Singapore stock market direction 10 june 08

Cannot see the future but the past is a good indication

After seeing the Singapore stock market as well as other Asian stock markets staging a mini melt down over the past few days, some of my friends have asked me to share my thoughts about the Singapore stock market.

For starters, I do not usually look at blue chips or big caps. My favourites are S-chips or Singapore listed companies with operations mainly in china. I also prefer to look at stocks with good trading volume and range between S$0.20 to S$2.00.

Oh, I almost forgot to mention that I usually combine both fundamental and technical analysis when I analyze stocks. Over the past ten years, I must admit I have developed the habit of analyzing stocks whenever I have time…..it has become a past time hobby of mine so please take note that I do not always have to have a position (either long or short, buy or sell) because I do enjoy the analyzing part. Some people like playing golf or PS3 but I prefer looking at stock charts on Metastock when I am free. And as strange as it may sound, when I do not have a position but still analyze stocks, sometimes I think I can see things clearer since my emotions are not affected.

Now this is what I have to say about the current singapore share market situation, and the following are purely my personal observations which you may or may not agree.

The Singapore stocks market seems like behaving in the same pattern as before.

I have expected this since seeing the behavior in the past few quarters, that selling momentum returns once the results season is over. Typically during downward or weak sentiment market, many stocks that I monitor have been sold down once results or earnings season is over and only starts to recover about one month before the next results season begin…..this was clearly the case last time round. So when the results or earnings season concluded on 15 May, I started to warn some friends that selling pressure may yet return again……unfortunately to those who have long positions, I have been right this time.

For those who have little or no position, the golden question is when does one think the market may stage a rebound? I expect the market to remain choppy just like last time when results season was over, with the bias towards the downside and a reprieve or rebound will only come about 2-4 weeks before the next earnings season begin!

With that in mind, I will eagerly look forward to 2Q08 or end June quarterly results seasons which is expected to start end July. So if you work backwards 2-4 weeks before the last day of results reporting ie 15 August,…..that means the earliest the market is likely to stage a stronger rebound may be mid July. But sometimes, the timing may be off by 1-2 weeks so I will start to monitor closely again around end June.

That does not mean that market will be one way traffic down all the way until mid July, it just may remain choppy up sometimes, down sometimes, rangebound, until a base is formed to stage a stronger rebound.

As for technical analysis indicators, one indicator I like is CCI.

Right now, CCI for a few hot stocks that I monitor like Ferrochina and China hongxing have created lower low while in negative zone. Now being in negative zone is not good to begin with but to create lower low means double whammy and not likely to see any strong rebound in the near term. I would get excited again once I see CCI indicator forming a nice base for several hot stocks.

Hope that you enjoy my talkstock session………

rooney

Foreign Exchange ( Forex ) Trading Scams

Beware forex scams and too good to be true adverts

We have often heard of foreign exchange (“forex”) scams which defraud individual investors or traders by convincing them that they can expect to achieve abnormally high returns through trading or investing in the forex market.  According to a recent report by the Wall Street Journal, the US Commodity Futures Trading Commission (CFTC) reported that average individual forex traders who fell victims to forex scams loses about S$15,000 each.

One form of outright scam is when certain websites or even companies would make bold promises to investors that their initial investment will grow exponentially (with claims ranging from 5% per month to even 100% per month) if they put their money in the forex market.  The con artists would usually entice investors by showing them high returns when they invest small sums but once investors increase the quantum of investment, that’s when trouble begins.  In actual fact, their money are never really invested in the forex market through any legitimate dealer, but simply disappear or never refunded upon request. 

Another form of outright scam is when certain websites or brokers promise zero costs or zero pips for trading forex through them.  In actual fact, these brokers would make excuses when investors try to withdraw their money.  There have been instances when some of these fly by night forex brokers refuse to allow any withdrawals.  They would also trade against the investors by manipulating the spreads and also move the spread range upwards so that when the trader sells, he is selling at a lower than normal price and when he buys, he is buying higher than a normal price.

Having said that, it does not mean forex market is completely off limits to everyone.  There are many people that I know off who are able to make a living from trading in the forex market.  We just have to be aware of and alert to the risks and scams out there in the market.  For example, one should try to stick with more reputable forex brokers, such as those that are bank backed or accredited by US authorities such as the National Futures Association.  It would also be good if they are based in big countries like US or in Switzerland directly rather than some remote countries.

If you come across something that appears to be too good to be true, chances are it is the case………I do not believe in free lunches except during AGM or results briefings.

Cheers

Rooney

If you are currently holding on to some stocks in the Singapore share market and wondering what you can do with them while waiting to sell at the right price in this market slump, you may consider SBL or short for Securities Borrowing & Lending to potentially enhance your portfolio returns while waiting for the right time to sell in future.  So what is SBL ?

Securities Borrowing & Lending (SBL)

The Definitions

Securities borrowing and lending is a temporary loan of securities between the lender and the borrower. This is done so as to allow the borrower who expects the price of a stock to fall to hold a short position for a longer duration. On the other hand, the lender receives a fee which could potentially enhance his portfolio yield with relatively low risk.

The Benefits

On the borrowing side, you can hold a short position for a longer period of time. Short selling with Phillip Securities Pte Ltd (PSPL) allows you to have direct market access in your order. This gives you, the borrower, the flexibility to choose whether the sell order should be a market order or a limit order. In addition, you enjoy other benefits such as no account maintenance fee required, no financing charge levied on leveraging on equities and interest paid on cash collaterals.

On the lending side, you could potentially enhance the yield of your portfolio through receiving a lending fee at relatively low risk level by lending your shares that are idling in your portfolio.

The Mechanics

For securities lending, you may contact SBL directly to indicate interest in lending. When there’s a loan request by SBL, SBL will contact you to discuss on the terms of the loan.

For securities borrowing, you may contact your trading representative or the SBL Desk to check the availability and / or to put up a loan request. Alternatively, you may access the loan availability page by logging onto POEMS (SBL page)

For more details on SBL or to open a SBL account, you may wish to contact your existing Trading Representative (TR) / Financial Adviser Representative (FAR).

Source : www.poems.com.sg

Rooney

p/s : I am not sure if Malaysia stock brokers offer SBL