Tuesday, November 11, 2008
Monday, November 10, 2008
11:00 am - FKLI break down on lower volume but has no follow thru on the weekly basis !
Looks like the FKLI is reversing ! The low is 800 level.
10:54 am - DJIA raise up on lower volume !
Sellers had temporarily left the market for the time being !
10:24 am - Market Outlook by Bill Wermine
Dear Traders,
Today I attended a market outlook by Pong Teng Siew, Head of Research of Jupiter Securities. There was a full house, standing room only. Mr Pong is a highly regarded analyst and has been able to consistently forecast KLSE market turns. He feels 802 is the near term bottom because credit markets world wide are unfreezing. The new fear he said is world wide recession which 1/2 of the developed countries including the US, UK and Europe are in. however; markets turn in the depth of a recession as players anticipate an economic upturn.
He suggested to be in defensive mode. Avoid property, construction, banking, auto and airline shares as the economy is slowing. On the other hand, he recommends Sime, TM and PPB Group due to defensive qualities and solid dividends. I hold these shares for my managed accounts.
He also forecasts a recovery in crude oil and CPO as these commodities are deeply oversold and are trading at less than fundamental value. He also feels the US Dollar will resume its fall as credit markets unfreeze and the US prints money to bail out the banks, auto companies, un employed workers, housing etc. Obama will print massive amounts of US Dollars to fulfill his election promises.
We are holding our monthly Traders Club at Phillip Capital Office on 15 November at 10 AM . If you have any topics you wish to share please let me or Martin know.
I will present an interesting study on Gap trading in the CPO and CI Futures and how to use volume to confirm the success of a gap trade. I need someone to present on point and figure.
Have a good day
Bill
Today I attended a market outlook by Pong Teng Siew, Head of Research of Jupiter Securities. There was a full house, standing room only. Mr Pong is a highly regarded analyst and has been able to consistently forecast KLSE market turns. He feels 802 is the near term bottom because credit markets world wide are unfreezing. The new fear he said is world wide recession which 1/2 of the developed countries including the US, UK and Europe are in. however; markets turn in the depth of a recession as players anticipate an economic upturn.
He suggested to be in defensive mode. Avoid property, construction, banking, auto and airline shares as the economy is slowing. On the other hand, he recommends Sime, TM and PPB Group due to defensive qualities and solid dividends. I hold these shares for my managed accounts.
He also forecasts a recovery in crude oil and CPO as these commodities are deeply oversold and are trading at less than fundamental value. He also feels the US Dollar will resume its fall as credit markets unfreeze and the US prints money to bail out the banks, auto companies, un employed workers, housing etc. Obama will print massive amounts of US Dollars to fulfill his election promises.
We are holding our monthly Traders Club at Phillip Capital Office on 15 November at 10 AM . If you have any topics you wish to share please let me or Martin know.
I will present an interesting study on Gap trading in the CPO and CI Futures and how to use volume to confirm the success of a gap trade. I need someone to present on point and figure.
Have a good day
Bill
Saturday, November 08, 2008
9:42 am - Stocks rise after 2 days of heavy selling
Stocks rise after 2 days of heavy selling NEW YORK (AP) - 1107b--wallstreet Buyers returned to Wall Street Friday after two days of heavy losses,mindful of the economy's growing problems but attracted by stocks' lower prices.Analysts said the advance was to be expected as Wall Street experiences a rockyrecovery from October's devastating selling. The major indexes jumped more than 2 percent, including the Dow Jonesindustrial average, which rose nearly 250 points in light trading. For the week,the Dow and broader benchmarks like the Standard & Poor's 500 index lost about 4percent after surging 10 percent or more last week. Friday's trading was a mini-version of the market's performance over thepast two weeks, with investors upbeat, then realizing there was little basis inreality for their resurgent confidence, then changing their minds again. The market briefly came off its highest levels of the session afterPresident-elect Obama reiterated at a news conference that there is a great dealof hard work to be done to restore the economy to health. Investors hadoptimistically sent prices higher, only to temporarily pull back when Obamaunderscored what they already know: that the economy's problems won't be easilysolved. George Shipp, chief investment officer at Scott & Stringfellow, said Obamaappeared to be trying to telegraph to the market not to expect too muchimmediately. Obama, noting that he has until January before taking office, saidhe will work to support an economic stimulus plan and will seek ideas forhelping the auto industry. "My expectation is that he lowers the bar and buys the time," Shipp said."Certainly there is no reason to create any undue expectations right now." The market fluctuated after Obama spoke, then righted itself to close nearits best levels of the day. Hank Smith, chief investment officer at Haverford Investments said themarket's turns aren't a surprise. "I think it's absolutely part of the bottoming process," Smith said. "TheOct. 10 low has been tested again a number of times." The blue chips hit anintraday low of 7,882.51 on Oct. 10. Friday's economic and corporate news reminded the market that the countrycould be in for a deep and protracted recession. The Labor Department said the nation's employers cut 240,000 jobs inOctober, hurtling the U.S. unemployment rate to a 14-year high of 6.5 percent.The market had expected employers to cut 200,000 jobs and for the unemploymentrate to rise 6.3 percent. Meanwhile, Ford Motor Co. reported a $129 million third-quarter loss andannounced plans to cut more than 2,000 additional white-collar jobs. GeneralMotors Corp. said it lost $2.5 billion in the quarter and warned it could runout of cash in 2009. The struggling automaker also said it has suspended talksto acquire Chrysler. Although the day's news was on its face worse than expected, investors weredrawn by prices beaten down the past two sessions and some relief that thereports weren't more grim. "We're coming off of a very oversold market that had already braced itselffor bad news out of Detroit and certainly bad economic data in terms of thelabor report," said Peter Cardillo, chief market economist at Avalon Partners. The market is following the pattern of volatility that analysts warned wouldprevail for some time to come. Obama's election was preceded by a big rally, during which the benchmarkStandard & Poor's 500 index surged 18.3 percent in six sessions up throughTuesday. This was followed by a two-day loss of about 10 percent in the majorindexes, including a 929-point drop in the Dow, as investors turned their focusonce more to the economy's woes. "There are three factors that are driving this market: psychological,fundamental and technical," Smith said. "The psychological is fear and panic.We've certainly seen that." The fundamental factor is investors don't know exactly how the currentcredit crisis is going to affect the economy. And the technical factor that isplaying in to the market is the forced selling from hedge funds and mutual fundsthat have to raise cash for redemptions, Smith said. Nov. 15 is the cutoff for shareholders to notify fund managers of theirintent to cash out investments before year-end, which means a sudden influx of"sell" orders could force funds into dumping more investments. Analysts expectthis to continue to add to the volatility in the market. The Dow rose 248.02, or 2.85 percent, to 8,943.81. The broader S&P 500 index added 26.11, or 2.89 percent, to 930.99, and theNasdaq composite index rose 38.70, or 2.41 percent, to 1,647.40. The Russell 2000 index of smaller companies rose 9.95, or 2.01 percent, to505.79. Advancing issues outnumbered decliners by more than 2 to 1 on the New YorkStock Exchange, where consolidated volume came to a light 4.80 billion shares,compared with 5.96 billion shares traded Thursday. For the week, the Dow fell 4.1 percent, the S&P 500 index lose 3.9 percent,the Nasdaq slid 4.3 percent and the Russell fell 5.9 percent. Paper losses for the week in U.S. stocks came to $500 billion, according tothe Dow Jones Wilshire 5000 Composite Index, which reflects nearly all stockstraded in America. Despite the gains Friday, investors have not lost sight of the potential fora deep and protracted recession. Obama will inherit an economy marred by ahousing collapse, mounting unemployment, hard-to-get credit and financial marketupheaval when he assumes office early next year. Investors are watching closely for whom Obama selects as the next Treasurysecretary, as well as whom he appoints to key Cabinet positions. Additionally,investors are mindful of how the government's $700 billion financial rescuepackage will be further implemented under a new administration. Obama met Fridaywith economic experts ahead of his press conference to discuss steps aimed atrepairing the economy. To provide fresh relief, House Speaker Nancy Pelosi said Democrats will pushfor another round of economic stimulus later this month. The weak economic data on Friday reflect the freeze in the credit marketsthat began in mid-September following the bankruptcy of investment bank LehmanBrothers Holdings Inc., and the subsequent pullback in spending among fearfulconsumers. This has forced companies to cut jobs, said Michael Sheldon, chiefmarket strategist at RDM Financial Group. "Comments that we're hearing from CEOs when they report their earningsindicate that economic activity fell off the cliff," he said. In other corporate earnings news, Sprint Nextel Corp. reported a loss of$326 million in the third quarter as it continued to lose customers. Thenation's third-largest wireless provided had posted a profit in the year-agoperiod. Sprint dropped 31 cents, or 8.4 percent, to $3.37. Investors fled General Motors following its quarterly reports but Fordadvanced. GM tumbled 44 cents, or 9.2 percent, to $4.36, while Ford rose 4cents, or 2 percent, to $2.02. The dollar fell against most other major currencies, while gold prices rose.Light, sweet crude rose 27 cents to settle at $61.04 a barrel on the New YorkMercantile Exchange after falling sharply during the week. The three-month Treasury bill's yield slipped to 0.28 percent from 0.30percent late Thursday. A lower yield indicates increased demand. The yield onthe benchmark 10-year Treasury note rose to 3.79 percent from 3.69 percent lateThursday. Bank-to-bank lending rates fell again, though, suggesting that banks aremore willing to lend to one another -- a positive signal for the tight creditmarkets. The London interbank offered rate, or Libor, for three-month loans indollars dropped for the 20th straight day by 0.10 percent to 2.29 percent, thelowest level since November 2004. Overseas, Japan's Nikkei index fell 3.55 percent, and Hong Kong's Hang SengIndex rose 3.29 percent. Britain's FTS
Friday, November 07, 2008
8:55 am - FKLI gap down due to DJIA almost 5 pct loss
Trading is difficult leaving market congesting !
Thursday, November 06, 2008
6:14 pm - The Crash of 2008... Education...
The Crash of 2008... Education...
From: Robert Dijkstra (info.robertdijkstra@gmail.com)
Sent: Wed 10/29/08 10:05 AM
To: Robert (info.robertdijkstra@gmail.com)
The Crash of 2008... Education...
By Dr.Alexander Elder
Dear Trader,
We live in extraordinary times. The world stock markets have crashed, and their volatility is unprecedented. Back in the 1970s, when I first entered the markets, the 1,000 level of the Dow was called 'the graveyard in the sky' - any time the market went up to that level, it turned and entered a bear market that would go down 200 or even 300 points within the next year or two. Now the Dow can leap almost a thousand points in a single day, and a 200 point range feels almost like a quiet day.
We have seen severe damage to the price structures of major market indexes worldwide. On some days, as I listen to investors and traders, the feeling of fear is almost palpable. It pays to keep in mind that a savvy trader plans ahead, while a poor beginner jumps in response to emotions - he or she buys amidst the optimism of market tops and dumps shares in fear at market bottoms.
Let us review the current market situation, try to look ahead, and plan for the future. We also must begin thinking about the lessons this crash can teach us. This will take a long time and we will not accomplish everything in a single letter, but there are several points worth discussing today.
To find a parallel to today's state of the world's stock markets and global economy one must go back to 1929 and its aftermath. Those times seem like ancient history to most people, but when I first entered the markets I met guys who traded in 1929 and during the bear market that followed the crash. I eagerly listened to those old-timers and learned from them.
The Crash of 1929 rolled over into a Depression due to two severe mistakes by the Republican administration of that day. First, it focused on defending the US Dollar by jacking up interest rates which dealt a body blow to the real economy. Second, a misguided Congress tried to 'protect American industry' by erecting high tariff walls. It never occurred to those gentlemen to ask how we can expect the world to buy our goods if they cannot make money by selling their goods to us.
The current government is acting quite differently. It reminds me of Sigmund Freud's famous quote: 'the voice of reason is quiet but persistent.' Simply put, I think that the current administration has learned from those old mistakes and is handling the crisis much better. They are pumping money into the markets, supporting the banks, and not allowing the system to seize up. Sure, it feels disgusting that taxpayer money is going into the pockets of those who got us into this mess, but the key point is that trust must be restored so that the system can continue to function. Furthermore, instead of building self-defeating protectionist walls, today there is a remarkable degree of cooperation among finance officials around the globe. We are living through the worst worldwide financial crisis since 1929, but the signs are that we will muddle through a lot better now than our forefathers did back then. We do not expect to see what was a sad norm in the 1930's: a 25% unemployment rate, massive repossessions of busted out farms, and other such Grapes of Wrath stuff.
At the same time, I think we have not yet seen the bottom of this decline. Markets rarely if ever trace out V-bottoms. Individual stocks can do it occasionally, but it would be highly unlikely for the entire stock market to turn on a dime. A violent bottom, like the one we just saw, is likely to be retested a few months later on lower volume. Or rather - we hope it gets retested and then the market reverses, but there is no guarantee that the current lows will hold.
Let us look at a few numbers. The average length of a US bear market is about 18 months. This bear is just one year old, meaning it is reasonable to expect this weakness to last into Spring 2009. And what about the real economy? The stock market tends to lead the economy by about 9 months, although this lead may have shortened a bit, as the pace of life has speeded up. This would seem to indicate another year of continued weakness in the economy. When things get ugly in the economy, interest rates decline further, and almost everyone forgets what a bull market looks like, but that's when the first stage of the new bull market can begin - possibly some time in 2009.
Keep in mind that bear market bottoms present fantastic buying opportunities. Prepare yourself to think of incredible bargains you will be able to scoop up. This is a very important topic that we will be tracking in the months ahead.
And what about the lessons we should learn from this crash? The very first one is that every position deserves what I call 'a catastrophic stop'. An experienced trader may manage a short-term trade with only a mental stop, but every position you plan to hold for any length if time deserves a real stop at a level that one hopes never to see. Two friends of mine bought a stock at $20 that they thought was a bargain, but now it trades at 20 cents. One bailed out at $18, the other still holds it today. At the time he bought he should have asked himself, what level he never expected to see - $15? $12? Whatever it was, that's where he should have put his 'catastrophic stop!'
Most traders have very short memories. They look at recent events and extrapolate them into the future. They feel bullish at the tops and bearish at the bottoms. Long-term successful people possess a knowledge of history and a memory of how things work. They need it in order to do the counter-intuitive thing - sell at the tops and buy near the bottoms.
Make no mistake about it - there are fantastic buying opportunities ahead of us on the horizon. It is our goal to learn to recognize them, time them reasonably well, and have the intestinal fortitude to buy. These are the tasks on which we will be focusing.
PS - one day before this email was to be sent out, a message arrived from one of our clients. I reprint it here, with writer's permission, to show how a serious person takes steps to protect himself in a decline and even to profit in it:
"Dr. Elder,
In the last Bear market, I watched my 401k plummet and didn't know who to believe or trust.
After reading your books, attending your webinars and live seminars I began trading. Not successfully at first, but eventually producing consistent results.
Now, I am trading independently and trusting my own analysis of the chart patterns. This year has been incredible for my trading!
Thank you for sharing your lessons and wisdom. Without it, I certainly would be experiencing the same despair as in 2002.
Kyle Richardson"
From: Robert Dijkstra (info.robertdijkstra@gmail.com)
Sent: Wed 10/29/08 10:05 AM
To: Robert (info.robertdijkstra@gmail.com)
The Crash of 2008... Education...
By Dr.Alexander Elder
Dear Trader,
We live in extraordinary times. The world stock markets have crashed, and their volatility is unprecedented. Back in the 1970s, when I first entered the markets, the 1,000 level of the Dow was called 'the graveyard in the sky' - any time the market went up to that level, it turned and entered a bear market that would go down 200 or even 300 points within the next year or two. Now the Dow can leap almost a thousand points in a single day, and a 200 point range feels almost like a quiet day.
We have seen severe damage to the price structures of major market indexes worldwide. On some days, as I listen to investors and traders, the feeling of fear is almost palpable. It pays to keep in mind that a savvy trader plans ahead, while a poor beginner jumps in response to emotions - he or she buys amidst the optimism of market tops and dumps shares in fear at market bottoms.
Let us review the current market situation, try to look ahead, and plan for the future. We also must begin thinking about the lessons this crash can teach us. This will take a long time and we will not accomplish everything in a single letter, but there are several points worth discussing today.
To find a parallel to today's state of the world's stock markets and global economy one must go back to 1929 and its aftermath. Those times seem like ancient history to most people, but when I first entered the markets I met guys who traded in 1929 and during the bear market that followed the crash. I eagerly listened to those old-timers and learned from them.
The Crash of 1929 rolled over into a Depression due to two severe mistakes by the Republican administration of that day. First, it focused on defending the US Dollar by jacking up interest rates which dealt a body blow to the real economy. Second, a misguided Congress tried to 'protect American industry' by erecting high tariff walls. It never occurred to those gentlemen to ask how we can expect the world to buy our goods if they cannot make money by selling their goods to us.
The current government is acting quite differently. It reminds me of Sigmund Freud's famous quote: 'the voice of reason is quiet but persistent.' Simply put, I think that the current administration has learned from those old mistakes and is handling the crisis much better. They are pumping money into the markets, supporting the banks, and not allowing the system to seize up. Sure, it feels disgusting that taxpayer money is going into the pockets of those who got us into this mess, but the key point is that trust must be restored so that the system can continue to function. Furthermore, instead of building self-defeating protectionist walls, today there is a remarkable degree of cooperation among finance officials around the globe. We are living through the worst worldwide financial crisis since 1929, but the signs are that we will muddle through a lot better now than our forefathers did back then. We do not expect to see what was a sad norm in the 1930's: a 25% unemployment rate, massive repossessions of busted out farms, and other such Grapes of Wrath stuff.
At the same time, I think we have not yet seen the bottom of this decline. Markets rarely if ever trace out V-bottoms. Individual stocks can do it occasionally, but it would be highly unlikely for the entire stock market to turn on a dime. A violent bottom, like the one we just saw, is likely to be retested a few months later on lower volume. Or rather - we hope it gets retested and then the market reverses, but there is no guarantee that the current lows will hold.
Let us look at a few numbers. The average length of a US bear market is about 18 months. This bear is just one year old, meaning it is reasonable to expect this weakness to last into Spring 2009. And what about the real economy? The stock market tends to lead the economy by about 9 months, although this lead may have shortened a bit, as the pace of life has speeded up. This would seem to indicate another year of continued weakness in the economy. When things get ugly in the economy, interest rates decline further, and almost everyone forgets what a bull market looks like, but that's when the first stage of the new bull market can begin - possibly some time in 2009.
Keep in mind that bear market bottoms present fantastic buying opportunities. Prepare yourself to think of incredible bargains you will be able to scoop up. This is a very important topic that we will be tracking in the months ahead.
And what about the lessons we should learn from this crash? The very first one is that every position deserves what I call 'a catastrophic stop'. An experienced trader may manage a short-term trade with only a mental stop, but every position you plan to hold for any length if time deserves a real stop at a level that one hopes never to see. Two friends of mine bought a stock at $20 that they thought was a bargain, but now it trades at 20 cents. One bailed out at $18, the other still holds it today. At the time he bought he should have asked himself, what level he never expected to see - $15? $12? Whatever it was, that's where he should have put his 'catastrophic stop!'
Most traders have very short memories. They look at recent events and extrapolate them into the future. They feel bullish at the tops and bearish at the bottoms. Long-term successful people possess a knowledge of history and a memory of how things work. They need it in order to do the counter-intuitive thing - sell at the tops and buy near the bottoms.
Make no mistake about it - there are fantastic buying opportunities ahead of us on the horizon. It is our goal to learn to recognize them, time them reasonably well, and have the intestinal fortitude to buy. These are the tasks on which we will be focusing.
PS - one day before this email was to be sent out, a message arrived from one of our clients. I reprint it here, with writer's permission, to show how a serious person takes steps to protect himself in a decline and even to profit in it:
"Dr. Elder,
In the last Bear market, I watched my 401k plummet and didn't know who to believe or trust.
After reading your books, attending your webinars and live seminars I began trading. Not successfully at first, but eventually producing consistent results.
Now, I am trading independently and trusting my own analysis of the chart patterns. This year has been incredible for my trading!
Thank you for sharing your lessons and wisdom. Without it, I certainly would be experiencing the same despair as in 2002.
Kyle Richardson"
Wednesday, November 05, 2008
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