bollinger Band)继续的属于窄小的格局,这表示综指正在等待布林频带再度的打开,那综指将会摆脱横摆的格局而出现一个新的趋势。这新的趋势将由综指处于布林中频带(Bollinger Middle Band)的相应位置维持来决定。由于综指目前已经是处于布林中频带以下了,所以若综指在布林频带开始打开时还未上扬到布林中频带以上的话,那综指将有形成跌势的风险了。

如图中箭头B所示,马股成交量减少10.9%,这表示市场整体上是属于交投淡静的格局。无论如何,这是属于布林频带收窄时的典型状况,不过若在综指再度上扬时,成交量是必须上扬至40天平均值以上;当综指下跌时,若成交量高于40天平均值则表示跌势加剧。

如图中C圈所示,随机指标(Stochastic)目前继续的处于30%以下,这表示综指当前的短期走势依然属于偏弱中。换句话说,我们是必须等到随机指标开始上扬突破30%的水平,那综指的短期走势才能有转强上扬的机会。

Composite Index Daily Technical Analysis 18/11/2008

As indicated by A, the KLCI is again pulled down by negative economic news around the globe while continues its narrow consolidation. The KLCI tested the 887 resistance but failed to break above this resistance. Therefore, the 887 resistance remains intact while the support is still at 800 points.

As shown on the chart above, the Bollinger Bands Width is still narrowing, suggesting the consolidation of the KLCI continues. But still, since the Bollinger Bands Width is now very narrow, it implies that the consolidation is near its end. With the KLCI staying below the Bollinger Middle Band, the immediate outlook for the KLCI is on the bearish biased, if the Bollinger Bands Width should expands.

As indicated by B, total market volume declined another 10.9% on Tuesday, with volume below the 40-day VMA level. This shows that the market participation is relatively low as investor are still on the sidelines. Still, from the technical analysis stand point, it is considered normal to see lower volume during a sideways consolidation. If the KLCI should attempt to break above the resistance line, more volume is need to confirm the breakout.

However, if the KLCI should start falling with high volume it would means an increase of selling pressure, thus further dampen the market sentiment.

As circled at C, the Stochastic is still below 30% level, which is the short term bearish region. Therefore, the market movement for the short term is still bearish biased, unless the Stochastic could break above 30% level successfully.

HAPPY TRADING & GOODLUCK2ALL

Tuesday, November 18, 2008

KLCI : Fragile sentiments - excesses are unsustainable / 综合指数 2008年 11月 17日 / Composite Index 17/11/2008




KLCI : Fragile sentiments - excesses are unsustainable By Zhuge Liang

Let's recap the KLCI in late August ...........

The dominant feature is the bearish long term head and shoulder pattern. It is important to note that the downside targets near 760 have not yet been achieved. This market is particularly compatible with head and shoulder patterns. They occur often and they display a high level of reliability in this market.

This is not a freefall market. There is a long term support consolidation trading band between 860 and 920. A market collapse has a high probability of pausing in this consolidation area. There is some evidence of a consolidation rebound developing in this region. However this is a temporary rebound. All regional markets with head and shoulder patterns have achieved or exceeded these pattern targets

The neckline, or base of the head and shoulder pattern uses the extreme low in August 2007 and the low in March 2008. A straight forward application of the pattern target measurement sets a downside target near 760. This target is not an historical support level.. Support is located near 800 so this is the higher probability downside target. This has been achieved, and the rebound has developed from this area. The 760 target is an extreme technical target.

There remains the potential for a sharp temporary fall towards the head and shoulder target near 760. The sudden temporary falls in March and August 2007 and again in March 2008 show how it is possible for this behaviour to develop. This is consistent with the character of the Malaysian market.

Bear markets have three stages — sharp downreflexive rebounda drawn-out fundamental downtrend.



综合指数 2008年 11月 17日

综合指数周一以开低收高的姿态交易,综指最终稍微上扬2.41点,惟还是未能突破887点的胜图自动费氏线,所以887点继续的成为综指当前的阻力水平,而综指的支持水平则是800点的胜图自动费氏线。

如图所示,布林频带(Bollinger Band)收窄得相当的小,这表示综指酝酿的新走势有开始接近出现的迹象。当然由于综指目前已经是处于布林中频带(Bollinger Middle Band)以下了,所以若综指短期内还未能上扬突破布林中频带的话,那当布林频带开始明显打开时,综指是有下跌的风险了。

如图中箭头B所示,马股成交量比上周五减少20.5%,使到成交量再度跌破了40天成交量移动平均线(VMA),这表示整体市场开始有冷淡下来的格局,不过这在综指横摆巩固时是正常的。

如图中C圈所示,随机指标(Stochastic)继续的处于30%以下,这表示综指的短期走仍然是属于趋软中,直到随机指标上扬突破30%为止。换句话说,若随机指标上扬突破30%的话,那综指的短期走势就有望出现转强的讯号。

总的来说,综指继续的处于横摆巩固中,所以接下来我们必须密切的留意布林频带的变化,因为这横摆的僵局将在布林频带再度打开时结束。

Composite Index Daily Technical Analysis 17/11/08

On Monday, the KLCI opened gap down, but managed to close higher, up 2.41 points at 884.06 points. Still, the KLCI failed to break above the 887 Fibonacci Retracement resistance. Support for the KLCI remains at 800 mark.

As shown on the chart, the Bollinger Bands Width is still contracting with a rather narrow Bollinger Bands Width, this implies that the consolidation is near its end, and the KLCI is about to break out from its consolidation. Again, if the KLCI should remain below the Bollinger Middle Band as the Bollinger Bands Width expands, it would be a bearish signal for the KLCI.

As indicated by B, total market volume declined another 20.5%, and as a result, the volume is now below the 40-day VMA level. This shows that the market participation is relatively low, as investors are mostly on the sidelines. However, it is rather normal to have lower volume during a consolidation of the KLCI.

As circled at C, the Stochastic remains below 30% level, which is the short term bearish region. As long as the Stochastic is still below 30% level, the short term bearish movement is expected to continue, until a valid break out above the 30% level.

In short, the market direction of the KLCI is still unclear, and we will still have to wait until the Bollinger Bands Width expands to determine the direction of the next movement.

HAPPY TRADING & GOODLUCK2ALL

Monday, November 17, 2008

CHANGING WITH THE MARKET


CHANGING WITH THE MARKET By Zhuge Liang

When the market changes, we must change our tactics, strategies, and analysis techniques to accommodate the new market conditions. This is not a new idea, but it is one that is not very widely recognized, particularly when applied to the long-term. In recent writings I have emphasized that we are in a bear market, and that we must play by bear market rules. Overbought conditions will usually signal a price tops, and oversold conditions can often see prices slip lower to even more oversold conditions. When making these comments, ZL's focus has been on the cyclical bull and bear markets.

Unfortunately, it takes time to unlearn the lessons of the heady bullrun of 186, 1996 & 2006/7, and we can still observe people using bogus valuation models that only work in bull markets. We still see people trying to pick bottoms, and we still see people who think that a stock is under valued because it is down 70%. By the time this current secular market phase is over, people will have learned all new rules, that will not apply to the next 20 years.

Whether or not ZL have correctly identified the current secular market phase as a consolidation remains to be seen, but I am certain that we are no longer operating on the rules of the last secular bull market.

SEE$$$TAKE$$$

Saturday, November 15, 2008

5056 ENGTEX / 综合指数 2008年 11月 14日 / Composite Index 14/11/2008




5056 ENGTEX By Zhuge Liang


Bollinger Mid Band & Rising Volume Support
:
#1 Bollinger Middle Band : ENGTEX prices breakout Bollinger Mid Band in late Oct 08 and stayed consistently above, Therefore the Mid BB act as the immediate price support. Next support seen @83 sen.

#2 Rising Volume : ENGTEX prices consistent with the rising monthly average. The present traded volume is only about 50% of the price drops further 2 months back. Any additional volume will bring prices to immediated target 93 sen. Next target seen RM1.00

MACD & Stochastics : Faltering somewhat due to weak mkt sentuments but neverheless still in bullish mode.

What went most unnoticed about ENGTEX prices are the obvious support off low prices.

How many RED candles do you see from the ENGTEX charts for the past 10 sessions? NONE ..... therefore supporting ZL's observations in the stock low prices support. Whenever ENGTEX open below previous closing price, buying support prevent any severe price discrepancies in this stock. Since Red candles denote bearishness, what about ENGTEX's greenies? Naturally it is a healthy issue.

Support...............0.83 / 75 / 70
Resistance.......... 0.95 / 1.00 / 1.20

Cutloss................ 0.68 sen

Target................. 0.93 / 98 / 1.18

Recommendations : Buy on dip towards target 1.00 >>> 1.20


综合指数 2008年 11月 14日 By Zhuge Liang


如图中箭头A所示,综合指数一度上探887点的胜图自动费氏线的阻力,惟综指最终还是未能突破此阻力水平,这表示887点继续的成为综指接下来的阻力线。综指当前的支持水平则落在800点的胜图自动费氏线,而T2这下降趋势线也有望成为综指的动态支持线。

如图所示,布林频带(Bollinger Band)收窄23%,这表示综指目前依然是处于一个横摆巩固的格局里。一般上,综指将继续的处于这巩固的走势,直到布林频带重新开始打开为止。

如图中箭头B所示,马股成交量增加18.6%,使到成交量再度超越40天成交量移动平均线(VMA),这表示并不是所有的投资者都作壁上观,市场还是有一定的交投量。

如图中C圈所示,随机指标(Stochastic)跌破了30%的水平,这意味综指的短期走势还是属于弱势中。无论如何,由于布林频带目前是属于收窄中,这意味这综指并未确认形成一个短期跌势,因为当布林频带收窄时,随机指标的讯号只是反映短期走势的情绪,综指是要等待布林频带重新打开,我们才能确定综指新趋势的方向。

总的来说,目前综指将继续的维持在横摆巩固,酝酿着一个新的趋势,通常综指横摆越久,综指在布林频带打开是的爆发力就越大。


Composite Index Daily Technical Analysis 14/11/2008 by Zhuge Liang

As indicated by A, the KLCI tested the 887 WinChart Automatic Fibonacci Retracement on Friday, but failed to break above the 887 level, and therefore, the 887 resistance remains intact. Support for the KLCI is at 800 Fibonacci Retracement, while the T2 line is the dynamic support for the KLCI.

As shown on the chart, the Bollinger Bands Width is still contracting (-23%), suggesting the KLCI is still in its consolidation stage. Generally, as the Bollinger Bands Width contracts, the market direction is unclear. In other words, the KLCI is gearing for a new direction, and the new direction shall be revealed once the Bollinger Bands Width re-expands.

As indicated by B, total market volume increased 18.6%, with the volume returned to above 40-day VMA level. This shows that the market participation is still at a healthy level.

As circled at C, the Stochastic breaks below 30% level by margin, suggesting the KLCI is turning weaker. But since the Bollinger Bands Width is still contracting, the signals from the secondary indicator are usually less significant.

In short, the KLCI is still at consolidation, while preparing for a new move. Generally, the longer the consolidation, the expansion of the Bollinger Bands Width signal would be clearer, thus producing a more precise signal for the new direction.

HAPPY TRADING & GOODLUCK2ALL

Profit / Loss Calculator

Enter the details and click on the compute button to find out if you are making a profit or a loss.
 Contract Details
  No of Shares Price (RM) Brokerage Rate Desired Profit
Buy
Sell    
 

Contract Type
Share Bought From:
Clearing Fee For:
 Results
 Details Buy  Sell  
 Proceeds 0.00  0.00  
 Brokerage Fee 0.00  0.00  
 Clearing Fee 0.00  0.00  
 Stamp Duty 0.00  0.00  
 Net Amount 0.00  0.00  
 Summary
 Breakeven Price 0.00  
 Buy Net Amount 0.00  
 Sell Net Amount 0.00  
 Profit/Loss 0.00  

Price Range Index
 
Stepping Method:
 Auto Computation (Profit/Loss)
Sell Price  Net Amount  Profit/Loss  
0.00  0.00  0.00  
0.00  0.00  0.00  
0.00  0.00  0.00  
0.00  0.00  0.00  
0.00  0.00  0.00  
0.00  0.00  0.00  
0.00  0.00  0.00  
0.00  0.00  0.00  
0.00  0.00  0.00  
0.00  0.00  0.00