Stock Market Stages

Stage One

Stage 1 is the stage right after a prolonged downtrend. This stock has been going down but now it is starting to trade sideways forming a base. The sellers who once had the upper hand are now beginning to lose their power because of the buyers starting to get more aggressive. The stock just drifts sideways without a clear trend. Everyone hates this stock.

Stage Two

Finally stocks break out into Stage 2 and begins the uptrend. Oh, the glory of stage 2!! Sometimes I have dreams of stocks in Stage 2! This is where the majority of the money is made in the stock market. But here is the funny thing: No one believes the rally! That’s right, everyone still hates the stock. The fundamentals are bad, the outlook is negative, etc. But professional traders know better. They are accumulating shares and getting ready to dump it off to those getting in late. This sets up stage 3.

Stage Three

Finally, after the glorious advance of stage 2, the stock begins to trade sideways again and starts to "churn". Novice traders are just now getting in! This stage is very similar to stage 1. Buyers and sellers move into equilibrium again and the stock just drifts along. It is now ready to begin the next stage.

Stage Four

This is the dreaded downtrend for those that are long this stock. But, you know what the funny thing is? You guessed it. Nobody believes the downtrend! The fundamentals are probably still very good and everyone still loves this stock. They think the downtrend is just a “correction”. Wrong! They hold and hold and hold, hoping it will reverse back up again. They probably bought at the end of Stage 2 or during Stage 3. Sorry, you lose. Checkmate!

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What Is A Stock Trading System?

A stock trading system is simply a piece of software that helps assist in your stock trading. These systems are designed to help you accurately determine when to buy and sell, as well as what kind of profits to expect. But since it is a piece of software ultimately designed by a human, one has to wonder how accurate it can be.

A stock trading system bases its functionality on certain technical analysis tools, and since there are many types of analysis tools, the results can vary depending on which system you use. On the one hand, it is great to find an automated system that can assist with this analysis, yet on the other, accuracy will depend on which tools it uses.

And therein lies the problem with a trading system - whether or not this program will work as it claims depends on the programming. That is why a lot of care and research needs to be put in to determine which trading system will be best for your needs.

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Petronas Dagangan 26 October 2007

Petronas Dagangan Weekly Chart 26 October 2007

On candlestick weekly chart showing that PETDAG in uptrend mode and at the same time trading on its uptrend line. Anyway, if you see on the volume chart showing that the stock trading on decrease volume lately which I assume that the correction will occurred. Additionally if you see the technical indicator RSI 14-weeks, there is bearish divergence existed and it is around overbought area RSI~70. Wait the pullback if you wanna a play safe game on this counter.

Happy learning and happy trading!

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Kuala Lumpur Composite Index 26 October 2007

KUALA LUMPUR (Thomson Financial) - Malaysian shares closed sharply higher Friday, with the benchmark index hitting a fresh record as investors became increasingly convinced the Federal Reserve will lower interest rates next week.

The Kuala Lumpur Composite Index (KLCI) closed up 20.08 points or 1.5 percent at 1,398.35. For the week, the KLCI was up 28.18 points or 2.5 percent. Advancers beat decliners 663 to 222, with 255 stocks unchanged and 184 counters untraded. Volume traded was heavy at 1.91 billion shares valued at 2.17 billion ringgit.

KLCI Weekly Chart

On the last Friday, Kuala Lumpur Composite Index (KLCI) already penetrated the all time high 1392 (previous) at 1398 points. It looks like the KLCI going to be higher after break the previous resistant with heavy volume. From the chart showed that the first projected price using fibonacci level extention is at 1442 points. Technical indicator 14-weeks RSI also pointing up and still not in overbought area which I assume next week we will see some new high will be made.

Trading on your own risk. Happy learning and happy trading!

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VADS Berhad

VADS’ core businesses are the management of computer network systems and call centers. It is an information technology (IT) company that can provide total solutions for companies seeking to outsource their internal computer and network requirements.

Standard and Poor's (S&P) quoted in his stock commentary today that "We reiterate our Buy recommendation and raise our 12-month target price to MYR7.00 (from MYR5.44 adjusted for a 1 into 2 share split)".

VADS intends to pay out 40% - 60% of net earnings as dividends giving reasonable yields forecast at 3.6%. With MYR19 mln net cash at end-Jun. 2007, we believe the conservative payout policy leaves VADS with sufficient reserves to make further strategic acquisitions or failing which, to raise the payout going forward. (S&P)

VADS Berhad Weekly Chart

From the weekly chart showed that VADS Berhad stock trading at 423.6% fibonacci extention level which already achieved the second target price. A doji star occured where the doji gap above previous candle on the uptrend sometime showing that the trend will change. This signal confirmation can be validated after the next candle occured. On the techincal indicator 14-weeks RSI showing that the price is in overbought area at 78. Additionally bearish divergencce occured in daily and weekly chart RSI.

Even the S&P recommendation is to buy this stock in his report, my TA said that we have to wait until we get a good price which I assume this stock will make correction before its continue to north direction.

Trade on your own risk. Happy learning and happy investing!

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Tenaga Nasional

Tenaga Nasional (Tenaga) is the electricity utility company in Malaysia and is mainly involved in the generation, transmission and distribution of electricity. Tenaga manages the electricity grids in both Peninsular Malaysia and Sabah.

Standard and Poor's (S&P) said in his stock commentary today that "We reiterate our Strong Buy recommendation and 12-month target price of MYR13.00". Risks to our recommendation and target price include Tenaga being made to absorb higher gas prices, the continued upward spiraling of non-gas fuel costs and weaker-than-expected electricity demand growth.

Tenaga Nasional Weekly Chart

Above is Tenaga Nasional weekly chart and I will put my comment on this counter. The 200 SMA is used to separate bull territory from bear territory. Since end of July 2006 Tenaga stock trading below 200 SMA which showing that it is in bear or downtrend mode. Technical indicator 14-weeks RSI set a new low while the indicator is not. This is triple bullish divergence. But I'm still thinking that the price will be at intermediate support at RM8.50 which at the same time relate to fibonacci 261.8% level. Patience is the key to success and we should waiting the confirmation signal for trading and take small risk that acceptable.

Additionally, Tenaga Nasional slid 20 sen or 2.1% to 9.25 ringgit after the company reported a lower-than-expected fourth-quarter net profit due to foreign exchange losses. Investors were also worried that higher power purchase costs and a potential increase in fuel costs may impact Tenaga's outlook next year.

Trading is on your own risk. Happy learning and happy trading!

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Definition of Stock Day Trader

Very active stock trader who holds positions for a very short time and makes several trades each day. Day traders are individuals who are trying to make a career out of buying and selling stocks very quickly, often making dozens of trades in a single day and generally closing all positions at the end of each day. Day trading can be costly, since the commissions and the bid/ask spread add up when there are so many transactions.

What is the definition of a Day Trade?

A day trade is the purchase and sale (or short sale and purchase) of the same security on the same day in a single account.

2. What is not a Day Trade?

Liquidation of overnight positions (or purchase to cover a previous day's short sale) of the same security the next day will no longer be considered a Day Trade.

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Kuala Lumpur Index Composite 22 October 2007

The market closed lower last Friday with the KLCI falling 6.15 points or 0.45% to 1,370.17. The market started on a positive note but gave way to selling pressure in line with the weaknesses in regional bourses.

Today KLCI ended with 19.36 points dropped at 1350.81. Dow Jones Index slumped 366 points last Friday which showing us high impact on US market crisis to our regional stock market. Counter gainers 136 while losers 784.

For those who is still hold any stocks, lock your profit tight. Stay away from market at the moment if you are not very confident.

As per Warrant Buffet said:

Rule No. 1: Do not lose your money. Protect your profit.

Rule No. 2: Do not forget rule No.1

Trade on your own risk. Happy trading!

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Online Stock Broker In Malaysia

Table of Authorized Online Stock Broker Listed By Bursa Malaysia

Online stock broker is a comprehensive web-based, real-time Electronic Client Ordering System (ECOS) that facilitates clients with the ease and convenience of online share trading for all securities listed on Bursa Malaysia. Through this service, clients can place orders and such as:

1. Live Stock Quotations for All Securities
2. Live Order Confirmation
3. Intraday Stock Tracker
4. Stock Alerts
5. Profit/Loss Calculator
6. Favorites List
7. Off-Market Deals
8. Company Financials
9. Key Market Indices
10. Market Statistics & Scoreboard
11. Market Trade Monitor
12. Up-to-Date Market & Stock Announcements/News
13. Bernama News

The purpose to list this authorized online stock broker is to make sure that we are not cheated by others party when somebody eager to start stock trading. You have to survey which one is good online stock broker and suitable with your self-fulfilled.

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Bullish Eyes on Astro Counter?

Astro Daily Chart

Overlook Astro below 200MA and still in downtrend mode. On last Friday, breakout based on the downtrend line happened as picture above with average 5-days volume high then price closed at 4.16. The price may retest a few times around the trendline. Candlesticks showing bullish patterns. Technical indicator RSI >70 Astro in overbought area which seems that Astro may do correction in very short-term period.

This counter looks very interesting when my analysis showing some contradict. Dowtrend line already broken with 5-day average volume high. Trading rules for trendline entry method already fulfilled when today 8/10/2007 Astro opened at 4.16. The red horizontal (4.15) and vertical line showing how to make an entry. If price open above the horizontal line, the entry is there. While my counts based on Elliot Wave Theory and Fibonacci Expansion line, overall Astro in downtrend which still in count no 4 and waiting count no 5 for the end.

My instinct said that downtrend is still ongoing on Astro and I will not trade this counter. Sometimes you must believe your instinct which will guide you to make decisions.

Day after this I will show you how to trade using trendlines, Elliot Wave Theory and some explanation about Fibonacci. The basic material to show you is still in progress.

Anyway, happy learning and happy trading!

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Kuala Lumpur Composite Index Recovered?

KLCI Daily Chart

KLCI ends +0.19% at 1372.39 in heavy volume with more than 2 billion shares changing hands as bargain hunting on blue chips, government-linked stocks by local funds helped reverse losses. Market breath turned positive at close with gainers edging out decliners 631 to 282. Follow through buying interest may push benchmark to retest all time high of 1392.18 tomorrow.

On the wall street market, the Dow and the S&P 500 surged to all-time intraday highs on Friday after a solid employment report rekindled optimism about the U.S. economy and corporate profits. The S&P 500 also closed at a record high.

Technically from the price chart above we can see that market is trying hardly to retest the previous high at 1392 points. After some moment of the bearish sentiment US market, KLCI take a breath at the fibo level and might to retest all the time high. Daily RSI showing that KLCI in overbought area RSI>70 which I expect that correction will happen this week. Overall look up still uptrend and promising.

Additionally with the Hari Raya holidays around the corner and given the lack of fresh leads on the local front, market observers say the KL Composite Index will likely fall into consolidation mode this week.

Enjoy this reading and happy learning!

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Chart Patterns and Formations

The most common chart patterns that usually trades are as follow:

1) Symmetrical Triangles2) Ascending Triangles

3) Descending Triangles
4) Double Top
5) Double Bottom

6) Head and Shoulders
7) Reverse Head and Shoulders

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