Dow - Can 15,000 hold ?

I will be with a group of 'Ah Kong, Ah Ma' touring Korea for the next 10 days. During this period, I don't expect much changes to the market sentiment.

I believe Dow won't plunge this year, Bernanke will make sure that the market won't collapse before he steps down. Investors are worried about the 'US debt ceiling' at this moment. Like the fiscal cliff in 2012, it will be settled soon.

I also believe that when US is OK, Bursa Malaysia should be OK too, unless some mad fellows started shooting in Chow Kit or Petaling Street.

Dow dropped about 125 points to 15,133 level after 3 hours of trading.

Possibility 1 : If the current correction is the sub-wave ii of wave (ix), Dow should not drop below the lower trend line. The magnitude for sub-wave ii is about there, around 15,100 level.

Possibility 2 : If Dow continues to move lower in the next few days and drop below the lower trend line. Then I will be looking for major wave (6) at around 14,000 level. Head and shoulder reversal pattern will be formed.

Possibility 3 : At the back of my mind, I always keep this possibility as an option that I can not rule out at this moment. More confirmation is needed.


.

So far so good

Dow dropped 70 points on Friday bringing the index lower than its Wednesday's low, sub-wave ii of its wave (ix) is still being formed.

FBMKLCI is also trying to complete sub-wave ii of its wave (v). No immediate danger at this moment.

Farms Best Bhd (0.58 sen)

Operations : Poultry farm operation, procession and distribution of poultry products and property development.
Last quarter earning : 3.1 sens per share
Net assets per share : Rm 2.77

Since completing its mega wave (1) in 2009, Farms Best has been forming a complex mega wave (2), a A-B-C-D-E wave form. It is highly possible that mega wave (2) was completed by end of August (last month).

I like the uniform pattern formed by the five mini-waves 1-2-3-4-5. Hopefully that is the starting of the mega wave (3).

.

Dow - Continues its wave (ix)

After dropping for 5 consecutive days, Dow gained about 40 points after 2 hours of trading on Thursday morning.

It is possible that sub-wave ii of wave (ix) has been completed. Sub-wave iii will see Dow setting new record highs.

TA Enterprise Bhd (69 sen)

TA gained 4.5 sens (+7%) to close at 69 sen today. Its OBV recorded a new high, a breakout with high volume.

 

From its 1998's bottom, TA took 15 years to complete its mega wave (I)-(II) and major wave (1)-(2).

 

By the end of last month, it has completed its wave (ii) at 55 sens.

 

I was actually looking for a five mini up waves with low volume to confirm the starting of its wave (iii). However, the candlesticks and the volume in the last  two sessions really surprised me. Instead of having the mini wave 5 to end at 63 sens and to pull back to 59 sens for a good entry point, it moved higher for two days to close at 69 sens. Now I have to wait for the sub-wave ii correction. Hopefully it can go down to 63 sens to close that small gap before starting its sub-wave iii. 

.

Keck Seng (M) Bhd

Keck Seng gained 16 sens (+2.9%) today to close at Rm 5.66.

I have been monitoring and also moving in and out of Keck Seng for quite some times.

From its long-term wave counts, Keck Seng is forming its major wave 3 at the moment. The major wave 3 started in December 2012 from around Rm3.80 level, after Hwang DBS came out with an article on the company.

Click 'Keck Seng' for the article.

It is an asset-rich conglomerate with activities covering plantation, property development and investment, Hotels and Golf Resorts operation  and other investment. It has assets and operations in Malaysia, Singapore, Hong Kong, Canada and United States.

Its half-year earning is about 19 sens per share. Net assets per share is Rm5.25, which is grossly understated. Its borrowing is only Rm 6 million. Its cash and short term investment stand at Rm 887 million, Investment in properties and securities is Rm 567 million. The total is close to Rm 4.03 per shares.

In its 2012 Annual Reports, it valued its 8,163 acres of oil palm plantation near Johor Bahru ( 10km east of Ulu Tiram) at 10 sens psf.  In 2005 the Government acquired some of its land at about Rm 6 psf. for road construction. The land must be more than Rm 6 psf by now. Even if I used Rm 6 psf. for 8,163 acres, the value is Rm 2.13 billion or Rm5.91 a share

 

Its property development project at Bandar baru Kangkar Pulai, Tg. Putri and Taman Daya with a total land area of 1320 acres has a book value of about Rm 94 million or Rm 1.63 psf. Again if I were to use a valuation of Rm 6 psf. I get another Rm 344 million or Rm 0.96 a share.

 

From its 2-year chart, Keck Seng is forming the wave (v) of its major wave 3. 

The only problem with Keck Seng is that it tends to sleep once a while, can be quite boring with low volume and negligible price movement.

.

 .

Dow jumped to new record closing

Dow set a new historical high after Federal Open Market Committee (FOMC) decided not to scale back the US$85 billion a month asset purchasing programme.

With this new record closing, the option for Dow that I have mentioned in my August 22 posting becomes the most likely wave count for Dow.

Wave (ix) is going to take a few months to completed, that will push the 'major wave (6)' option and the 'game-over' option to 2014.

Similarly for Bursa Malaysia FBMKLCI, it will have adequate time to complete its major wave 3,4 and 5 to complete its mega wave (5) before the next major correction in 2014.

 

Gunung Capital Bhd

 

Gunung gained 6.5 sens today to close at 83 sen. It is possible that this is the first candle of its wave (v). Gunung's earning per share is 8.6 sens for the first 6 months, very impressive.


.

When will the bubbles burst ?

Dr. Doom, Marc Faber has been expecting for months a major correction. Last Thursday he was predicting a market fallout similar to what was seen in 1987. He was referring to the 'Black Monday', 19th October, 1987, when Dow dropped 22% in a single day.

Economist Nouriel Roubini has been talking about a global 'Perfect Storm' to take place in 2013.

Normura macro strategist, Bob Janjuah, in November last year, believed 'There may be one last parabolic spike higher before the S&P 500 plunged to 800'. At that time, he was predicting a spike to 1575 level before the plunge. From 1575 to 800 the drop is about 49%.

For FBMKLCI the bubble will burst ultimately but I don't think it will happen in 2013. FBMKLCI still needs time to complete its mega wave (5).

Similarly Singapore STI also needs time to complete its mega wave (3) of its wave B.

From STI's long-term chart, it appeared to me that it is forming a big A-B-C corrective wave.

Since end of August, STI has formed five mini waves. That can be the first advancing sub-wave of its major wave 5.

For Dow, I am still not very sure whether it is forming its major wave (6)

OR Dow has already formed its peak at 15,658 level last month to complete its major wave (5) and its mega wave 1. Watch out for the head and shoulders reversal pattern.

Don't forget in the 2007/2008's market plunge, Dow has its peak in October 2007 whereas FBMKLCI peaked in January 2008.


.

Dow - A 'wave b' rebound ?

If the game is not over yet, the current rebound is likely to be the wave b of major wave (6).

The next possibility is the worst case scenario, the rebound is the sub-wave ii of wave (i) of major wave (1) of mega wave 2. In simple language, this is the starting of the mega wave 2 correction.

But I think it is more likely to be a wave (6). Why ?  Because FBMKLCI is not ready to end :) and Bernanke won't allow a collapse to take place before his term is over :)

Bursa Malaysia

I was expecting a mini wave 5 (down) in the last few days but instead FBMKLCI gained 45 points (2.6%) in 3 days. With that, wave c has only three waves instead of five waves, so the current three waves run-up can be wave d, to be followed by another three waves down, the wave e, to complete the sub-wave (iv).

 

However, if the index continues to move higher in the next few days and proceeds to break its July's high of 1810, then I have no other choice but to accept the last low as the end of sub-wave (iv) with mini wave 5 missing.

Sub-wave (v) is expected to last until early 2014.


.

Dow - Major wave (6) or Game Over ?

Dow has completed 5 major waves, major wave (1) to (5). Is this the end of the run-up since March 2009,  OR it is just a major wave (6) correction ? No way to tell, the buyer's guess is as good as the seller's guess. That is why the market can exist.

Even if Dow has a strong rebound in September/October, I still cannot tell whether this is the case of 2007, game over and with a 54% drop, or it is the case of 2011, major wave (4) pullback as shown below.

It is always safer to hold more cash and less stock under such a situation until the picture is clearer. It is always better to pay a little bit of premium rather than get caught with your pants down.

If Dow failed to set a new high in the coming rebound and if it continued to trend lower, 14,000 level is where I will assess the possibility of Dow forming its major wave (6).

 

Bursa Malaysia

For FBMKLCI, no matter how I looked at its long-term chart over the weekend, it appeared to me that the game is no over yet.

FBMKLCI is only forming the wave 3 of its major wave (5).

It is currently at its sub-wave (iv) of its wave 3 as shown below.

The sub-wave (iv) has so far completed its wave a and b and mini-waves 1-2-3-4. The next down should be the mini wave 5. 

If the upwards sentiment is too strong, it can be a failure mini wave 5.

Similarly, if the downwards momentum is very strong, it can have a failure sub-wave (v) later to end its wave 3 and continue with a higher degree 15% to 20% wave 4 correction. 

.

What if Dow still able to hold ?

If Dow's current correction is only a major wave (6) pullback as shown below

I would expect Bursa Malaysia to move in tandem with the Dow ultimately, despite the talk of foreign funds leaving the Asian markets.

If Dow can hold, FBMKLCI will continue to form its major wave 3, 4 and 5.

Under this possible wave count, the recent sharp drop is the sub-wave 3 of wave (iv).

Then the last few days of rebound is the sub-wave 4. There will be one more drop, the sub-wave 5 to complete the wave (iv).

Just monitor closely and let the wave shows us in the next few days whether it is forming the sub-wave 5.



.