CORRECTION AFTER REBOUND FROM MAJOR SELLING DOWN

Correction is always followed by the rebound after major selling down.

The major selling down was heavy last week, especially on last Friday. Market started to strongly rebound around 1 1/2 before market closing on 17/8. The rebound continued to climb, hit the bouncing peak today morning.

Human physchology can explain this scenario. Major selling down has risen attention from punters to long term investors. Go and asking around the investors, you may find some long term investors were so worried on thier shares, disposed their shares last week afraid of everything back to square.

Many start to whispering on 1997 crisis. The major seling down pattern, all way down without a rebound, is alike 1997 crisis. Will it be crisis? Will all my shares 'kaput'? Investors are so worried their paper gain gone and thier paper loss widen.

Though our research shows it seems a different scenario of this major correction compared to 1997 crisis, as sub-prime issue yet to stailised, many will choose to temporarily aside. Therefore, market does always have correction after rebound from major selling down.

Rebound hit a peak today morning. Using T4 Shaking Out Theory(Shaking out Contra Players), the market may only bounce back again Friday or next Monday afternoon.

We are now waiting to fishing again at low. If our theory is right, the correction is just started today, will last for few more market days.

Happy Fishing to All !!!

COUNTER TO WATCH - 801

Counter To Watch on 1 Aug 2007

POTENTIAL BREAK OUT MOMENTUM
AFFIN(5185) & AFFIN-WC (5185Y)

HAVE YOU TAKEN PROFIT BEFORE 528 - 601 CORRECTION ?

The correction we are expecting, i.e. 528 - 601 (28/5/2007 to 1/6/2007) is near.

On 515 (15/5/2007), our market did provide a buy low opportunity, unfortunately, broad market was so weak to spring up except KLCI, which shot up 20.34 on 522 (22/5/2007). Today the bad days are near, the market is expected to be cloudy and windy throughout next week.

As the traders, we are now ready with cash cow on hand to aim for buy low next week. Our broad market shows the downward move rather than upward move. No doubt there are some selected stock play such as WELLI, KENCANA and so on. Did you able to catch them at low? If you did, you are practising the right trading method, congratulations.

If you didn't, you may consider to try buy on weakness method which we believe, next week will be the opportunity. This is what our strategy for recent trade.

515, CHANCE TO COLLECT LOW AGAIN

OUR STRATEGY : BUY ON DIP TODAY, 15 MAY, THE BROAD MARKET IS FORECASTED TO SRPING UP A BIT WITHIN THESE 2 WEEKS. NO DOUBT KLCI IS THE BENCHMARK, BUT WE ARE IGNORING THE IMPACT OF KLCI THIS ROUND.

HUBLINE (7013)

Have been wathcing this counter lately. RM 2.80 is the most important resistance to break, watch out.

BUY OPPORTUNITY FOR SHORT TERM PLAYER

Dow Jones lost 146 points overnight, KLCI today once lossed 19 points in the morning, KLCI lossed 8.88 for midday closing.

Technically, today market provides buying opportunity for short term player. Opportunity for broad market to rebound is high next week. Our strategy is collecting today, and aiming for taking profit for 10% capital gain within next 2 weeks.

The last week of May/Early week of June is the awaited entry point, we are waiting for mid-term investment positioning. Ensuring ample cash cow before hand, grab the buy low opportunity for 2nd liner stocks.

MARKET SLOW DOWNTREND

Our latest finding shows the overall market is heading downward except KLCI. If one counter rebound, take profit first, keep the cash cow on hand wait for End of May/Early of June to buy low is our strategy.

MARKET CORRECTION END MAY/EARLY JUNE

CI climbs to New High, break 1994 high (1,332). Limited selective counters such as LBS and QUEST going up slowly. 2nd & 3rd liners go up and down, ding and dong, going no where. These few days, market is slightly correct, looks like correction, but it is not. The market may have chance to rebound only within 2 weeks, eventually the real correction is forecasted to set in in last week of May/first week of June.

We would say our strategy is, if one counter gives 10% capital gain within next 2 weeks, we would take profit, keep our cash cow, waiting for the real correction in the last week of May/first week of June to buy low again.

CI TARGET 1,600 - 1,800

Our market has continued its strong bull momentum, our research shows CI may hit 1,600 - 1,800. Comparing to regional performance, CI is still considered laggard. This year, CI may extend its bullish to catch up the regional level.

Fundamentally, promising economic growth and corporate earnings are relected on Bursa Malaysia which is the barometer of Malaysia Economy. Technically, market is in the accumulating phase where the broad market may make another upside move within 2 months' time.

WE ARE NOW BACK AT http://STOCTOUCH.blogspot.com

First of all, we would like to thank a supporter who emailed us and helped us to get rid of our blog address problem. We are now back at http://STOCTOUCH.blogspot.com as usual.

In here, we would like to share our view on the market as well. The quite market these few weeks shows the Accumulating Phase. Which in turn, we do think, there may be a market rally after this Accumulating Period. Before any aggresive market rally, take profit whenever one gives capital gain around 10% may be strategised.

Our monitor list : FARLIM, KIMBLE, BURSA-CD

MARKET CORRECTION

CI formed Double Top at 1332, Market is expected to correct towards this week end. Market is likely to resume the uptrend next week.

We do feel pity of losing our original blog address, i.e. http://STOCTOUCH.blogspot.com The transition of Blogger Account has resulted the publishing error of our blog to http://STOCTOUCH1.blogspot.com as you are visiting now. Due to no technical support by Blogger, we has to publish our blog to http://STOCTOUCH1.blogspot.com until further notice.

We do appreciate if any fellow know how to solve this problem contacting us at stoctouch@gmail.com

LOST ORIGINAL BLOG ADDRESS

A few weeks i didn't post any updates to my blog at http://STOCTOUCH.blogspot.com, now i couldn't publish my blog to this original blog address.

Log-in my account (www.blogger.com), i found out "the publish address" is automatically filled as http://STOCTOUCH1.blogspot.com. There is "1" at the back of my blog address STOCTOUCH. I tried to change it back to the original blog address, it showed "the address is not available".

I totally lost my visitors, after years i built it.

I have written to blogger staff a week ago, but it was not replied. I am feeling helpless for solving this problem. I do hope someone can help me up to solve this problem.
Whoever is willing to help me to solve this problem, please write an email to me at stoctouch@gmail.com

Thanks for help.

CIMB : MALAYSIA NEEDS MORE CALL WARRANT ISSUERS

(Business Times (Malaysia) Via Thomson Dialog NewsEdge) CALL warrants are crucial in boosting market volume and they are in great demand from retail investors, but Malaysia will need more issuers - typically investment banks with adequate capital and infrastructure - to grow this product, CIMB Group says. A market leader in the area, CIMB Group currently issues 85 per cent of call warrants in the domestic market.

"The number is way too high. We hope to see more players here," Datuk Nazir Razak, chief executive officer of CIMB Group, said yesterday in Kuala Lumpur. Unlike in Singapore and Hong Kong where there are more than 10 issuers in the market, only three players are issuing call warrants in Malaysia - CIMB, AmInvestment Group and OSK Investment Bank Bhd.Nazir said the warrant market holds great potential since the number of issues here is just a fraction of that of the more established markets such as Hong Kong and Singapore. Over the past three years, the Malaysian market has seen just under 50 new issues. Comparatively, Singapore, which launched the product in 2005, has had more than 400 issues a year, while in Hong Kong, there are over 1,000 new issues a year.

Nazir said demand for the product is big, especially from retail investors. This is because call warrants give them the exposure to underlying blue-chips at a lower cash outlay and provide leveraged exposure - with higher upside and downside than the mother shares themselves.

"Call warrants would also help address the low trading-velocity problem on Bursa Malaysia as the product has high trading volume. The hedging activities of the warrant manufacturer would create more activities in the underlying shares too," he added. Still, Nazir said the high level of infrastructure, risk management and capital required of a market maker mean that only banks with such capabilities can afford to issue call warrants.

"We are committed to market-making ... CIMB is there to buy back and sell and that's important. If investors want to sell, there'll need to be a buyer ... the liquidity is crucial to provide confidence to investors," he explained."It's a game for the banks and not the small, niche brokers," he added.

The banking group yesterday launched a public website called CIMB Warrants Portal, providing investors with education and information that they will need in trading call warrants. Bursa Malaysia Bhd chief executive officer Datuk Yusli Mohamed Yusoff, who launched the portal, said many investors have been attracted to warrants lately due to their relatively cheaper entry points compared to blue chip stocks.

"There is a lot more to warrants than just their pricing, and all these factors are vital for investors to know," he said. Yusli said more call warrants should be issued to increase market volume, adding that the current value is about RM85 million.

Call warrants in Malaysia now account for over 5 per cent of the total market volume compared with less than 1 per cent before 2005, when the Securities Commission revised guidelines to allow faster and simpler issuance of call warrants.

source : http://www.tmcnet.com/usubmit/2007/02/05/2311703.htm

ROOM FOR GROWTH IN WARRANTS MARKET

source : http://thestar.com.my/news/story.asp?file=/2007/2/1/business/16744084&sec=business

Warrants have yet to stamp a mark here even though markets like Singapore and Hong Kong saw increased derivatives trading in 2006, thanks to Asia’s bull run. Today’s first of a six-part fortnightly series explores this instrument.

Structured warrant markets in Asia underwent big changes in 2006, partly due to the buoyant regional market and the growing familiarity with the instrument.

With bullish sentiment, warrant trading now accounts for nearly 30% of Hong Kong’s total turnover compared with 7%-9% a few years ago. In Singapore, it contributes to 5%-10% of total daily turnover.

Such appetite for volatility is evident in Malaysia, despite slowed momentum since the new Securities Commission (SC) guidelines in May 2003. Bursa Malaysia shifted gears in the second half of 2006 with CIMB accelerating its warrants issuance programme, followed by AMMB and OSK Securities.

Still, the warrants market here is small and inactive - from 12 call warrants at the end of 2005 to 35 currently.
For 2007, expect to see further relaxation of listing requirements. The current placement methodology (new issues need to be placed to 100 holders, or 50 holders each subscribing to a minimum value of RM100,000) is a barrier to expanding the warrant market. .

Hong Kong and Singapore abandoned such regulations in 2001 and 2004 respectively, replacing them with the “warrant supermarket” approach where issuers list warrants and “shelve” them for public consumption.
Risk management takes effect when the warrants are consumed in the secondary market, causing an influx of warrant launches. Listing fees were lowered as an effect (not a cause) of the huge issuance supply.

Such supply-driven effects fuel structured warrant popularity. Currently, there are 20 issuers in Hong Kong and 13 for Singapore though only a few dominate the market.

They compete to issue or roll over new warrants with relevant strike levels as the market trended upwards throughout 2006.

There are 550 Singapore Exchange (SGX)-listed structured warrants, compared with Bursa's 35 (in 2003, both SGX and SC revised guidelines). Another implication is that the greater range of issuers and warrant issues will translate to depth and market making efficiency with warrants.

Prior to the current system, daily prices of structured warrants were based on supply and demand without liquidity guarantee. Nonetheless, the existing system is not foolproof. Examples include quotations of two call warrants - Resorts-CA and Genting-CA, which traded in opposite directions to their underlying stocks.
The challenge for Bursa is to induce inter-warrant competition from foreign issuers running on a global platform to improve overall market making efficiency.

Risks will increase as more issuers compete for a selective group of stocks. Any inconsistent pricing from volatility manipulation or failure to maintain tight bid-offer spreads will be quickly acknowledged by demand.
While the appetite for volatility can become more manageable on the delta- and gamma-hedging fronts, increasingly competitive supply will evolve and issuers will adopt less defensive techniques.

Bursa, the issuers and the distributing brokers are anxious to keep the warrant market moving. Thus they need investors to understand structured warrants. In Hong Kong and Singapore, warrant issuers actively provide data on warrants indicators and conduct product seminars on warrant trading.

The structured warrant market in Malaysia needs to grow. The typical buy-and-hold warrant trading strategy will only succeed with efficient market makers from a range of issuers. High delta in-the-money warrants will be replaced and rolled over fast with relevant strike levels, and issuers need not resort to defensive market making tactics (e.g. widening the spreads) and rapid implied volatility adjustments.

Otherwise, investors and traders will adopt shorter holding periods for structured warrants upon closer scrutiny of the various market-making mechanisms employed by the issuers. In markets like Singapore and Hong Kong, about 90%-95% of total turnover on structured warrants were day-trades, a result of three to four years of product adoption.

The Malaysian warrant market cannot at such an early stage implement this, where participation from day-traders prevails over actual retail clients.

CI TO REACH 1,332.04 to 1,440.00

news from theedgedaily.com
By Kevin Tan & Isabelle Francis
http://www.theedgedaily.com/cms/content.jsp?id=com.tms.cms.article.Article_975b9750-cb73c03a-126c6ea0-997a4ce0


Bursa Malaysia is expected to surpass the Kuala Lumpur Composite Index’s (KLCI) all-time high of 1,332.04 in Januray 1994 based on the current rally, underpinned by the increased liberalisation of economy, accommodative fiscal and monetary policies and improving corporate returns on equity (ROE), analysts said.

CIMB Research forecast the KLCI could reach 1,440, outperforming the region for the first time in four years due to a confluence of positive macro factors.

This would be above the KLCI’s all-time high of 1,332.04 during the super bull run on Jan 5, 1994.
On Feb 6, the KLCI surged to its 10-year high of 1,236.63, up 10.9 points while the FBM Emas added 54.31 points to 8,155.14. Turnover surged to 2.09 billion units valued at RM3.41 billion with 451 gainers against 470 losers.

Index-linked counters were the major gainers. Among them were British American Tobacco (Malaysia) Bhd and IOI Corporation Bhd, which rose 50 sen each to RM45 and RM20, respectively.

Resorts World Bhd was 40 sen up to RM16.50, MISC Bhd-foreign 40 sen to RM9.80, and Bumiputra-Commerce Holdings Bhd-CA and SP Setia Bhd 35 sen each to RM5.45 and RM6.60, respectively.

Volume leader Affin-WC with 78 million units done surged 14 sen to 50.5 sen.
CIMB said foreign investors were giving the stock market a significant boost and the local institutional and retail investors should provide the follow-through.

Roadshows by major corporations recently had also been successful in bringing foreign funds into the market. CIMB had taken Khazanah Nasional Bhd and seven companies — AirAsia Bhd, Bumiputra Commerce Holdings Bhd (BCHB), Bursa Malaysia Bhd, Genting Bhd, Malaysian Resources Corporation Bhd, UEM World Bhd and YTL Corporation Bhd – for a one-day conference in London on Feb 2.

It said the response was very good, with nearly 40 representatives from 30 fund management companies attending the one-on-one and small group sessions.

UBS Investment Research Malaysia forecast the KLCI to reach 1,348 by year-end, underpinned by news flow of further mergers and acquisitions, either from new deals or completion of existing deals.

“A better political climate combined with commitment to maximise capital management should bode well for market sentiment,” said its head of research Colbert Nocom (pic).
He said the market was expected to benefit from development spending which is set to rise 24% to RM44.5 billion in 2007 with the onward implementation of the Ninth Malaysia Plan.
However, he said there could be a possible correction for the KLCI given its 32% run-up over the past six months.

“But we think this correction could be short-lived backed by clear signs of increased liberalisation of economy, accommodative fiscal and monetary policies supporting Gross Domestic Product (GDP) growth of 5.5% in 2007 even amid a soft landing for the US economy, and improving corporate ROE,” he said.

Nocom said in terms of ROEs, he expected them to rise to 14.2% this year from 13.4% last year. Earnings per share (EPS) growth was expected to be around 17% in 2007, he said.

UBS Malaysia’s strategy for the first quarter of 2007 was an overweight on the banking and property sectors, which would become proxies to fiscal pump- priming policies. It was overweight on plantations as crude palm oil price was expected to hit record levels.

On foreign investors’ interest in Malaysia, he said it should be sustainable as long as the country’s politics remained stable and corporate earnings are high. Among UBS Malaysia’s favourite stock picks for the year are Malayan Banking Bhd, BCHB, AMMB Bhd, Genting Bhd, KL Kepong Bhd, SP Setia Bhd and IGB Bhd. UBS Malaysia monitors a pool of 44 stocks listed on Bursa Malaysia, most of them with market capitalisation of over RM1 billion.

The laggards included IOI Corporation Bhd, Astro All Asia Networks Bhd and Uchi Technologies Bhd.