Technical | Fundamental Analysis Discussion Stocks Listed In Bursa

Tuesday, December 28, 2010

Taking control in the management of your money in today’s world is perhaps one of the most important financial imperatives facing us all. This checklist should serve you well, and possibly keep you from becoming a victim of the market and false media information.

In my twenty-one years of trading experience I have found these rules to be an invaluable way of keeping me focused on the trade. Deel’s 15 Rules of Investology

Set objectives before you ever buy. Define all outcomes—not only what
you will do when it goes right, but what you will do if you are wrong.
Determine the amount of capital you are willing to lose and conversely,
define when you will take profits. Letting the market take away your
profits by holding on to a losing trade is not a good strategy. Write out
a trading plan on paper and follow it. Do not become a causality of
emotionally involved buy or selling. Trade with a plan.

To select trading vehicles you must have a predefined method. Select a
method based on price momentum and trend. Don’t guess what the
future is going to be, trade the current trend direction. Your method must
consider your individual time frame and risk tolerance. Always address
liquidity, sector rotation, and technical factors when screening stocks.

Never buy a stock without looking at a chart of the stock first. Look at
the one-year trading range. Ascertain where you currently are in the
trend and what that trend is. Also determine if the chart reflects a stock
split. Never trade against the trend. Buying and selling decisions are
technical in nature. Fundamentals will never tell when to buy or sell a
stock. Always look at a chart for entry and exit timing decisions.

Your probabilities of success are far greater if you stay with a definable
market trend. Statistically, these trends provide better profit potential
with a lower amount of risk. A good rule of thumb is to watch a 50-day
exponential moving average of the close. This moving average represents
the intermediate trend of a stock. A 12-day exponential moving average
represents short-term trend. The use of these two moving averages
should yield excellent results in keeping you in the trend. If you perceive
the trend beginning to change, act accordingly by taking profits or plac-
ing stops to protect your capital and locking in a profit.

Determine the probable dollar losses of your trading plan or investment
style based on your trading record for the current year. Then devise a
way to generate income through passive sources.
Cutting a loss quickly is the best money management you can have.
Too many times traders fall in love with stock, holding on as the stock
begins to decline. Never use a hedging strategy, such as options, to
justify holding on to a losing position.
The use of money market, bond, and stock dividend income to off-
set losses in your trading portfolio is an excellent technique.
Covered call options may be an appropriate way to generate income
for your portfolio to offset losses. Be careful here because you can write
covered calls into oblivion. If the stock is going against you, sell it.
If you are going to hold a trade overnight, never risk more than 3%
of your available capital. If you are going to day trade, an excellent rule
of thumb is to only risk 1% of your capital in any one trade.

Many times you won’t feel quite right about a buy or sell decision.
If this feeling persists after you have done all your research and you have
followed the rules to this point, don’t take the trade. Too many times
individuals try to rationalize a decision. Don’t try to find a good reason
for making a bad decision. Your decision must be a confident one.

Stay with major markets and stocks with millions of shares in the float.
Make sure the average trading volume is enough for you to sell all of
your position on any given day. By following this rule you should be
assured of a reasonably good execution of your trade. Don’t buy stocks
trading at the lower end of the price range. Generally speaking, do not
buy stocks that don’t have good trend characteristics or predictability.
True professional traders avoid them and so should you.

More money has been lost on hot tips than is in the U.S. Treasury. While
this is an exaggeration, it does make the point clear. If someone tells you
about an investment or trade, research the recommendation before you
put your money into it. Most novice investors and traders fall victim to
tips every day. Please don’t fall for the story no matter how good it
sounds. Always use technical analysis to make your buy and sell deci-
sions, and buy or sell based on facts.

If your timing decision was wrong on an aggressive stock, don’t make
the problem worse by trying to buy a stock that is going lower. The prob-
ability is that you will only compound the loss. I call this technique
disaster cost averaging. Don’t buy a stock until the trend is evident.
Dollar cost averaging is good for your broker, but if you continue this
technique, the ‘broker’ you will become.

Many people enter the stock market focused only on the profits and do
not consider the losses. If you think for one minute you are going to
win one hundred percent of the time, you are wrong. Losing is just part
of the cost of doing business. Your goal is to make sure you control the
risk and not blindly put your money at risk, like a buy and hold
investor. You must come to the realization that you will never learn how
to win until you first learn how to lose. How you handle loss psycholog-
ically is truly the difference between an amateur and a professional.
Professional traders don’t react the same way as an amateur to loss.
When a professional trader loses, he or she simply says next.They don’t
take the loss personally.

The proper use of stops will protect profits and limit your losses. Look at
stops as profit and loss insurance. When you enter a trade, you place a
stop to limit the loss in case the trade goes against you. When the trade
becomes profitable, you use them to lock in a profit.
Anyone who would argue against risk control by discouraging the
use of stops is a fool indeed. In effect they are saying you should put
your capital at unlimited risk. Does this make any sense to you? Of
course not, but that is exactly what a buy and hold investor does all the
time. Most investors do not use stops because they are afraid of being
stopped out. This is a psychological problem of not wanting to be
wrong, or having to admit to yourself you lost on a trade. It certainly
isn’t based on logic or strategy. Remember, always use stops if you are
carrying a trade over night.

Make the time or suffer the consequences. If you are too busy to man-
age your money, maybe you’re too busy. Take a look at your portfolio
and if you lost half of your money without knowing it, you can congratu-
late yourself on being too busy. Was it worth it? Probably not. It doesn’t
make much sense to work yourself to death and have nothing to show
for it. You must take time to educate yourself and take control of your

Making money safely takes time. The only time to hurry is when you’re in
trouble. Remember, “Everyday is not a trading day”. Only trade when
the sector, market, and the correlating stocks are in trend. Just because
you want to trade doesn’t mean you should. Only trade when the proba-
bilities are in your favor, and let the market come to you.
The market is going to do what it is going to do and what you want is
irrelevant. Don’t become addicted to the action. You are not an action
junky. You are a high probability trader. Profits are made the old fash-
ioned way, one trade at a time. Be patient and make time your friend
instead of your enemy.

The most successful traders and aggressive investors learn from their
mistakes. Many even go as far as writing down what went wrong and
analyzing the problem. Mistakes can be costly, so use them as learning
experiences and don’t make the same mistake twice.
Unfortunately a large number of people are doomed to make the
same mistakes over and over again. This behavior is usually a sign of
emotional reactions to price momentum and the absence of any well
thought out strategy. My father once told me that the best education
was to learn from the mistakes of others. Most people fail in the market
not because of technology or a lack of information, but because of
emotional reactions, and never learning from their mistakes and the
mistakes of others.

Some people are doomed to make the same mistakes over and over
again. Using this set of 16 trading rules, which has been compiled
from over 20 years of experience, should keep you from making many
common mistakes.
If you follow Deel’s Rules of Investology, you have a much better
chance of success than someone who doesn’t. Always remember, there
is never any guarantee of success. But if you are properly educated and
develop the correct mindset, you have a major advantage. Don’t
become one of the sheep led to the slaughter by media nonsense.
You must make your own fortune and control your financial destiny.
Always remember, it’s your money. Take control…and follow the rules.

Robert Deel is an internationally recognized trading expert, and has trained groups of traders
throughout the U.S., Europe, Asia, and Canada. He is the author of Trading the Plan and The
Strategic Electronic Day Trader. He is also the President and CEO of, a
school that trains individual and professional traders from all over the world.

Saturday, December 11, 2010

KLCI Chart

KUALA LUMPUR, Dec 11 — Shares on Bursa Malaysia are likely to trade firmer next week with more inflow of funds despite the market’s short-term weakness and concerns about China’s monetary policy and the eurozone crisis.

The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) staying above 1,500 on good volume gave credibility on its resilience, Affin Investment Bank Head of Retail Research Dr Nazri Khan said.

This week, the key market barometer rose by 6.3 points to 1,507.28 after rising near the historic high of 1,528.01 on Thursday on strong buying interest on key heavyweights but succumbing to profit taking a day later as investors opted to sell on strength.

“Despite short term weakness on Friday and concern in China/Europe, we see positive investor risk attitudes in the local equity market, possibly driven by good corporate earnings and ample talks on consolidation exercise,” Nazri said.

Other factors include impending election hype, stronger commodity price, attractive local bond yield and hot-money carry trade play.

The fact that Dow Jones at a new two-year high and Nikkei at a new seven-month high is likely also influence Asian indices, including FBM KLCI, higher.

“We also expect reduced equity volatility for the rest of this month to support FBM KLCI higher given the downtrend of the CBOE Volatility Index which suggests declining investor anxiety,” Nazri said.

The looming “January effect” with year-end accumulation of selected blue chips in the last few weeks of the year is also supportive for the local market.

“Currently, we see the property and construction sectors (with focus on the politically-connected-election-linked counters) as the two sectors dominating the local bourse January effect,” he said.

As the property and construction indices remain very close to three-year highs, there is expectation for more strength of the sectors to push FBM KLCI higher.

“Going forward, we believe the local market is likely to show more resilience with a potential upside break-out next week. Given ample liquidity now, we are not surprised to see FBM KLCI aiming for 1,530 in the near term,” Nazri said.

Any close above 1,530 would lead FBM KLCI to a good bull rally towards an all-time-high of 1,550 in the early part of next year, he added. On a weekly basis, the FBM Emas Index increased by 84.98 points to

10,255.42, the FBM Top 100 Index added 66.2 points to 10,010.48 and the FBM Ace Index jumped 68.28 points to 4,261.36.

The Finance Index increased 217.25 points to 13,767.5 while the Industrial Index was lower by 66.96 points to 2,786.66 and the Plantation Index surged 35.76 points to 7,862.13. Petronas Chemicals was among volume leaders. It ended four sen higher at RM5.58. Its parent company, Petronas, had signed a memorandum of understanding with BASF to undertake a joint feasibility study to produce specialty chemicals in the country which could involve a joint investment of up to RM4 billion.

Tenaga Nasional which had said it would ask the government to review the tariff for natural gas if coal prices were to rise significantly and become a financial burden, dropped 19 sen to RM8.60.

The average coal price has increased to over US$110 a tonne, which will definitely affect the utility giant’s bottom line.

DRB-Hicom which had said that it was not aware of talks on any privatisation proposals, was also actively traded. It added 15 sen to RM1.80.

There was a report saying that Tan Sri Syed Mokhtar Al Bukhary was believed to be considering taking the auto and banking group private.

The market’s weekly volume rose to 4.968 billion shares valued at RM8.94 billion from 4.89 billion shares valued at RM9 billion.

The Main Market turnover declined to 3.754 billion units worth RM8.612 billion from 4.23 billion units worth RM8.85 billion but volume on the ACE Market jumped to 375.025 million shares worth RM84.661 million from 298.08 million shares worth RM84.46 million.

Warrants increased to 827.357 million units valued at RM233.123 million from 347.79 million units valued at RM61.13 million. — Bernama