Today is the last weekend before the start of August, a month that is traditionally known as the most treacherous month for the Malaysian stock market. In my monthly-updated Market Pulse column (see link), it is observed that the month of August has seen some of the greater monthly declines historically.
KLCI – what is next?
As mentioned in earlier posting, if it ever breaches the support zone of around 1,728, I personally feel that we may potentially see further downside bias. If it ever breaks the 1,800 resistance point, the index may be on an upside trajectory.
How should one deal with August?
There are numerous options that may be considered…
- Focus on swing trading strategies with appropriate reward-to-risk ratio / risk management strategies
- Bargain hunting for beaten-down value stocks / mid-large cap stocks (for purpose of long term investing)
- Increase cash position (in money market funds)
- Maintain status quo
“Short term volatility is greatest at turning points and diminishes as a trend becomes established.”
As shown below, the current volatility of FBMKLCI continues to remain low. If the volatility increases, this may indicate that a potential trend reversal is imminent.
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I am always fixated with swing trading because I do not have patience with most things in life. Whenever there is a 15% unrealised gain in a position, I will be very tempted to monetise the gain. I believe that I am in the category of “sell winners too fast, hold on to the losers”. To some extent, I truly believe that we live in a world that is filled with ‘black swans’. Hence, the bird in the hand theory matters. Swing trading provides wealth creation opportunities in the shortest possible time frame. On a serious note, one should seriously consider long term investing in order to balance out a portfolio that is filled by a combination of short-medium and long term trading / investment positions. It is usually the case that multi-baggers come from long term investing. To qualify for long term investing, one should truly look beyond an investment horizon of more than 2-3 years.
Continue reading “Long Term Investing”
Strictly for educational and illustrative purposes
In an earlier posting, I have developed a preliminary equity rating scorecard. In this subsequent posting, I intend to refine this scorecard and continue to test & refine it over the next 12-18 months. It is very important to reiterate the point that an equity rating scorecard does not “predict” the future target price of a security. It is merely a simple high-level tool / framework / weightage system which serves to harmonise different perspectives / factors that may potentially affect the share price of a security. The end final score / rating does not mean anything (seriously). I personally look at the final score / rating as higher probability of the security hitting my target price or stop loss.
Continue reading “The Five Factors Equity Rating Scorecard”
I am NOT an expert in crypto currencies. I do NOT intend to be one. I do NOT invest / trade in what I do NOT understand. However, I am really curious to find out more about Bitcoin (BTC) from a statistical viewpoint.
Continue reading “Renminbi & Bitcoin”
Have you ever come across a trading idea that you are not 100% convicted about it? I do feel it this time. Nevertheless, I choose to share this simple trade idea in order to give a more balanced and realistic view of the world of trading / investment. It is a world filled with contradiction, unpredictability and randomness.
Continue reading “A Not So Convicted Trade Idea”
In one of the earlier posts (see this ), Malaysian-listed printing specialist, Tien Wah Press Holdings Berhad was one of the illustrative “buy signal” results extracted based on rules-based algorithmic screening process. Let’s dig deeper into this security. Continue reading “Digging Deeper”