Correction Coming??

Hello, I personally think there should be a correction on tuesday.... to understand market correction, good to read this article again before proceeding.... hehe... :P

http://survivingstockmarket.blogspot.com/2007/10/volatility-vs-severe-acute-distribution.html

Now, why do i say there might be a correction? why would i think there will be one in the first place...
well, on Friday, actually on my side, i think our CI is moving on a healthy ­style­... so am really expecting a good day, at least at the early session on Monday.... but.... walau eh... on the friday night itself, the DJI made almost a 400 point drop.... this itself is severe enough to make any healing wound to burst.... so i personally think Monday's drop is not due to our intrinsic factor.... it is more of a intermarket effect... so this made me to believe tat a correction should have happened on tuesday...
unfortunately, the whole regional market decides to bleed some more.... when i look at our intraday CI movement, and compared it with our neighbours, i notice tat we are actually performing quite well. which leads me to believe that recovery is indeed in place, only might be stalled or masked.... so i am actually putting quite high expectations on wednesday... :)
and i do hope tat it will not let me down...

but let me emphasis again, i am not saying that there will be a major change in the trend, when i say recovery, it just means tat there should be an upmove or an up swing.... wether or not it is enough to make a trend change, will still depends....


Regards & Good luck!

Helping out a friend... :)

Dear Investors,

Hi. I would really appreciate it if those of you who are reading this message could spend just 10 minutes of
your time TICKING a few boxes to answer a few short questions posted in the Word document attached below.

More details:
The document is actually a short questionnaire that focuses on a largely neglected and under-researched investor
group, that of small retail shareholders/investors. It aims to enhance our understanding of what individual investors
actually do and also the thinking behind their actions over the investment cycle. So far, there has been much
speculation and assumptions made with regards to these issues but little concrete evidence. In order to get the complete
picture of the situation, it is important that we get your opinions on this topic. Your opinions would be extremely useful
as these could potentially lead to new ways of helping investors to make better investment decisions in the future; to
inform policy on how to better protect the interests of these investors and also to improve areas that the investors
themselves see to be important.

Please save all completed Word documents and send them to any one of the following email addresses: kyid@hotmail.com
or ken.yeoh@unn.ac.uk. Your answers/responses will be kept completely confidential.

Thank you very much for your time. Happy investing!

http://bl133w.blu133.mail.live.com/mail/ScanAttachment.aspx?messageid=0e4732f8-0be1-4486-8525-9f327e751de9&bissafe=True&attindex=0&cp=20127&attdepth=0

How to use Volume

How to use volumes…. This itself is long enough to write a few articles… :P first of all, how to use volumes depends on what method you are adapting to…. to start from basic, volume is formed when transaction is done… every transaction or every volume means an agreement of price between buyers and sellers…. Volume is like and indicator for the sustainability of trend…. To make it simple, it is like fuel for the flame… the flame represents the trend, no matter up or down… so, if you see volume dying down, it shows signs of dying flame too…. and vice versa… simple? :P

Now, homework….
1) Are the statements correct?
a. Low volume equals illiquid.
b. Low volume equals price is about to drop.
2) What is true low volume and what is relative low volume? What is the significance?

Ok, lets go a bit deeper, if we are using trends or phases… how do we incorporate volume into them? Basically, we can generally divide the trend into three types or phases:
3) Uptrend
4) Downtrend / Distribution
5) Range bound

How does volume come in? Well, as stated above, when we see price moving uptrend, a healthy one will be accompanied with increasing volume because this means more people agree and supports the increasing price… so we can say it is sustainable…. and vice versa…

How about range bound? during range bound, volume is also normally in range… why? Because less transactions involved… now, towards the end of range, volume will pick up… because there will be more and more people involved and more transactions are being done… this is called public participation…

Homework:
1) Does public participation or volume picking means that uptrend is next?
2) Revise a bit on supply Vs demand.

Ok, stop here first, leave the deeper stuff for later… :P do post your answers and questions if you don’t understand or require further information…


Regards and happy learning

What is KLCI?

Hello,

When we talk about the market, generally, we refer to the KLCI... however, do we really know what is KLCI, how is it calculated, what determine its movements and how the movements affect other counters? well, this may be very basic to most people, but i do think it is important to know the basics first so that we can understand the complicated.... :)

1) KLCI is calculated with this formula:

Current aggregate Market Capitalisation x 100 ­base­

_____________________________________

Aggregate Market Capitalisation

2) wat are the counters tat is used to calculate? the answer is in http://%20www.bursamalaysia.co%20m/website/bm/%20market_information/%20index_components.htm%20l

so, this also means tat, the KLCI does not represent the whole market, because not all counters are used to calculate it... some would prefer to use market breath... but then again, for TA readers, so far, i have not seen a chart tat uses market breadth.... wat to say use the beloved indicators on it? hehe.... tat is why, the closest you can get might still be the CI when you want to use TA... hehe... :P

and the CI is determined by the price and not the other way around... (questionable) that statement is theorically correct, but practical wise, it depends... i will explain more on this in the next article.... or else this one will be very long... hehe... :P

Regards

Fundamental Vs Technical

Actually there have been quite a lot of arguements on which is better... but if you ask me, i think both are good methods. it just depends on the user's ­style­ and preference... :)

Anyway, what is the difference between the two? Well, FA looks at balance sheets and annual reports to make their picks. TA looks at the charts to make their picks.

actually, both have some very different perspective on "expensive" and "cheap"... hence time to buy and when not to buy...

if you were to imagine stock is a product, you might be able to understand these methods better. FA uses annual reports to determine the current and future potential of a company and sets a value for it... for example, by using annual reports, FA defines a value or the price the stocks is worth.... either now or in future (investments). so when the current price is higher than wat they value now or the future potential, they consider it as expensive... but if the current price is below their value, they call it cheap or discounted... so it will mean time to buy... that is why you find investors using FA averaging down...
TA on the other hand do not really focus on the price itself or the potential of the company, but rather on the balance between supply and demand. no matter how good or how bad a company is, there will be a time to buy and time to avoid... TA buys when there is demand for the stocks... or when the demand is starting to exceed the supply... which also means tat the price is going up... so, wat is expensive and what is cheap for TA users? hehe...
Basically, expensive is the price when the demand is getting lower, which is when the price will start to drop... and cheap when the demand starts to pick up... so, TA actually averages up and dont average down (normally). because as i said, it is about supply and demand, when price go down, it means the demand is less, so TA will avoid such stocks...

to sum up, FA values a point or a range of a price tat they think the stock is worth, anything more is expensive and less is cheap...
TA tracks a movement of price, so you can say there is no cheap or expensive, only demand vs supply... buy when there is demand...So, this is why investors using FA averages down but traders using TA dont...

Regards...

Overbought and oversold

Hello, Recently these terms becomes very frequently heard... haha... this is expected as these indicators will be showed very actively on most charts due to the price movements...

So, maybe it is good to discuss a little about the functions and the limittations...

first of all, wat affects the price of stocks? i believe it would be the balance between supply and demand... ­

base­d on this, wat is oversold? meaning something is aggressively being sold... so the supply will be more while the demand for it is low... wat does this mean? there is too much products circulating and people are not willing or will not have to bid for the products with a higher price... so, the price will drop... and the opposite stands for overbought...

this is also why people depending highly on this indicator will buy when the stock is being oversold and sell when the stock is being overbought.

however, how dependable are these indicators? well, let us look at the pros and cons... the dependability will also depend a lot on which phase or trend the stock is in... wether it is on an uptrend, downtrend or range bound... why do i say so? there are some interesting points worth looking into...

if you believe tat overbought means time to sell and oversold means time to buy, let me ask you, how can a stock go into or continue on an uptrend if it is no high demand over supply? how can the price continue or start to go up if it is not being overbought? :)

how can a downtrend start or being kept if it is not being oversold?

this is also why the phase or trend of the stock is so crucial in determining how dependable this indicator is... hehe...

i do not use indicators, but if you insist on depending on this indicator, be aware of the phase, it is a lot more dependable when the stock is in range movements and highly dangerous if used solely on trending phase...

most indicators are not suitable to be used alone... and this happens to be high on the list... so, maybe it is safer to use this indicator to find stocks to be put into your radar while using other more fine tuned method or indicator to time the entry and exit point... :)

Correction or Crash?

Hmm... a lot of panic is starting with our market these days... and with today's superb drop... how many of us can sit still? a lot of topics like "wat to buy? is it the time to buy? it is bargain time! everything is cheap!". now i think it is important to revise the posting.. http:// www.talkandshare.com /index.php/ Technical-Analysis/ 378-Volatility-Vs- Severe-acute- distribution- Crash......-P.html

why do i say it is good to revise? it is because, correction has its opportunities like volatile market...

now, how about correction? i'm unsure of the world market sentiment, as i am not good at fundamentals... but if we take out our market and analyze it technically, i think it is more likely under correction rather than a crash... why do i say it is a correction? because it is an expected move form the charts from a few days back... if the supports do not hold, then it may not be a mere correction anymore... if it is a mere correction, support will hold and rebound will come... if it is not... i also got no eye see liaw...

so, the crucial thing now if you were to trade with a heavy weightage on CI, you will need to decide if this is a correction or a crash before making your next move... both starts with C, but the meaning and outcome is very different...

Regards and good luck!