27/04/2009 Market Update

	Close	Change	Low	High
STI	1,818	-34	1,796	1,855

	Shares	Value
Volume Traded	1.77 billion	$1.16 billion

An unexpected outbreak of the swine flu over the weekend killed our optimism on the US gains last Friday. Fear gripped our market initially as investors were reminded of the SARs outbreak in 2003, pushing STI below its support at 1,830, and even beyond the psychological level of 1,800. Panic selling and/or shorting were prevalent during the first half of the day before some bargain hunters came in towards the later part of the day, and pushed STI well above its day low.

I think the sudden emergence of this swine flu has created much uncertainty in the market. Here are my thoughts just to share: It is a fact that the 1,830 support has broken, while the next support levels are at 1,780 and 1,720 region. The question here is, "Will STI find support here and bounce upwards soon, or if it goes down, will it hold at 1,780 or 1,720? Or go even lower?" If you had not bought into the market during this level and the STI rebounds, then you will miss the boat. If the STI retraces down further, regardless of whether you have entered, we are just trying to buy more at cheaper levels. I think scenario two is more likely for now.

So now, which strategic support should we aim? In my opinion, we should enter at both levels should both levels be hit, because we seriously won't know where the STI will hold and rebound up exactly. If you have all received my adhoc market announcement this morning, based on my house technical analyst's current views on the swine flu, the market should hold at 1,780. But from the latest news, it seems like there might be a new strain of the flu virus, and should it evolved into an epidemic, then obviously, 1,780 is not likely to hold strength. I will leave it to individual's discretion on when he/she wants to enter. My advice will be: regulate your bullets and try some at every strategic level. Those investors who have always try to pick the low points should understand perfectly, because most of the time, we ended up missing the low points and buy higher instead.

For the very near term outlook such as tomorrow, we are just waiting to see how Wall Street will react tonight. If it closes weak enough, it might lead us to create a gap down at our opening, which will create an ideal entry point for both collectors and traders alike. This is because when the market gaps down, chances are that it will recover on bargain hunting to cover back the gap in its chart.

SIA:

Following my adhoc market update this morning, I continue to suggest it as a contrarian play. Whether it will turn out to be a short-term or long-term trade will depend on the overhang from the swine flu.

F&N:

Apparently, there are some market talks on the possibility of it doing capital raising after Keppeland announced its rights issue. That's probably why it has been underperforming so much compared to the rest. I guess it will only be more advisable to have it as a longer term investment. Do remember to keep extra capital on hand in case it really announces a rights issue.

Contra trading Vs. Contrarian trading:

I think some of you are mixed up between these two terms. Contra is basically buying, and closing out the position before the due date for payment. The contra period is within 5 days from trade date. And strictly speaking, is mostly betting on luck when traders play contra. On the other hand, contrarian trading or investing derives from the word, "contrary". The idea of going contrarian means doing the opposite to what the mass market is doing, believing that the mass market has overdone the selling or buying. Contrarian investing has a longer term connotation and is largely favored by Warren Buffett, the renowned investor. Contrarian trading is more short-term.

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