Puzzled

Recently the government has announced that it will introduce a Goods and Services tax starting in 2015, and also possible increases to electricity tariffs, public transportation fares, highway tolls, property assessment rates and others in 2014. Since the government slashed petrol subsidies in September, prices for many essential goods and services have increased. 

In response to a planned rally at Dataran Merdeka on 31st December to protest against the above price hikes, the police today issued a stern warning that individuals or groups would be charged for holding the illegal assembly to overthrow the Government. 

Police's logic :

Protest against price hikes = Overthrow the Government

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Dow - It is mini-wave 3 run-up

By now it is clear that Dow is having its mini-wave 3 of sub-wave iii run-up. I need not worry about the possible wedge formation that I have mentioned previously. From now until 3rd quarter of 2014, I just need to watch Dow unfolding its sub-wave iii, iv and v, if wave (ix) has only 5 sub-waves. The target is 20,000 The up trend can last even longer and can go well beyond 20,000 if wave (ix) has 9 sub-waves.

TA Enterprise Bhd (Rm0.775)

My wave count for TA.

 

If my wave count is correct, its next surge is the sub-wave iii of wave (iii) of major wave 3 of mega wave (3). It is the iii of (iii) of 3 of (3).


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Merry Christmas

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Latitude Tree, FACB Ind, Land & General and PM Corp.

Latitide Tree Holdings Bhd (Rm2.35)


I mentioned 2 stocks on 28th November, Latitude Tree and FACB Ind. At that time both the stocks have just announced their respective quarterly (July to Sept) earning.

For Latitude Tree, earning per share (EPS) is 15.02 sen, net assets per share is Rm 2.57. Since then Latitude Tree has continued with its major wave 3 and moved from Rm 1.48 to Rm 2.35, up 58%.

It is currently forming the wave ix of its major wave 3.

FACB Ind Incorporated (Rm 1.25)

FACB on the other hand has hardly moved at all. In fact it dropped 3 sen from Rm 1.28 to Rm 1.25.

FACB reported EPS of 76.64 sen and net assets per share of Rm 2.61. The high earning was due to its disposal of properties. Without this exceptional item, its profit due to its normal operation was about 2.3 sen a share. After its properties sale, its net cash per share is Rm 1.77

FACB is currently forming its  a-b-c wave 4. That explained why its stock price has been moving side-way to lower.

Land & General Bhd (43.5 sen)

I have modified my wave count as shown below. Its latest quarterly EPS is 3.86 sens and net assets per share is 75 sens. Its cash per share is 42 sens.

Land & General is forming its sub-wave ii at this moment. Its next wave up is the sub-wave iii of major wave 3 of mega wave (3). It is the iii of 3 of (3).

Pan Malaysia Corporation Bhd (22.5 sen)

Its last quarter earning is 3.22 sen a share. Net assets is 48 sen, out of which 20 sen is cash.
The current pull-back can be its wave 6 correction. So watch out for the wave 7, it can be very dynamic with high volume. Just wonder whether its price will go below 20 sen.

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Dow - Next week can be crucial.

Dow closed the week with another new record at 16,221. I am looking forwards to Dow moving above 16,400 level next week, to confirm the mini-wave 3 run-up and hopefully Dow can last another 9 to 10 months..

And if this is going to be the last surge before the bubble burst, an euphoric parabolic run-up may take place to bring Dow to above 20,000 level.

However, if Dow failed to break its upper resistance line to go above 16,400 next week, Dow may complete its wave (ix) with a wedge formation as shown below. It's quite likely that Dow may go to 14,000 level to form its major wave (6).

My focus next week will be on whether Dow can break its upper resistance line.

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Dow Jumped on Federal Reserve Tapering Announcement

Dow jumped 292 points (+1.84%) on Wednesday to set another new record at 16,168 level after Federal Reserve announced to reduce its US$85 billion monthly bond purchase by US$10 billion starting January 2014.

With this surge, last Thursday low of 15,739 is very likely to be the mini-wave 2 of the sub-wave iii.

Dow will set more new highs on its way to complete its mini-wave 3 of sub-wave iii. 3 of iii, it has to be dynamic. With this wave count, Dow is likely to complete its wave (ix) during third quarter of 2014.

Another possible wave count is rather pessimistic, sub-wave iii and iv of wave (ix) were completed as shown below, a wedge formation. Wave (ix) can be completed within the next two weeks.

I personally feel that this option is unlikely. It is more likely that Dow will break its upper resistance line to complete its mini-wave 3 of sub-wave iii.


Land & General Bhd (46 sen)


L&G closed strongly today at 46 sens. Is this the starting of sub-wave v of wave (iii) ? With a quarterly earning of 3.86 sen per share and having cash at 42 sen per share, L&G at 46 sen is dirt cheap.

 

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Dow - Has sub-wave iii ended ?

I am a firm believer that when Dow plunges, the whole world stock indices will follow. At this moment I cannot rule out the possibility that the completion of wave (ix) of major wave (5) might be the end of the bull run for Dow that started in March 2009 from 6,547 level.   

So far Dow has completed its sub-wave i and ii of its wave (ix).

Has sub-wave iii ended ?


Possibility 1 - Not yet

Dow is currently forming the mini wave 3 of sub-wave iii as shown below. Wave (ix) may be able to last until 3rd quarter of 2014.

Possibility 2 - sub-wave iii has been completed

Dow is in the process of forming its sub-wave iv. If sub-wave iv is taking the form of a-b-c-d-e as shown below, Dow is likely to complete its sub-wave iv within 2 weeks by end of this month, latest by early January 2014. Dow may take another month, say by early February 2014 to complete sub-wave v and wave (ix). If wave (ix) has only 5 sub-waves, sub-wave i to v.

Sub-wave iv can also take the form of a 3 waves a, another 3 waves b and 5 waves c.

Under this alternative 2, Dow may be able to drag on a little bit longer until March 2014 to complete the crucial wave (ix) and possibly major wave (5) and also mega wave 1. Then mega wave 2 will begin.

However if Dow still can live on after this crucial wave (ix) turning point because of excessive liquidity, the next higher degree pullback is the major wave (6) as shown below.

Then Dow will have a long journey to go until 2015 to form its major wave (6)-(7)-(8)-(9).

I read from TheEdge that icapital.biz Bhd, a listed closed-end fund of Tan Teng Boo, had over Rm209 million cash as at 31st August, 2013, compared with the value of its investment, which stood at Rm199.6 million. In notes accompanying icapital.biz's quarterly result ended 30th August, it cites Buffett's virtues of patience, saying, "We don't get paid for activity, just for being right. As to how long we will wait, we'll wait indefinitely." I guess Tan is waiting for the collapse before doing anything.



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Land & General Bhd

Land & General (L&G) moved higher everyday in the last 4 trading sessions from 41 sens to 47.5 sens with high volume.

My wave count for L&G is as shown below.

L&G is currently forming its sub-wave iii of wave (i) of major wave 3.

L&G earned 3.86 sen a share for its latest quarter ending 30th September. It has Rm 293 million cash in hand with bank borrowing at Rm 26 million. Assuming full conversion of its 77 million ICULS, the number of share is 636 million. Cash per share is about 42 sen. With quarterly earning at 3.86 sen and cash per share of 42 sen, L&G looks cheap at 47.5 sen.


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DBKL Proposed Hike in Property Assessment

On DBKL proposed hike in property assessment, Tong Kooi Ong, the executive chairman of The Edge Media Group has these to say :

"A rise in property prices should not be the justification for an increase in assessment. Rather, any increase in assessment rates should be tied to an increase in DBKL's operating costs".

"DBKL's development expenditure should be funded by the federal development budget of the country".

"Instead of asking for more money, it should be looking at ways to improve efficiency and reduce costs and wastage".

By comparing DBKL's proposed budget with that of Selangor with respect to population, area and number of household, he illustrates how inefficient DBKL is.

Click 'DBKL and Selangor : A tale of two contrasting budgets' for his full article.

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Dow - A higher degree correction

Dow dropped 130 points or 0.8% on Wednesday. Dow opened lower on Thursday morning, it dropped another 70 points after 30 minutes of trading. Dow is having a higher degree correction.

Possibility 1 - Mini-wave 2 correction.

As shown below, Dow is forming wave c of mini-wave 2 of sub-wave iii of wave (ix). This is a more bullish scenario as wave (ix) will take a longer time, say 4 to 6 months to complete and it may reach 17,000 level.

Possibility 2 - sub-wave iv correction.

Dow is forming wave a of its sub-wave iv. Dow is likely to complete its sub-wave iv by early January 2014. Sub-wave v may take another month to complete. Wave (ix) is likely to be completed before end of February, 2014 and wave (ix) may reach only 16,200 or it may even end at wave (iii)'s high of 16,086 to form a double-top reversal pattern.

On the completion of wave (ix) I will have to answer the crucial question of whether that is also the end of major wave (5) and mega wave 1 as shown below.

Mega wave 2 may go for a 30% pullback. Be careful.

However if the subsequent pullback is the major wave (6) then I will have to worry about the possibility of an 'Expanding Triangles' on the completion of major wave (7), that will be years later, so no need to worry about that at this moment.


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Any danger sign ?

Hang Seng Index

No danger sign. Forming sub-wave (ii) of wave 3.

Singapore STI

No danger sign, forming sub-wave ii of wave 5.

FBMKLCI

 

Forming sub-wave iii of wave (v), no danger sign.

Pan Malaysia Corporation Bhd (PMC)

PMC Group is primarily involved in the manufacturing, marketing and distribution of food and confectionery products with subsidiaries operate in Malaysia, Singapore and Hong Kong. Its products under established brands such as Tudor Gold, Crispy, Tango, Kandos and Kiddies are exported to more than 30 countries worldwide.

Its earnings for 2011 and 2012are 0.39 sen and 1.13 sen per share, very low.  For 2013, its cumulative earning until 3rd quarter is 3.28 sen per share. The higher earning this year is due to an exceptional gain of Rm 21.58 million from disposal of a piece of land with building. Net Assets per share is 48 sen. Its cash in hand is about Rm 139 million, bank borrowing is about 6 million. If I divide net cash of Rm 133 million by its 712 million shares, It is 18.6 sen per share.

In early September, its share price started to move from 14 sen to a high of 34 sen by early November to complete its wave 5. Since then its price has started to move lower and it closed at 23.5 sen today.

Looking at the chart, I just wonder whether the current correction is the wave 6 pullback or it is the starting of the higher degree major wave (4) correction, if wave 5 marked the end of its major wave (3).

For major wave (4) correction, it may drop to around 16 sen level. But for a wave 6 pullback, the magnitude is about there.


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Worst case scenario - Expanding Triangles

Bearish Option

Refer to Matthias Chang's 'Dow at 16,000 - Suicide Poker' and several of his other articles, I guess Dow with an 'Expanding Triangles' will fit into the magnitude of the coming financial tsunami in his mind.

In this bearish option, the year 2000's peak at 11,722 marked the end of super wave (V) as well as the end of grand super wave (III) as shown. Grand super wave (IV) is a 3-3-3-3-3 expanding triangles formation.

The bull run since 2009's bottom is the mega wave D that has 7 major waves. Major wave (5) is about to complete. After that Dow will have a major wave (6) correction to be followed by the final major wave (7)'s run-up to complete the mega wave D. Mega wave E may fall short or it may also over-shoot on the down side to 5,000 or 4,000 level for Dow. If Dow can hit 17,000 before it drops to say 4,000, that is a 76% drop.

Not So Bearish Option

In this option, assuming the 'Untested New Concept (flood the market with money)' of the central bankers some how can work, then the bull-run since the 2009's bottom is the mega wave 1 of the super wave (VII).

Major pullback will only take place after the completion of the mega wave 1. The only question now is whether mega wave 1 has 5 or 9 major waves.

Possibility 1 - Mega wave 1 has 5 major waves.

Dow is about to complete the wave (ix) of its major wave (5) as shown below. The mega wave 2 correction may bring Dow to the 11,000 level for a 30% correction.

Possible paths for wave (ix)

For either case wave (ix) is likely to end during 1st quarter of 2014.

Possibility 2 - Mega wave 1 has 9 major waves

Still a long way to go before the completion of  major wave (9) and before the mega wave 2's 30% correction takes place, may be in 2015. Since the 2009's bottom, Dow is about to finish its major wave (5). It still has major wave (6), (7), (8) and (9) to go.

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The man that overturned apartheid

Nelson Mandela
Born : 18th July, 1918
Died : 5th December, 2013

 "If I had my time over I would do the same again, 

so would any man who dares call himself a man"

When asked to give a tribute to Mandela, 

Jose Mourinho, "I feel too insignificant to make any comment."

Sorry Dow has not finished its mini-wave 4

Dow Dropped another 25 points on Wednesday and it opened lower on Thursday morning. The mini-wave 4 can have a possible low of 15,746. But once it goes below 15676 level (the top of sub-wave i, then I will have to review my wave count.

Matthias Chang, "If any one of you venture into the market after Dow hitting 16,000 in the hope that it WILL soar higher, YOU WILL BE IN FOR A SURPRISE. Dow may collapse anytime, even before it hits 20,000".


Click 'Dow at 16,000 - Suicide Poker !' to read Matthias Chang's article.

If one can agree that the current bull run and records setting is fueled by excessive liquidity (money printing), and if one believes that this is something that is not sustainable, then one will have to agree with Matthias Chang that this is a 'Suicide Poker' game. Under this scenario, it is true that 'Dow may collapse anytime'. But as a charting technician, I believe that there should be some 'signs' that tell me to run for my life before the collapse.

Remember the banker that I have mentioned in one of my earlier articles. To him, the assets purchase is supported by solid liquidity. To balance or to absorb the excessive liquidity, the value of the assets has to move to a higher level (new equilibrium). The 'money printing' by central bankers is an unprecedented 'experiment' or 'untested new concept' of the central bankers. It is possible that they themselves also do not know this story has how many episodes and how the story is going to end. Under this scenario, the 'assets bubble' may be able to drag on for a few more years and Dow may go higher than 20,000.

A Super Wave VII scenario.


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