14/04/2009 Market Update

A key reversal day today. The market simple shrugged off the bad GDP figures as investors look at that as the end of our tunnel. At closing, STI got matched up to close at day high of 1,897, with a gain of 20 points – unbelievable. We have breached above the 1,880 resistance already. Volume traded was also incredibly high at 2.19 billion shares worth $1.33 billion.
The matched up was partly due to the US futures gaining strength as well. Furthermore, there is news that our government is considering a second stimulus plan worth $10 billion.

I think this is the fundamental confirmation that we have been waiting for. Whether there are any pullbacks or not have became secondary because everyone has come to a consensus that the market had bottomed last month. That’s why when we wait for the fundamentals to prove to us, we have to be prepared to buy at prices that are 15-20% higher from the trough. This is because as I have always said, the stock markets are forward-looking mechanisms.
Chart wise, I think given the current situation, STI is quite likely to minimally break above the previous high point (1,960) during the last bear rally in January. Given all these confirmations, the market is basically ideal for investors who have holding power regardless of traders or investors. Those without holding power should at least have the discipline to cut loss if things go awry, especially if you are trading the second-liner stocks. Whatever you do, just make sure that you do not miss out the sprouting bull market. It might come anytime for all we know.

F&N:
It has been very weak these few days. I vaguely remember that I read somewhere about one of its subsidiary company is in some kind of refinancing problems. If I recall correctly, it should be FrasersCT. As the mother company, F&N will be obliged to lend a helping, to the extent of raising capital such as a rights issue. Therefore, we see its price being so depressed. It might be worth collecting some of it at this junction taking into consideration that it didn't run up during this rally. Once the uncertainty is removed, the share price is likely to bounce back up.

Kep Corp:

This counter did quite badly today compared to the rest. I wonder if it has anything to do with the rumors out there saying that it might need to raise capital. But it should be worth collecting it again soon once the share price discounted adequately the likelihood of a rights issue etc. Just take not that it will go XD on 28/04/2009 though and thus the share price is likely to adjust downwards on that date. So do not mistake that behavior as the discounting mechanism for a likely rights issue.

SIA:

The chart is showing a correction in the making. It should be worthwhile to start collecting it before it bounces back up again.

Note: Kindly read my first post, About Myself, on my disclaimer. Thank you.