Trading Ideas. Lionind. 123 bottom anticipation.

Watch Lionind for 123 bottom reversal. Resistance at 0.84

At this point of time one can only anticipate the 123 bottom as it needs to break above the 0.84 resistance to confirm. By the way, today's daily candle is a bullish engulfing candle. Interesting.

Depending on one's trading style, there are 2 possible trading scenarios.
1. 0.69 - 0.84 range trade
2. 0.84 break out trade

As usual don't forget your stop loss (...as the pattern may fail plus the overall trend is still bearish)

See More Do More. Bursa Trade Securities

An interesting change is about to take place in the Malaysian securities market. On 01/12/2008, Bursa will be running a new trading platform called Bursa Trade Securities.

More transparency? Less market manipuation? Only time will tell.

"See More Do More...Bursa Trade" that is the new marketing tag line for Bursa Trade. To "see more" go to www.bursatrade.com/

Anyway here's the Bursa Malaysia Press release (with highlights added) :

BURSA TRADE SECURITIES TO OFFER MORE TRADING OPPORTUNITIES FOR INVESTORS.

Bursa Malaysia’s new trading platform enables greater accessibility, efficiency and transparency.

Bursa Malaysia today announced the introduction of Bursa Trade Securities, a new trading platform for the securities market, which is targeted to be operational on 1 December 2008. The launch of this trading platform marks the completion of the exchange’s integrated trading system that will provide greater accessibility for both local and international investors, as well as enhance trading efficiency and transparency in the market

The launch of the new system on 1 December 2008 is subject to a successful Pre-Live implementation test with market participants scheduled for 29 November 2008.

The first phase of Bursa Trade was implemented in 2006 for the derivatives market. Bursa Trade, powered by NYSE Euronext Advanced Trading Solutions, underlines Bursa Malaysia’s commitment to enhance and upgrade its infrastructure and technology as part of its ongoing efforts to achieve an efficient marketplace.

Bursa Malaysia Berhad’s Chief Executive Officer, Dato’ Yusli Mohamed Yusoff said, “Global exchanges are leveraging heavily on technology to offer greater speed, access and control in trading. As our marketplace progresses in tandem with global market demands, this system’s new and improved features will allow market users and investors access to more trading opportunities.”

Some of the key features of Bursa Trade Securities are as follows:

Theoretical Opening Price (TOP)

Investors will be able to have ‘viewing ability’ of the theoretical opening prices for each stock under the pre-opening phase from 8:30am until the market opens for trading at 9am, as well as in the second session. The pre-opening price process enables real-time calculation of stock prices for first matching at opening phase. This allows investors to gauge market sentiment and prices better as the pre-opening period is made transparent. This is particularly useful for new listings.

Theoretical Closing Price (TCP)

This transparency of trading extends to the moment the market is about to end for both the first and second trading sessions. The theoretical closing price feature promotes natural discovery of closing prices for each session.

Trading At Last (TAL)

The last 10 minutes of each session will provide traders with the opportunity to close their positions. Matching will take place at a fixed price which will be either the last done price or the theoretical closing price.

Continuous trading

Bursa Trade Securities enables real-time and continuous matching of orders compared to 10 seconds matching under the current system. This makes the online trading experience faster and much more responsive.

Five best price limits

Investors would find this feature beneficial as it provides them with a clearer picture of market depth. The five-best price limits give investors more control of their trading decisions as opposed to the three-best price limits that is offered by the current system.

Odd Lots Settlement

Investors will now be able to do partial matching for odd lots which makes it more marketable. Odd lots can be partially matched based on price time priority.

Final Settlement Price for FKLI and OKLI

The implementation of Bursa Trade Securities will also have an impact on the derivatives market. There will be a change in the calculation of the Final Settlement Price (FSP) methodology for the derivatives products carrying the Kuala Lumpur Composite Index (KLCI) as the underlying instrument. The products affected will be the KLCI futures (FKLI) and the KLCI options (OKLI). This new methodology makes it less susceptible to market manipulation and smoothens out price volatility.

“Bursa Trade Securities is a scalable platform which can support future initiatives and innovative products such as multi- currency products. The introduction of Bursa Trade Securities will also enable the implementation of Direct Market Access (DMA) for equities which should be operational next year,” Dato’ Yusli added.

Dato’ Yusli also emphasised the exchange’s commitment to responsibly managing the implementation of this new trading system. Bursa Malaysia had carried out numerous user acceptance tests of Bursa Trade Securities with market participants since the beginning of this year in order to ensure that they were familiar with the new features.

He added, “As with any new technology and system implementation, there are inherent risks involved. We have put in place measures to ensure a seamless conversion to the new trading platform and to minimise any trading disruptions.

“Nevertheless, if an unexpected disruption should occur, as is the case under the current system, there are two possible resumption scenarios. If a major disruption occurs before the start of the trading day, Bursa Malaysia will be able to resume trading within the same day. If a major disruption occurs during the trading day, trading is expected to resume the next business day,” he concluded.

........................................

Side Comments : Perhaps Bursa should also implement shorter trading hours in this bearish trend. Shorter quality trading hours would be a more cost effective option.

News. Chinese Domestic Demand For Steel Down.

Extracted from SteelGuru:

Chinese domestic demand for steel down

China Knowledge cited Mr Xu Lejiang president of Baosteel Group as saying that China's demand in steel products for the past several months this year has dropped sharply fuelled by mainland economic slowdown and squeezed export.

Mr Xu during an industrial meeting said that China's steel output is expected to decrease to 480 million tonnes this year because of the weakening demand in the domestic market and the declining prices of steel products that has forced steelmakers to cut their output.

He said that mergers & acquisition are the strategic option for the industry, which will enhance the bargaining power of domestic iron and steel enterprises in both the upstream and downstream sectors.

Eye Kandy (Not)

Do u know the house owner/tenant? :)

Music. Carla Bruni. No Promises

A couple of months ago I asked a mate of mine if he has heard of Carla Bruni. He said that he recalled her “as some sort of a hot model”. Well, Carla was one of the most sought after and also possibly one of the most controversial model around. I shall not go into why she is controversial as it would digress from the essence of this write-up. For a lady who will turn 40 this December, she still has the looks and appeal (debatable).

Carla can sing and she does it well. Her 2nd album No Promises is an impressive follow up to her debut Quelqu'un m'a dit, released 5 years ago. On No Promises Carla demonstrates that she has poetic intellect imbued in her blood. Comprising 11 songs, this album is literate in nature as the songs are adaptations of poems by WB Yeats, Christina Rossetti, Walter de la Mare and Emily Dickinson amongst others.

On No Promises, Carla worked with Louis Bertignac and the result was an intimate sound with smoky tones at the right places. Her folk inclination and Bertignac’s blues influence is potent.

Those Dancing Days Are Gone opens the album with a funky blues number interspersed with the occasional harmonica. And when she goes into her breathy whispery singing mode, it exudes a classy gritty feel.

She later gets dreamy and “waltzy” on Before The World Was Made and also on Autumn. On If You Were Coming In The Fall the pace quickens with some rock elements in it.

At Last The Secret Is Out is an apt closure. Not so much for the lyrics as most of the time I just don’t dig deep into them. To me the title of the song has symbolic significance as we know now and can affirm that her talent lies beyond the catwalk and print-ads. She has evolved well indeed to a singer/songwriter to be reckoned with. There is also a certain emotional conviction in the way she sings her songs. And yes, her pronounced accent was all over with no attempt made to mask them. In fact, I like it like that as it imbues the songs with a certain warm tinge.

This album is musical poetry for repeated listening to soothe the frayed soul. Intoxicating at times. Best listened when the lights are dimmed. Glass of red wine in hand - optional.

Oh, ya...she is also known as Mrs. Sarkozy now.

Bullish Reversal Patterns.

In a bearish trend, like the one that we are going through now, it is common for traders and investors to try to bottom fish. This is a highly difficult task. It is also common knowledge that many who attempt to do so, end up catching falling knives instead of a cushy bottom when they don't manage their risk and exit well. Being able to identify the possible reversal points can provide insight to the possible entry points and for risk management in the event the anticipated reversal fails.

Reversal patterns generally indicate the possibility of the end of a current bearish trend/phase. What follows thereafter is the probability of an opposite movement. These are some of the common patterns we can look out for (thanks to tradingprice patterns):

1. Double bottom (or W)
A double bottom occurs within the context of an existing bearish trend. It starts when a stock reaches a low from which it sharply rebounds. The stock then hits a high from which it rolls over. The stock then falls back down to the previous low and rebounds for a second time, forming two equal lows. These lows are connected to form a horizontal support level. The resistance level is defined by the high formed after the initial rebound.

Double bottoms occur frequently within the context of bearish trends; therefore, it’s important to wait for confirmation before acting on a double bottom. Like 123 bottoms (see below) , double bottoms are ubiquitous. Many will form but ultimately fail over the course of a bearish trend. Anticipating confirmation is possible, but doing so requires acute risk management.
Double bottoms can form over very short periods and long periods of time.

A double bottom is confirmed once a stock breaks above the horizontal resistance level. Entry points can be taken upon the breakout or after waiting for a retest of previous resistance and then buying on the bounce. A double bottom is rejected once a stock breaks down below horizontal support.

2. Triple bottom
A triple bottom occurs within the context of an existing bearish trend. It starts when a stock reaches a low from which it sharply rebounds. The stock then hits a high from which it rolls over. The stock falls back down to the previous low and rebounds for a second time, forming two equal lows. The stock then rebounds to its recent highs and rolls over once more. The pattern concludes after the stock falls to its lows and stops going down for a third time. These three lows are connected to form a horizontal support level. The resistance level is defined by the two highs formed after the rebound attempts.

Triple bottoms occur less frequently than double bottoms. But when triple bottoms do form, they provide very precise entry points and risk management levels. Triple bottoms can form over very short and long periods of time.

Triple bottoms can go on and become quadruple bottoms if the same horizontal support level is retested. The patterns can continue indefinitely, but the more often a support level is tested the weaker it becomes. Keep as much in mind when trading triple bottoms that don’t immediately reverse higher.

A triple bottom is confirmed once the stock breaks above the horizontal resistance level. Entry points can be taken upon the breakout or after waiting for a retest or previous resistance and then buying on the bounce. A triple bottom is rejected if the stock falls below horizontal support.
















3. 123 bottom
The 123 bottom is the most common bullish reversal pattern. The requirements for the 123 bottom are rather common, causing the pattern to frequently appear in existing bearish trends. Many 123 bottoms reach the first two conditions, but never confirm. The 123 bottom, therefore, can be somewhat deceiving. That’s why it’s imperative that the pattern confirms before placing trades.

The 123 bottom starts when a stock sharply reverses higher after an extended bearish trend. This sharp rebound is the first requirement of the pattern, or part 1. The second requirement is for the stock to halt its rally attempt at short-term resistance, which is part 2 of the pattern. Part 3 of the pattern forms when the stock stages another sharp rebound, but from a relatively higher level than in part 1. The 123 bottom confirms when the stock breaks above short-term resistance as defined in part 2.

A basic definition of a bearish trend is lower lows. A basic definition of a bullish trend is higher lows. The 123 bottom seeks to identify when a pattern of lower lows ends and a new pattern of higher lows begins.

Another way to think of a 123 bottom is as a very short-term cup and handle, only the 123 bottom occurs at the end of a bearish trend.

The 123 bottom occurs in most bearish trends, but it rarely confirms. When it does confirm, it’s best to take a very short-term approach to trading the 123 bottom. Taking profits quickly is generally a good idea after entering a 123 bottom.

A 123 bottom is confirmed once the stock breaks above the horizontal resistance level as defined in part 2 of the definition. An entry can be taken as soon as the stock crosses its short-term resistance. This resistance will often act as support in the days following a breakout.

A 123 bottom is rejected if the stock fails to break above resistance or falls below the relative low traced in part 3. A drop below the relative low in part 3 reveals a very short-term pattern of lower lows, which is a bearish indication.
















Note : it would be prudent to observe that your usual indicators also support the reversal patterns.

(the charts featured above were extracted from stockcharts and thereafter marked upon to illustrate the reversal patterns)

Some Trading Rules

While pending a lead in the current direction-less local stock market, it would be time well spent for one to refresh & remind oneself of some basic trading rules.

Let us look to John Murphy for some light. John, who is an acknowledged technical analyst, has drawn upon his thirty years of experience to develop ten basic laws of technical trading: rules that are designed to help explain the whole idea of technical trading for the beginner and to serve as a concise trading methodology for the more experienced trader.

The following are his ten most important rules of technical trading:

1. Map the Trends Study long-term charts.

Begin a chart analysis with monthly and weekly charts spanning several years. A larger scale "map of the market" provides more visibility and a better long-term perspective on a market. Once the long-term has been established, then consult daily and intra-day charts. A short-term market view alone can often be deceptive. Even if you only trade the very short term, you will do better if you're trading in the same direction as the intermediate and longer term trends.

2. Spot the Trend and Go With It Determine the trend and follow it.

Market trends come in many sizes -- long-term, intermediate-term and short-term. First, determine which one you're going to trade and use the appropriate chart. Make sure you trade in the direction of that trend. Buy dips if the trend is up. Sell rallies if the trend is down. If you're trading the intermediate trend, use daily and weekly charts. If you're day trading, use daily and intra-day charts. But in each case, let the longer range chart determine the trend, and then use the shorter term chart for timing.

3. Find the Low and High of It Find support and resistance levels.

The best place to buy a market is near support levels. That support is usually a previous reaction low. The best place to sell a market is near resistance levels. Resistance is usually a previous peak. After a resistance peak has been broken, it will usually provide support on subsequent pullbacks. In other words, the old "high" becomes the new "low." In the same way, when a support level has been broken, it will usually produce selling on subsequent rallies -- the old "low" can become the new "high."

4. Know How Far to Backtrack Measure percentage retracements.

Market corrections up or down usually retrace a significant portion of the previous trend. You can measure the corrections in an existing trend in simple percentages. A fifty percent retracement of a prior trend is most common. A minimum retracement is usually one-third of the prior trend. The maximum retracement is usually two-thirds. Fibonacci retracements of 38% and 62% are also worth watching. During a pullback in an uptrend, therefore, initial buy points are in the 33-38% retracement area.

5. Draw the Line Draw trend lines.

Trend lines are one of the simplest and most effective charting tools. All you need is a straight edge and two points on the chart. Up trend lines are drawn along two successive lows. Down trend lines are drawn along two successive peaks. Prices will often pull back to trend lines before resuming their trend. The breaking of trend lines usually signals a change in trend. A valid trend line should be touched at least three times. The longer a trend line has been in effect, and the more times it has been tested, the more important it becomes.

6. Follow that Average Follow moving averages.

Moving averages provide objective buy and sell signals. They tell you if existing trend is still in motion and help confirm a trend change. Moving averages do not tell you in advance, however, that a trend change is imminent. A combination chart of two moving averages is the most popular way of finding trading signals. Some popular futures combinations are 4- and 9-day moving averages, 9- and 18-day, 5- and 20-day. Signals are given when the shorter average line crosses the longer. Price crossings above and below a 40-day moving average also provide good trading signals. Since moving average chart lines are trend-following indicators, they work best in a trending market.

7. Learn the Turns Track oscillators.

Oscillators help identify overbought and oversold markets. While moving averages offer confirmation of a market trend change, oscillators often help warn us in advance that a market has rallied or fallen too far and will soon turn. Two of the most popular are the Relative Strength Index (RSI) and Stochastics. They both work on a scale of 0 to 100. With the RSI, readings over 70 are overbought while readings below 30 are oversold. The overbought and oversold values for Stochastics are 80 and 20. Most traders use 14-days or weeks for stochastics and either 9 or 14 days or weeks for RSI. Oscillator divergences often warn of market turns. These tools work best in a trading market range. Weekly signals can be used as filters on daily signals. Daily signals can be used as filters for intra-day charts.

8. Know the Warning Signs Trade MACD.

The Moving Average Convergence Divergence (MACD) indicator (developed by Gerald Appel) combines a moving average crossover system with the overbought/oversold elements of an oscillator. A buy signal occurs when the faster line crosses above the slower and both lines are below zero. A sell signal takes place when the faster line crosses below the slower from above the zero line. Weekly signals take precedence over daily signals. An MACD histogram plots the difference between the two lines and gives even earlier warnings of trend changes. It's called a "histogram" because vertical bars are used to show the difference between the two lines on the chart.

9. Trend or Not a Trend Use ADX.

The Average Directional Movement Index (ADX) line helps determine whether a market is in a trending or a trading phase. It measures the degree of trend or direction in the market. A rising ADX line suggests the presence of a strong trend. A falling ADX line suggests the presence of a trading market and the absence of a trend. A rising ADX line favors moving averages; a falling ADX favors oscillators. By plotting the direction of the ADX line, the trader is able to determine which trading style and which set of indicators are most suitable for the current market environment.

10. Know the Confirming Signs Include volume and open interest.

Volume and open interest are important confirming indicators in futures markets. Volume precedes price. It's important to ensure that heavier volume is taking place in the direction of the prevailing trend. In an uptrend, heavier volume should be seen on up days. Rising open interest confirms that new money is supporting the prevailing trend. Declining open interest is often a warning that the trend is near completion. A solid price uptrend should be accompanied by rising volume and rising open interest.

Knowing & remembering the rules is one thing. Adopting & practising it is another. And we must also factor in the emotional element.

In anticipation, I wish u Happy 16092008! :)

News. Chinese Coke Market Under Pressure

Extracted from SteelGuru:

Chinese coke market under pressure
According to Securities Times, sales of coking sector have been pinched by production suspension and limitation of some steel mills since July. Industry experts analyzed that coke price will further move downward in coming future dampened by sluggish demand.

Mr Zhang Bochun secretary general of Hebei Coke & Chemical Industry Association said that in the first half of the year, coking industry in Hebei province witnessed sound development with rising price, which was a guarantee of certain profit for coking plants. However, things changed abruptly since July with a number of steel mills' ceasing and limiting moves in production.

He said that "As it went into August, many coking plants pushed down prices by CNY 100 per tonne. Shanxi, Hebei and Shandong consequently raised the Ensuring Price by Limiting Output measure, but still can not lower the declining trend.”

According to an analyst in the industry, as steel mills expect a further fall in coking price in the future and seem unwilling to increase their inventory but consume the held stock, the trading market will unlikely appear active in spite of lowered price.

As learned, a move of lowering purchase price has been launched by south China steel mills since August 15th with an extent of CNY 150 per tonne for resource from local market. What's more, some with comparatively higher inventory have cut coke purchase price for two times since earlier August.

KLCI. Brief comments

On 18/08/2008 the 1090 neckline support was breached. Immediate resistance at 1100 thereabouts. Expect to see more range bound movements with downwards inclination.

Sept 16 (16092008) is the new buzz word for these few days. And it is due to the local political scenario. Is a drastic change expected? On March 8, we had the General Election which saw a sweeping change in the balance of power and the weakened Barisan government. On March 10, we saw a big dip in the KLCI. As we all know, the PKR leader planned to bring down the current Barisan government on Sept 16. Whether this will happen on Sept 16 or later, remains to be seen. What can be expected for the KLCI on Sept 16 and the day after? ..... 16092008

Personally, i rather be holding to cash now than be in position. Counters that i'm watching are getting their support levels breached, anticipated pattern formations failed and etc. Very important to remind one self on trade capital management and spread.

Eye Kandy.

Eye Kandy. Let the photo speak for itself...for whatever it wants to convey.