Resorts World Bhd

A very solid stock with Rm2.79 billion cash and zero bank borrowing. A very clear inverted head and shoulders formation with Rm 2.60 as breakout level as shown above. Looking at the chart, Resorts can never come this low without the current economic crisis that rank only second to the 1929 Great Depression. An golden opportunity for investor to keep for long-term.

Recent heights at end of wave (I) and wave b rebound are the same value of Rm2.57. It will have to break Rm 2.57 before breaking Rm 2.60, the neck-line for the inverted head and shoulders

The simplified balance sheet is very solid. Look at the Rm 2.794 billion cash and the Rm 8,355 billion reserve. The company has been buying back its own shares from the open market since July 2007 when its price was Rm 4.20. The item under "Treasury Shares" of Rm 627 million is the cost for 182 million treasury shares. The average purchase price is Rm 3.44 which is much higher than the Thurseday closing price of Rm 2.42.

Limit on SPM subjects

DPM said yesterday government might limit the number of subjects taken by student in the SPM for fairer PSD scholarship selection. I am very stupid, can somebody tell me why by limiting all the student to take only 9 subjects or less can make PSD scholarship award fairer. To me, if the Government considered students with 7A1 should be given scholarship, then all students with 7A1 and above be given the scholarships, simple only. If there are other factors, make them known to everybody, be transparent. Of course other than this NEP has to be taken into consideration, nobody is questioning NEP.

Dow 3 Red Candlesticks In A Row

Dow dropped another 129 points on Thursday but the uptrend still remains intact as shown below

For the two possibilities that I have discussed in my May 19 post, the (I)-(II)-(III)-(IV) option remains the same except the wave a-b-c for wave(IV) takes a slightly different form but the magnitude and duration are almost the same as the a-b-c for (II)

For the other 1-2-3-4-5-6-7 option that I have mentioned, it is no more valid. It appears that that the major (I) has only 5 waves instead of 9. Dow is forming (II) at the moment. For this option the wave c of (II) can even go slightly below the lower trendline.

Look at the indicators below, both the options have even chances.

How high KL Composite can go ?

(Double clicks to enlarge the chart)

KLCI after hitting a bottom at 835 in December 2008 (refer to my older posts), it has so far completed wave (I) and (II) to form a "Triple Bottoms Reversal" pattern. Wave (III) started in March 2009 from 837. So far wave (III) has completed its sub-waves i-ii-iii-iv-v-vi-vii and viii, currently it is in sub-wave ix that may take another 3 to 4 days to complete. Based on the magnitude of wave(I) of 92 points, by using Fibonacci ratio of 2.618, wave (III) can end at 1077 (92x2.618+837) unless wave (III) continues with sub-wave x-xi-xii and xiii, under such circumstances Fibonacci ratio of 3.618 will have to be used.

Dow put on 235 points (2.8%) on Monday

Dow's 235 points up (2.8%) on Monday is bigger than what I have expected and has temporary reversed the downtrend set by the first 5 mini waves that I have mentioned two days ago. It appears that the current uptrend is being prolonged for a while.

As for the technical indicators, as usual they will swing together with the index.

After forming the 5 mini downtrend waves, I was expecting the Dow to break through the lower trend-line but instead of that, Dow has a candlestick that has recouped 75% of the losses caused by the 5 mini waves and at the sametime ruled out the expected downtrend waves i-ii-iii-iv-v that I have mentioned previously because the 'iv' rebound can not be so big that it overlapped 'i'. As shown below, the current uptrend is still remained intact.

The uptrend cases of either (I)-(II)-(III)-(IV)-(V) formation as shown above with Dow currently forming wave(V) or the 1-2-3-4-5-6 formation as shown below with Dow currently forming wave 7 (same as KLSE Composite) are more likely. Traders that have cleared out can move in again for another round whereas medium term investors can clear more stocks at better price.

Meanwhile keep an eye on the lower trendline for a break down in the uptrend. The balance of the uptrend journey is expected to be short.

'Char Siew Pau'

This is something from my daughter, some of you might have heard this before.

These are 'Char Siew Pau'

And these are 'Man Tau'

Question No 1 : 'Char Siew Pau' and 'Man Tau' went for movie, a sad movie. 'Char Siew Pau' cried and cried and cried but 'Man Tau' didn't, why?

Answer : 'Char Siew Pau' has filling (feeling), 'Man Tau' doesn't have filling.

Haha 'Mo Liew'

OK, next question most people can answer

Question No. 2 : 'Char Siew Pau' and 'Tai Pau' went for the same movie. 'Char Siew Pau' cried and cried, 'Tai Pau' cried louder, why?

Answer : 'Tai Pau' has more filling.

Question No. 3 : 'Char Siew Pau' and 'Tau Sar Pau' went for the same movie, 'Char Siew Pau' cried and cried, 'Tau Sar Pau' hugged 'Char Siew Pau' and consoled 'Char Siew Pau', why?

Answer : 'Tau Sar Pau' is sweet.

Next question many people can not answer.

Question No. 4 : This time 'Char Siew Pau' went to the same movie alone, 'Char Siew Pau' didn't cry, why?

Answer : This is the fourth time 'Char Siew Pau' watched the same movie. The filling has no more feeling.

'sub-fun-moo-liew'

Five waves set the trend

Both Nasdaq and Dow closed with about 0.5% drop on Friday as shown below with their respective technical indicators.


It is interesting to find that the indicators for the first time since March 9 are moving towards the baseline. It is also interesting to note that also for the first time since March 9, Dow has formed five mini downtrend waves as shown below. The Elliott's wave basic concept is "five waves in the direction of the main trend followed by three corrective waves". Based on this basic concept, the main trend for Dow currently is downtrend.

As discussed in my previous post, in a 1-2-3-4-5 formation as shown below, Dow after completing its major wave (I), it is currently trying to complete its wave "a" of its a-b-c or a-b-c-d-e corrective wave (II). So far it has completed "i" and "ii" and is either has or needs another one or two days to complete its "iii". "a" can take the form of either three-waves i-ii-iii or five-waves i-ii-iii-iv-v.

The second possible form of (I)-(II)-(III) formation for Dow (the bearish option) as shown below, after completing wave (III) and that is the major (6) of the bear since October 2007, Dow is heading for major (7) as explained in my previous post, Dow can reach 6,547 or even lower. This option looks unlikely at this moment but in stock market "anything can happen". At the end of 2007 very few people including those experts of the big international investment houses were able to foresee the Dow to drop for 17 months to 6,547. In the current down trend Dow has completed "i" and "ii", currently in "iii" to be followed by "iv" and "v" to complete its wave 1, which is to be followed later by waves 2-3-4 and 5. A "long and winding road"-The Beatles

While analysing the Dow, it suddenly struck my mind that there is another high possibility that the market might just take a short pause before it continues to run for another leg as shown below. In this case, the waves after (III) is not i-ii-iii as mentioned above, they are a-b-c instead as shown below with "c" having 5 mini waves. If this is really the case "c" has either completed or it needs another one the most two days to complete. What about the indicators? Well, the indicators will just touch the base and then go back to touch the top again. If this does happen, the (V) is going to be a short (V) for a diagonal wedge formation, just nice for one to sell the rest of the stocks in hand. For the traders, just nice to go for one more round especially on those speculative penny stocks that have pulled back sharply in the last few days. ((III) is much shorter then (I), (V) should be much shorter than (III)).