5th March 2017 is JINGZHE 驚蟄

Jingzhe 驚蟄, the third solar term, means the awakening of the hibernating insects. Jingzhe marks the starting of warmer weather accompanied by rain and thunder. In ancient China, the farmers would start to prepare the farmland to begin their year long agriculture activities. 

Whatever living things that are hibernating underground, if they do not wake up by the warmer weather, rain and thunder, they will ultimately be wakened up by farmer ploughing the field.

In Southern China especially the Guangdong Pear River delta region and Hong Kong, Jingzhe is the day to pacify the 'white tiger' 祭白虎  using a piece of raw pork and to beat the 'villians' 打小人 with a shoe.

After performing these rituals, there will be a year of smooth sailing, peace and good luck. 

Weekly Update

Crude Oil (WTI) (US$53.23)

Crude oil is expected to complete its wave (iv) rebound to around US$62.50 before end of this year. Wave (v) might bring the oil price to US$25.00. Crude oil is currently forming its mini wave 4.

Dow (21,005)

Dow has started its mini wave 4 of sub-wave iii.

FBMKLCI (1,708)

As mentioned in my earlier post, KLCI is either forming its sub-wave iv.

Or it is forming its mini wave 7. Whatever options, its trend for the next few months is up, up and up with some small corrections along the way.

Gadang Holdings Bhd (Rm1.19)

Gadang added 7 sens (+6.25%) on Friday and it managed to break its upper resistance line with fairly high volume, a bullish sign. An overlapping i-ii-iii-iv-v waves followed by a breakout is a 'must buy' for me. A classical pattern is a breakout followed by a pullback to rest briefly on top of the resistance line - last chance to buy before it flies. This pullback may not take place if the uptrend momentum is too great.

Gadang has completed its mega wave (1)-(2) and major wave 1-2. At this moment it is forming the wave (v) of major wave 3. Advisable to get out at the end of wave (v) as the major 4 correction can be as high as 40%. My target for wave (v) is Rm 1.60.

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What can we say.

He is right. He is not lying. Saudi Arabia announced the increase in price for its higher-grade unleaded petrol from 0.6 riyals to 0.9 riyals per litre in December 2015. A hike of 50%.

At current exchange rate of 0.27 US$ to 1 Riyal, the increase was from US$ 0.162 to US$ 0.243 a litre.

And at Rm 4.45 to 1 US$, the price of higher-grade unleaded petrol in Saudi was Rm 1.08 a litre in 2016. This politician quoted a Dec 2015's news and compared it with our last month price hike and he 'forgot' to compare the current petrol price between Saudi's Rm 1.08 a litre with our lower grade Ron 95's of Rm 2.30 a litre.

On 27 February 2017, Gasoline prices for some of the oil producing countries are as shown.

For March 2017

Our Ron 95 is Rm 2.30 a litre and higher grade Ron 97 is Rm 2.60 a litre. Prices remained unchanged from February. No increase, so no complaint from the public. Ah Jib is happy.

Actually if the computation was based on average monthly price, March's petrol price should increase. Most likely because of the strong protest from the public (we made a fuss) in February when both the prices for Ron 95 and Ron 97 were increased by 20 sens, the authority decided not to increase the price. Anyway nobody know how the 'black box' worked.

If the computation was based on monthly closing price, the prices for March should decrease.

Looking at the March's candlestick, if the crude oil price can maintain at the current level until end of March, our April petrol prices can be expected to drop.

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FBMKLCI and EG

FBMKLCI (1,697)

KLCI rebounded by about 4 points today. Going by my previous wave count for KLCI that the current correction is the sub-wave iv, then this rebound is likely to be the wave b of iv.

However, if KLCI can continue to move higher from here in the next 8 to 10 days, then the last pullback is the mini wave 6. The current run-up can be the mini wave 7 of sub-wave iii.

EG Industries Bhd (Rm 0.885)

I still believed that EG has completed its major wave 4 and is on its major wave 5.

It has just reported an improved quarterly earning of 3.6 sens a share. Net assets per share is Rm 1.24. EG managed to improve its earnings over 3 consecutive quarters from 2.3 sens to 3.38 sens and to 3.6 sens corresponding to improved quarterly revenues from Rm 150 millions to Rm 234 millions and to Rm 259 millions.

With the 2 days of unexpected drops after announcing its improved quarterly earning, I need to modify my wave count slightly as shown.

The pullback until yesterday became a higher degree sub-wave iv correction. EG is likely to continue to move higher in the next two weeks to form its sub-wave v of wave (i).

There is another possible wave count for EG if the October low is not the end of its major wave 4.

If the major wave 4 is a a-b-c-d-e-X-a-b-c formation, then the end of major wave 4 is in November instead of October. Under this condition, its February high becomes the sub-wave i. Then the worst scenario for EG can be a 100% retracement for sub-wave ii to 82 sens. Looking positively, we have another chance to buy EG at October low of 82 sens.


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Insas Bhd (Rm 0.805)

Insas announced its latest quarterly earning of 3.21 sens a share. Net assets is Rm2.18. Its latest earning is expected to be less than its previous quarter of 8.84 sens because it did not sell any Inari share since 29 September 2016. During its previous quarter (1st July to 30th September) Insas sold16.5 millions shares of Inari.

In actual fact, Insas's revenue for its latest quarter has improved by 36%. And if we removed 'Other Income' from its earning, its latest profit before tax has improved by 81%.

Insas's share price continues to drop is because technically it is having its correction phase. Please refer to my post on 16th February.

Details of its 'Other Income' shows that main contributors to its Q1 profit are 'Gain on disposal of shares' Rm 24.6 million, 'Fair value gain' Rm 4.9 million and Rm 6.5 million and 'Exchange gain' Rm 5.9 million.

Technically Insas is on its mega wave (5). It has completed its major wave 1-2 and is forming its major wave 3.

Depending on the magnitude of its current correction, there are 3 possible scenarios.

Scenario 1

Current correction is sub-wave iv.

Correction is almost done. Can be confirmed/ruled out by next week.

Scenario 2

A higher degree wave (iv) correction that may last another 2 weeks.

Next rebound is tricky, it can be the sub wave v of scenario 1 and it can also be the wave b of (iv) of scenario 2. It has to have uncertainty like this or else the market cannot exist.

Scenario 3 (Too bullish to be true - unlikely)

This is the most bullish (long-term) scenario. Insas is forming its sub-wave ii.

If really this is the scenario, Insas will have a long way to go, up up up - Fatt (发) loh.

Insas half-year earning is 12.05 sens. Net assets is Rm 2.18 a share.

As I have mentioned in my 8th February post, Insas has 402 millions Inari shares. For every Insas share there is 0.6 Inari share. At Friday's closing price of Rm 1.91 for Inari, the 0.6 Inari share is worth Rm 1.14. Insas at 80.5 sens is cheap, very very cheap.

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FBMKLCI (1,704)

KLCI is forming its major wave 5.

So far it has completed the wave (i) and (ii) of its major wave 5.Wave (iii) is in progress.

KLCI has just completed its mini wave 3 and it needs a few more days to complete its mini wave 4 at around 1,670 to 1,680 level.

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Dow - When will be its next major correction

Dow (20,743)

When Dow continues to set new record highs, the rest of the major world markets will follow the Dow faithfully, moving higher. How long can the current up trend last ?

Lets look at Dow's long-term chart. The current up trend is the mega wave VII, started in March 2009 after Dow hit a low of 6,547. At its current level of 20,743, Dow has gained 216%.

But mega wave VII is very unlikely to be the shortest wave. If I assumed its percentage gain to be the same as that of mega wave I, the shortest wave so far, mega wave VII can reach 31,000.

Currently Dow is forming the major wave 7 of its mega wave VII. I expect Dow to complete its major wave 7 within this year. The next major correction for Dow is its major wave 8 pullback of around 15% before Dow has its major wave 9 surge to 31,000 level. I expect the major wave 9 to be a crazy, short and sharp euphoric run up with record volume. It should end in 2018. Be careful of the mega wave VIII correction, it can be anything between 40% to 60%.

For short-term, Dow is about to complete its minor wave v as well as its mini wave 3. Mini wave 4 correction is likely to take a week. It will be followed by its mini wave 5 run-up to complete its sub-wave iii.

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