Weekly Update

Dow (24,271)

Very likely Dow is forming its major wave 8, an estimated 14.5% correction.

FBMKLCI (1,691)

I am still no very sure whether KLCI has already completed its major wave 5.

Or it still has one last kick to complete its major wave 5.

I usually would prefer not to talk about individual stock when I am having the idea that the overall market is due for a major correction. When there is a major shake out, the chart form of stocks will change. But whatever new forms that can develop, the new forms will be able to fit into one of the possible Elliott's wave forms. Elliott theory followers' interpretations can be wrong but Elliott wave theory is always right.

One of my follower has asked for my view on Inari and Insas as I have not mentioned about them for quite sometimes.

Based on the current market condition when there is no confirmation that the big bear is definitely coming and Dow is still has one more major wave 9 to go and that can easily take more than 12 months to complete with a target level of 35,000. That is another 10,000 points to go from its current level.

Assuming KLCI can continue to drift for sometime (do remember that I can be totally wrong), my reading for Inari and Insas remained more or less the same as my previous reading.

Inari Amertron Bhd (Rm 2.26)

Inari has completed its major wave 8 and is forming its major wave 9.

And if the mega wave (1) has more than nine waves, the next correction ca be the major wave 10 pullback instead of the mega wave (2) correction.

Insas Bhd (Rm 0.875)

The major wave 4 appeared to be 'deep' and has overlapped into major wave 1. But if Insas can move higher all the way up from its current level, it is possible that it has finally started its major wave 5.

But I cannot rule out the possible manipulation by the big fish to push the price lower to frustrate all the small investors so as to buy the stocks cheap cheap from them. The OBV divergence is an indication of strong accumulation. If they have not complete their accumulation's target, they may continue to push it lower to Rm 0.60 level to form a big A-B-C mega wave (4). (Big fishes have chart analysts to advise them too).

I personally feel that Insas at its current level of Rm 0.875 is too low when Inari is at Rm 2.26. No doubt its latest quarterly earning has dropped to 1.2 sens a share, but with Net Assets at Rm 2.47 a share and its is holding 600 million shares of Inari, that is about 0.95 share of Inari (worth Rm 2.14) for 1 Insas share.

By paying Rm 0.875 to buy one Insas share, you are actually buying 0.95 Inari share plus Insas other businesses and assets in Malaysia, Hong Kong and Singapore.

But my daughter, a banker, said to me once, "Papa, you cannot count like that" when I bought Batu Kawan and she bought Kuala Lumpur Kepong (KLK) many years ago, and she made more money than me.

Even you look at B. Kawan (Rm 17.90) and KLK (Rm 24.16) today, their respective stock prices are ridiculous to me. In every 1 B. Kawan share there are 1.25 KLK shares (B. Kawan with 400m shares is holding 500m shares of KLK). B. Kawan last quarter earning is 27.32 sens with NTA at Rm 15.87 whereas KLK quarterly earning is 17.80 sens with NTA at Rm 10.40. The only thing that I can say is - don't try to reason with stock.

Another stock with ridiculously low stock price is Kluang, a small plantation stock with 63 million shares that has 1,596 acres of oil palm plantation in Kluang. Its latest quarterly earning is 3.85 sens a share. Net assets is Rm 10.69. Cash per share is Rm 4.06. Investment per share is Rm 7.85 excluding its holding of 43.4% Sg. Bagan and 45.25% of Kuchai. Kluang is selling at Rm 4.20 on Friday with no taker.