The Malaysian Ringgit (RM) finally broke its winning streak against the USD on March 13. Is this the beginning of a short-term rebound (or, corrective rally) in the USD-RM? I think this is quite likely. From Chart 1 below, we can see that the USD-RM has been in a downtrend since March last year. This downtrend consists of 3 intermediate downtrends [denoted as A, C & E] and 2 short-term rebound [denoted as B & D]. While intermediate downtrends A & C lasted about 3 months, the current intermediate downtrends E has only clocked in 2 months. However, one can see that the distance traveled by intermediate downtrends E matches that of intermediate downtrends A & C.
Chart 1: USD-RM's daily chart as at April 15, 2010 (Source: Yahoo Finance)We can also see that a short-term rebound in USD-RM had coincided with a correction in the stock market. From Chart 2, we can see the 2 periods when this happened- in June 2009 & January-February this year.
Chart 2: USD-RM & FBM-KLCI's daily chart as at April 15, 2010(Source: Yahoo Finance & Tradesignum)Based on the above, we need to be more careful in order to avoid a possible market correction which may be indirectly brought on by a weakening of the RM.
18 comments:
Dear alex,
Have you written anything on perisai dan scomi. Is it worth trying this 2 counters? i dont known if i am heading the right direction. Pls give some pointers/advice. sincerely. thanks.
Hi Alex,
Would you please comment on AIM?
Thank you.
Grace
Do u think we should stop trading buy? Indeed there are too many bull traps around.
hey alex....
wanna know that weaknin of rm would again move klc upper side ??
if so to what level??
Hi Alex,
Was wondering if you have any words on KNM share. I am holding some of it which has since lose out but am not sure if it is still wise for me to hold it longer as the price keeps getting lower. Any comments?
How much u think will affect KLCI this week due to last Friday DOW correct more than 1% ?
Hi Layman,
I posted something on Scomi, not on Perisai. Since Scomi has broken above its medium-term downtrend line, its downside should be limited. I see support at RM0.45.
Perisai is a very volatile stock, which is now trading near its high (ranging from RM0.60 to RM0.75). The risk-to-reward ratio may not be in your favor.
Hi High Society,
AIM broke above its downtrend line at RM0.12-13 in January. In a short 3 months, the stock reached a high of RM0.42.
There was no announcement of any new venture in the past 6 months. The major shareholders have disposed substantial shares in the company (see link below).
AIM is a loss-making company, which incurred a net loss of RM1.3 million on a turnover of RM46 million for FYE31/12/2009.
http://aim.listedcompany.com/newsroom/AIM160410.pdf
Hi kian,
I feel the same way. To make money in this choppy market is very tricky.
Better to hold back a while.
Hi Jerry,
I have commented a few times on KNM. It has broken the very strong horizontal support at RM0.70 last Thursday. It is likely to slide further to test the next support at RM0.60 & then at RM0.50. The best time to sell was when the stock broke below the RM0.70 level. After that, an investor with the stock will go through his personal Battle of the Somme. If you cut loss now, the stock may rebound. If you hold on, the stock may drop further. At each support level, there may be a small rebound. Since you are carrying a bit of paper losses, you hesitate to sell into the rebound. Instead you average down when the rebound started to frizzle out. Your position would become larger. This situation would go on & on & it can wear you down. I know because I have seen it many times before.
Before you decide on your next course action, just think through it logically. Bear in mind, the loss did not happen when you finally cut off the position. The loss has already happened earlier. You are only trying to mitigate yourself.
If your position is a small position, you can just ride it through. KNM is not a PN17 stock. It is a reasonably profitable company, which reported a net profit of RM171 million on turnover of RM1.82 billion for FYE31/12/2009. The share price may come back up after a while.
hi alex. please comment on LONBISC? it is a undervalued stock? how it technically now? worth to buy at current level?
Hi cheer,
I think the KLCI is likely to test the 50-DMA support at 1309-1310 and even the psychological 1300 level this week. I hope it would not break below that the psychological 1300 support because it may bring forth more selling pressure. The market can turn quite ugly if that were to happen.
Hi wong,
LONBISC is a good stock. If you have a long investment time horizon (say, 1 year out), then you can accumulate the stock whenever it dipped below RM1.10. If you want faster action, you should time your entry when the stock breaks above the long-term downtrend line at RM1.20.
alex, what are your take on timber stocks?
Good day Alex,
What is yr take on Zelan based on this noon closing number? Do you incline for a downward spiral market?
dear alex,
would you please comment on KPJ?
thank you
Hello Alex,
Look like Supermx gonna fly. Appreciate your comments please.
Thank you.
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