Weekly Update

Dow (25,790)

If Dow can continue to move higher in the coming trading sessions, then it is on the sub-wave iii of its wave (vi) of its major wave 7.

But if it starts to move side way and lower, then it is more likely that Dow is at the tail-end of its major wave 8. Bearish.

My reading for FBMKLCI remains the same as what I have mentioned previously as I expect it to move in tandem with the Dow.

Dutaland Bhd (Rm0.56)

Duta will be announcing the quarterly result for its 4th quarter ending 30/6/2018 anytime next week before the Friday's National day. Its cumulative earnings for the first three quarters was a pathetic 0.22 sen a share.

Duta has sold 11,579.31 hectares of its oil palm plantation in Sabah to a subsidiary of Boustead Plantation Bhd for Rm750 million and it has received the 10% deposit amounting to Rm75 million by October 2017. Duta has completed the sale on 16th May and received the balance Rm675 million on the same day.

Based on its circular to shareholders dated 28th March 2018, Duta was expected to report an earning per share of 44.3 sens for its financial year ending 30/6/2018.

Computation was based on sale proceed of Rm750 million less the aggregate NBV of the plantation assets of Rm340.24 million and divided by 846 million shares. Net assets per share will increase from Rm1.11 to Rm1.54.

But net cash received in May 2018 was Rm703 million after deducting Rm47 million of expenses related to the land sale. Based on Duta's 3rd quarterly report, it has a net cash of Rm 21 millions. Together with the Rm703 million received, its current net cash per share is about 85 sens. But this will not guarantee that Duta will go to 85 sens. A good example is FACB that has a net cash per share of Rm1.94 but it closed at Rm1.32 last Friday.

Technically if Duta can moved up strongly next week because of the one-off earning of around 44 sens a share, it is possible that the run-up is the sub-wave v of its major wave 1 with a target of 73 sens.

But if it failed to run next week and instead it starts to move lower after releasing its 4th quarter result, then its side way movement since 2010 will continue forming a major ABC-X-ABC wave (2).

Nothing is for sure. That is the reason market can exist. That is why there is always buyers and sellers at the same time every good or bad moment.

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Is he relevant ?

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To right the wrong

My choice for the 8th PM

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Weekly update

Dow (25,669)

Not much changes to my reading for Dow. If it can continue to move up strongly in the next few weeks and moving above the 26,616 level, then it is still forming its major wave 7.

If Dow is unable to go above the 26,616 level, I cannot rule out the possibility that it is on the tail-end of the wave B of its major wave 8.

For FBMKLCI, I am still holding on to my previous readings with close correlation to the Dow.

USD/MYR (4.1025)

After going through the Monthly, weekly and daily chart carefully again, it appeared to me that vert likely the current weakening of the Malaysian Ringgit is the wave ii of its wave C and this wave ii is about to complete. I am quite bullish on ringgit. The next strengthening may bring USD/MYR to around 3.00 level.

EG Industries Bhd (Rm 0.60)

EG formed a very strong candlestick on Friday with very high volume of 9.3 million shares changed hand. It added 6 sens (+11%) at the close after touching an intra-day high of 62.5 sens. Is this the first candle of its mini wave 3? Is the run-up since early July marked the starting of its mega wave (3).

Is EG forming an 'inverted head and shoulder' pattern? I am keeping my fingers crossed.

Miscellaneous

They forgot what they have done in those years before GE14.

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Rare Planetary Arrangement..

Our solar system originally has 9 planets with the discovery of Pluto in 1930. In 2006, in a highly controversial decision the International Astronomical Union has classified Pluto as 'dwarf planet', reducing the list of 'real planets' in our solar system to the current 8 planets. Mercury is nearest to the Sun and Neptune is furthest away from the Sun.

Starting 19th July 2018 until 1st September 2018 our solar system is experiencing a rare planetary arrangement, all the 8 planets plus the demoted Pluto are moving to one side of the Sun leaving the region on the other side of the Sun in barren wilderness.

4 weeks has passed since 19th July, the concentration of gravitational force on one side of the Sun has not caused any serious problem to our planet earth except the Indonesia earthquake in Lombok island that killed 430 people so far. Just keep our fingers crossed for another 3 weeks. Don't listen to the doomsayers.

For the stargazer, this phenomenon provides an opportunity to see some of the planets at night. For those interested can go to the site 'Objects in your sky: Planets' to find out the time and location of any visible planets.

Within this week the planets that can be seen in Kuala Lumpur sky are Venus, Mars, Jupiter, Saturn, Uranus and Neptune.

In North American sky at mid-week from August 13 to August 20, Mars, Saturn, Jupiter and Venus can be seen

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New Currency crisis in the making ?

Asia markets dropped sharply on Monday as investor sentiment took a knock amid the renewed slump in the Turkish lira.

The Turkish lira has dropped about 41% against the US$ in August. So far it has dropped 85% this year. In 2012 to 2013 the lira was holding very well at around 1.7 lira to 1 US$. In today's trading, the lira reached an intra-day high of 7.0409 (-9.5%) from its Friday level of 6.4275 before recovering to around current level of  6.8795 (-7% within a day).

The country withe the worst financial crisis this year is Venezuela. Its currency the Venezualan Bolivar has dropped from its February level of 24,825 bolivar to 1 US$ to last Friday closing of 248,520 bolivar to 1 US$. The drop is 900%.

Which country is next in line ?

Luckily we have kicked out BN.

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Weekly Update

Dow (25,313)

After 2 weeks I am still unable to confirm which way Dow is heading at this moment. But if one believed that the trade war between US and China can only going from bad to worst, Dow is more likely to go south, heading for 23,000 level, another 2,313 points or 9.1% to go before completing its major wave 8.

FBMKLCI (1,805)

I expect KLCI to move in tandem with the Dow with respect to the two possibilities.

One of my readers has asked for an example for stock with OBV showing stock distribution by the 'smart money'. One good example is the Star Media Group Bhd (Rm1.24). Very likely in early 2015 'distribution' has started.

Another stock is ATTA Global Group Bhd (Rm0.86).

There is a different between Star and ATTA (please remember that my observation can be wrong), the distribution for Star were done by 'investors' that do not see a future in newspaper's business. They have given up hope on this stock.

For ATTA, the accumulation and distribution were done by 'smart speculators' with a simple plan - accumulate - pushing the price - distribute - short selling - buy back. 'Round one' completed. Looking at the OBV, 'they' are still holding some stocks. Have they started the 'Round two'? Are they accumulating?

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What a joke.

Except

Anwar's wife and daughter.

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What to say.

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On-Balance Volume

To answer the comment of Mr. Naruno Tony on MyEG's OBV, lets talk a little bit on OBV this time as I have nothing much to update my reading for the Dow and the FBMKLCI. The two options for both the indices remain the same.

On-Balance Volume (OBV) is a momentum indicator developed by Joseph Granville in the 1960s.

He used this indicator to look for accumulation or distribution of stocks by the 'smart money' (institutional investors). He believed that when volume increases sharply without a significant change in the the stock's price, the price will eventually move upward, and vice versa.

My E.G. Services Bhd (Rm 1.17)

For MyEG, the accumulation took 2 years from mid 2010 to mid 2012 followed by an OBV breakout and the stock started to run until GE14 on 9th May 2018. The OBV uptrend from 2012 to 2018 is just a normal trend with no sign of distribution. The uptrend during this period cannot be considered as accumulation, it just moved up in tandem with price. Usually I just let them run but will monitor closely for sign of distribution and use wave count to see where is the stock heading.

Then came the sharp drop with the change of Government on 9th May's GE14. After a 4-day holidays after the election, MyEG dropped limit down from 2.58 to 1.81 (-30%) on Monday and another limit down on Tuesday from 1.81 to 1.27. Finally it reached its low of 0.685 by 1st June.

Before the sharp drop there is no sign of distribution. Assuming the 'smart money' are still holding the stock (most probably they expected BN to win the GE14) and very likely they are the net buyer (have no choice) during the plunge. 

From June to August, the OBV moved with the price up and down, just a normal sign, no accumulation and no distribution. I would prefer to forget about that part of OBV before GE14 and start monitoring the OBV starting 1st June 2018. The 'smart money' will either have to find a way to push the price back to 2.58 or higher or they will distribute slowly by spreading rumours to manipulate the price to salvage whatever they still have.

To illustrate a good indication of accumulation lets look at Dnex.

Dagang Nexchange Bhd (Rm 0.40)

From 2011 to 2016 the 'smart money' is a net buyer for Dnex when it dropped from 0.40 to 0.20 (-50%)

Within 9 months from August 2017 to April 2018, the stock price was pushed from 0.20 to 0.66 (+230%) following an OBV breakout. From May 2017 to April 2018, the stock price dropped from 0.66 to 0.34 (-48%) but the OBV indicates that the 'smart money' are net buyers of Dnex.

When Dnex moved to 0.42 on 26th July, there was a small temporary OBV breakout to mark the end of sub-wave i. If my reading is correct, Dnex is forming its sub-wave ii at this moment. The next surge with high volume and another OBV breakout will signal the starting of sub-wave iii of wave (i) of major wave 3 of mega wave (3). I am not asking you to buy but technically this is what I have for Dnex.

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