Wednesday, November 28, 2012

FKLI - Potential Reversal Signal (Nov 28)

Hi all.

In my previous post, I mentioned the reversal is near, & we shall wait for some candlestick reversal pattern to gives us the confirmation to ride the rebound.

After days of wash & rinse, finally, today we see a close in Bullish Engulfing candle. Indicators hooking up from oversold region & volume spike supported the bullishness of the day.

However, there's a risk of this being a part of a 3-candle-formation called the Bearish Three-line Strike. Although candlestick theory suggests it to be bearish continuation pattern, some experts back-test studies had show that it practically act more as a bullish reversal signal, instead.

Hence, the more defensive LONG can wait for a higher close tomorrow as a confirmation for the bullish reversal. A higher close tomorrow may gives us another bullish candlestick pattern called the Three Outside Up. That will be what I call a 'double-confirmation'... :D

The three patterns mentioned above:

Candlestick Patterns - Bullish Engulfing, Bearish Three-line Strike, & Three Outside Up (Nov28)

Technical analysis is a study based on historical data.
Assuming we find bottom at 1,590, the bull run, from 1,300 (Sept'11) to the recent peak of 1,678 (Oct'12), will still be valid. On FKLI, almost all correction in a primary uptrend had ended with either a hammer, or a bullish engulfing candle. 
I'm actually quite comfortable going long just based on the bullish engulfing candle today. 

That said, my wave count on FKLI, stating the potential end of a [5](5) primary wave, might still not be confirmed yet.  Not until we see a failed test of the previous peaks of: 1,650 | 1,660 | 1,678, & subsequent break below 1,590 level.

Here's a view from the 1,300 bottom to date:

Bull Run from 1,300-1,678 (Sept'11-Oct'12)

Given that December is almost always a bullish month, with its famous year-end rally, window-dressing, & with the GE still to come, I'm keeping a bullish stance on the FKLI in the coming month. 
Hence, I'll take today's close as the potential start of the bullishness to Dec'12.

If the reversal proves valid tomorrow, we will see a rebound of about 50points magnitude, based on the long-term channel supporting the 1-year bull run. End target at about 1,640-50.
However, I'm skeptical about a 1,700 peak by year-end, given the deep correction we just had. Even a retest of the 1,678 peak will be a surprise for me, seeing that there's only roughly 20+ trading days remaining. 

My near-term (Dec'12) outlook on FKLI:

FKLI - Dec'12 Outlook (Nov 28)

Embrace X'mas & New Year 2013 with some good profit in-hand! :)
Happy Hunting everyone!

Friday, November 23, 2012

FKLI - Reversal is Imminent (Nov 23)

Following my previous post on FKLI, we close the week without any strong reversal signal. 
So, 尽信书不如无书, those who trust the brokers' reports too much might be suffering right now. :p

Below are my charts as of today's close.

FKLI Nov'12 Spot Month Contract (Nov 23 close)
I was wondering why the volume is not contributing its part to signal the coming reversal on the FKLI spot month chart. 
I thought, since when Malaysian celebrates Thanksgiving so heavily that the volume become so pathetic on the index futures??

Then, it strikes me when I check on the Dec'12 contract chart, all the volume has been running to the Dec'12, apparently!! 
We can see climbing volume bars on the Dec'12 chart, with today's volume the highest (almost 2x its 5d average). That's much more promising than the bleak picture on the spot month chart.

However, I'll wait for the confirmation on Monday to make a LONG entry. 
No shame to double- or, triple-confirm, as this is a heck of a looooooong & most persistent downtrend I have ever seen on the FKLI, a whole string of REDs for three weeks.

I'll be looking for strong reversal pattern on Monday/Tuesday, something like a hammer, dragonfly doji, bullish engufling, morning star.....Any one of those will be most welcomed, together with a highest volume bar.

FKLI Dec'12 Contract (Nov 23 Close)

For those who are not familiar with candlestick patterns, I highly recommend this cute little site called, where they explain the story behind each popular candlestick pattern/formation, so that you can quickly pick up the underlying meaning in each of them.

Do be diligent, & start following their babypips school lessons, all the way from PreSchool to Graduation!

Alrighty! Happy Hunting & be prepared for the most lucrative trading month of December!
Time for a Friday night movie!! ye@h!! :)

Monday, November 19, 2012

FKLI - Potential Retrace for Current Downtrend

Hi all.

Have seen many broker reports predicting a rebound for the local index today, Nov. 19.

Well, I do see potential for a rebound, but not as soon as many was expecting. Any potential upward correction for the current downtrend shall see:
  • my fibo target of 1,603 (or 1,600-1,610 region) is reached.
  • daily candle to cross-over & stay above the ST downtrend-line.
  • MACD histogram to turn green. Histogram length has been holding around -5 for a few trading days. Which mean the selling pressure is slowing down, & we shall see the buyers coming in soon.
Another point to note is, daily RSI is as low as 6.012 by closing today. That is the level where the previous extreme lows were recorded in May'10 & Aug'11 correction.

Below is my post-market analysis for the FKLI short-term outlook:

Enjoy! Happy Hunting!! :)

Saturday, November 17, 2012

FKLI - The BIG Picture (1998-2012)

Hi All.

It's been a while!! 

Since my last post, all the bazookas were launched:

Sept 6, 2012
ECB - Mario Draghi: ECB will engage in "unlimited" bond buying to maintain lower interest rates for troubled EU sovereigns.

Sept 13, 2012 
US Fed Reserve - Bernanke
  • The Fed plans to buy $40 billion of agency-backed mortgage securities (MBS) monthly, until the labor market improve substantially.
  • Extend Operation Twist through December '12. Fed will do reassessment in January when OT ends. (signaling a willingness to extend bond-buying well into next year, unless payroll numbers pick up significantly...)
  • The Fed also extended its interest-rate forecast, promising to keep interest rates between 0-0.25% through mid-2015. Before, the Fed had said rates would stay at rock-bottom until at least 2014.

On the local front, not exactly a bazooka, we got a few poppers, rather. 
Sept 28, 2012
Malaysia 2013 Budget:
  • Stronger growth - Government expects stronger economic growth of 4.5%-5.5% for 2013 compared with 4.5% - 5.0% for 2012, while at the same time cutting its budget deficit to 4.0% from 4.5% in 2012.

Budget Deficit as %GDP (2009-2013F)
  • Goodies to the Rakyat - Notable handouts are a 1% cut in income tax, which will give rise to tax savings of up to RM475, a RM250 cash handout under BR1M, a RM100/month raise for pensioners, and special incentives for military personnel worth RM200/month. Though meager, these should collectively boost disposable income & thus spur consumer consumption.

Despite all the desperate effort to revive the market confidence, the rally fueled by those various stimulus packages from US & EU was proven short-lived. All the major world indices are currently either back to square one, or worse, lower than where they were before the relief rally.

Back to FKLI....

By today's close at 1,620 (Nov 17), we have officially completed the round-the world tour from 1,618--1,678--1,620. We have now tumbled 60pts from the peak of 1,678 to 1,620, within 2-weeks time.

Based on fibo projection, I was expecting FKLI to reach 1,700-1750 previously, dragging near the high until we get our GE13 announcement. However, the current correction seems a little 2fast2furious for a healthy pullback.
I'm seeing an immediate support around 1,600-1,610 level. If the uptrend is to continue, we should rebound from the 1,600 region, in the last up wave of 5[5](5)v.

Well, that just send a shiver down my spine because we are either At/Near the END of a Impulse Cycle since recovering from the '97 Financial Crisis (2008 low at 270pts), growing more than 6x within 14 years.  
However, did our economy actually grow 6x through the years? Hmmmm......


According to Elliott wave principle, 
An Impulse Cycle of Wave 1-5 will be followed by a Correction Cycle A-B-C, where correction Wave C usually ends around the low of the impulse Wave 4.
A MARKET CYCLE, as described by the Elliott Wave Principle:
A Complete Market Cycle (Elliott Wave Principle)

I went on to do a wave count on 15-year FKLI chart.

I am not sure if the Primary [5] is completed at 1,678, or we will have another upleg to a new peak. I shall update it, by end of this month, when we shall know if the current correction is a [A](3)iv or [5](5)iv. In the mean time, I'll keep an eye on the support level of 1,600.

By the way, I just learn up the naming nomenclature for Elliott waves, hope I got it right or some of you can correct me if I'm wrong.

Here's my FKLI wave count:

FKLI - Wave Count (1998-2012)

Wherever we are at now, we are at/almost-at the END of a cycle, which shall be follow by an ABC correction, of which their projected depth I marked out with arrows in red

I have been waiting for this plunge since don't-know-when......I'm glad I'm born in such an era where I can get a BUST when I'm in my 20s.....because only in a BUST, there's opportunity to prosper from its recovery, which might last another 14years, or more.....
As for now, I'm preparing to profit from the plunge, accumulate my capital, & look for opportunities at the bottom. 
Believe me, anyone who can successfully catch this bottom can easily be the next Warren Buffett 20 years later.

Investors should have already taken their money off the table by now, I believe. This is a time to keep cash on hand. While for traders out there, it's our party time!!

Happy Hunting to everyone!
Till then! :)

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