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Saturday, July 31, 2010

JCY : This is the chart of JCY since its inception. Please click the chart to enlarge(someone said it is too small!!)

With the projection of 20% down(from 1.75 to 1.40, the previous downturn), the current downturn could go to about 1.18 from 1.52. That is 23% down.

There is an huge increase in its volume seen, showing the selling pressure is very great!! Nothing can stop the herds now, SELL SELL SELL is the sentiment. The 3 arrows showing MACD + RSI + Stochastic is DOWN or bearish. Technically extremely oversold with very high RED histogram seen now.

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DOW flat - A123 dived to 10.00 level in the opening before recovering and shot all the way to 11.00(10% in a day) and closed at 10.78. What is 'nice' about US-stocks are they are active and volatile. So, I m still waiting for DOW to dive, and started to look into the green-stocks in US, besides China's green stock listed in HK. I will like to write what is in my mind regarding green-stock one day when markets dive. A123 is one of the green-stock which dived from USD20+ to current USD10+.

Talking about stock diving, let us take JCY which I bought at its low at 1.36 level. It registered a NEW low. You may call it historical low as it is lower than its IPO price(A123 are way below its IPO prices too AND 50% below most analysts' estimate). By the way, JCY listed last year when market sentiment was good, so ... it might be overpriced. No IPOs during the bad down-turn, right? Anyway, I have not done my checking on JCY. I cant remember how many times it was over subcribed. But I do know it went all the way up to near RM2. Today, it is at 1.25 ... with many SELL reports from the broker-houses. Technically it is VERY bearish and we wont know when it could recover, if ever ...

So, I want to re-call what I have written about EMH weeks ago. To challenge this EMH, lets us talk about the 'over-reaction' hypothesis(ORH). This is called Contrarian Investing Strategy or CIS. It says ... markets over-react both ways - up or down but more on downside!!

Note : EMH, ORH and CIS - quoted from Fred Tam's book.

UP - it is GREED in play. A stock shooting for the sky will over-react and way above its "Fair Value".

DOWN - it is FEAR in play. A stock diving into cold water might be drown and way below its "Fair Value".

"Buying on bad times and selling on good is a contrarian strategy just as buying on FEAR and selling on greed consistent with this strategy" - quote from Fred Tam's book.

I told my ex-colleague(LL), who is heavily into KLSE, about this strategy. It is common sense. I said "If you are in FEAR, that is the time you buy" and when you feel GREED, that is the time you think of selling. BUY only good fundamental stocks or blue-chips. Do not buy what I m buying. That was before I left Sabah and we still in touch.

We need to mention here that those diving down is NOT fundamentally flawed or have the bases to recover. Example : Transmile, LCL or recently Kenmark are good examples for a flawed waterfalls ... dived into the water and fall ... forever?

Also need to note that those speculation counters like KNM is also NOT in our CIS category. Saag or Scomi could easily fall in this speculating category too. So, CIS is not to be applied for such stocks.

Can JCY be categorised as a 'good' waterfall? I will do some homework on it to decide if I m going to use CIS on it. That means, I need to see if the sell-off is uncalled for(due to herds reading SELL report and not due to change in its fundamentals). If the sell off is temporary, it will rebound. And for good stocks, a sharp dive will give a sharp rebound(Newton's Third Law, tho the rebound may not be as strong).

BJCorp which down from 1.80 level to current 1.05 level could NOT be categorised as a good stock as for its speculative nature. So, CIS could not apply here.

Do some homework, look for those GOOD stocks which are way below its 'fair value'. And remember NEVER to believe any of the brokers' reports. Those analysts are just merely doing their JOB - to write a report about a company which their head/superior given to them. They HAVE to write the report and at times, the CONCLUSION was given to them prior to their findings!! If the 'boss' said SELL JCY ... then, they have to write about not so optimistic outlook about the company.

Example : Rubber-stocks. Many no longer talk about rubber-rally and many are retracing 20-40% from the peak. Example - Adventa going below RM3.00 now. When the HERDS are not noticing on rubber-stocks, do some homework on those GOOD stocks in the sector that being neglected ... and good stocks WILL rebound. Rubber is a GOOD sector for KLSE, and it will rally again, matter of time?? Look for the leads from its leader like TopGlove. I will keep averaging UP or DOWN on TopGlove as it is the leader of the sector which being neglected. That is CIS in practice. For investors, do not go into those 'cheap' and valueless company which being goreng-goreng. Obviously they are being used by syndicates to lure 'ikan bilis' traders, before you know it, u will be in their stomach. Be careful.

王傑 : 一無所有





1.00 pm : Just finished a tuition class and missed the BB-tutorial by CN in the morning. I could miss lots of CN meeting now if they putting it in Sat morning as I m starting a class. Well, core job comes first, then only my personal education.

5.45 pm : LionInd and Evergreen in focus in CN's forum by a trainer. Yes, both are highly in my 'liking' stocks list. Building-materials on the move after construction and property? Well, property will run further as building-materials picking up as the 'rally theme'. For property, YNHProp could be a good grab as many going into Samgoss's site will buy what he is buying. Yes, that could support the counter. Another being mentioned is Sunway. Last week I mentioned about Suunway, which I m still looking at it.

Stock watch : 3A, LionInd, Evergreen, YNHProp and Sunway. That is for next week. At least buying into any of these stocks, I could feel 'comfortable'.

TEH

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