I am pro Fundamental Analysis, really!

It is starting to look like I'm a chartist, isn't it? I really am not. Just so happened that I have started to explore on Technical Analysis a little more. It sucks to watch my stocks fall right after I buy them. Ofcourse, Fundamental Analysis says that doesn't matter because it's for the long term, but if i can avoid buying at the worst points, such as strong resistance, why not.
When I started this blog, I wanted to write about companies listed in KLSE/Bursa which I may consider adding into my portfolio. Their fundamentals, pros n cons, a bit on technical and target prices. All of which that'll help me decide to grab or thrash.
A full write-up on a stock will take a long time. And most likely will deter me from ever finishing up. So, I'm gonna break it up into 3 parts; The Story, Fundamental Analysis and Technical Analysis.
The Story about a company is very important. If I can't tell a story about the company of the stock that I want to purchase, I do not go into it. I must be able to tell what the company does, what are its products/services, where are its presence, its growth prospects, market share, durable competitive advantages, its management and so much more. It's difficult to know much about the management as a retail investor. On this aspect, I mostly rely on financial ratios to gauge if its management delivers. And i avoid companies of notoriously shady management. You know, those who screw their shareholders over n over again. You know who they are...
There are so many stocks that I want to cover. So difficult to pick one to start with. So let's just go with something smooth, light, refreshing, full-flavored. You got it right, it's 'Time for a Tiger'. For the benefit of non-drinkers, my next post will be a story on Guinness Anchor Berhad (GAB). No ratios, no charts, just a story.

ChartNexus 3-hr Stock Screening Workshop

ChartNexus 3-hr Stock Screening Workshop

ChartNexus runs this free 3-hour Stock Screening Workshop every Wednesday at their training center at Menara UOA, Bangsar. Location is strategic, adjoined with Bangsar LRT station. Since I chose to drive there, a raining night yesterday, I had to fork out RM7 for the parking. Whoa not cheap at all. 

Prerequisite to attending this workshop. You gotta have ChartNexus software installed on your laptop. And ofcourse, bring your laptop to the workshop as it is a practical session. You can download chartNexus for free. 

The trainer began the session by briefly running through the basic operations of ChartNexus Software. Pretty easy to use. It’s a breeze to draw trend lines and highlight turning points. Without further ado, he launched into the analysis of KLCI. 

FBM-KLCI

Looking at the 20-day moving average, KLCI is trending up. Uptrend is accompanied by increasing volume, which strengthens the pattern.

Support at 1466. If can break out of 1491 with high volume, KLCI can reach 1513, resuming uptrend.

Macd getting shorter. Wait for curve up.

Macd warning: going against the rise of klci, bearish divergence

Airasia

Airasia, on 23^rd Sept 2011, trading out of Bollinger band, in a downtrend.

Hollow candle (oval highlight), buy signal. Filled candle(second oval highlight); sell.

Next, he introduced Xpert Trader, a paid module. With Xpert Trader, one can specify stock screening criteria. He demonstrated screening by Volume increase by 30% in the last trading day.

AMMB

At current, AMMB trading at lower Bollinger band. Good volume. Form bullish reversal pattern. Immediate resistance is 20-d MA. Risk-reward: buy at support 5.63, sell at resistance 5.83. It had formed a doji at support. Wait for green light from MACD. Green light means MACD bars turning from red to green. Somehow, MACD did not show up in the chart I captured. MACD bars for AMMB is red fyi.

Boustead. 

High volume. Doji is formed. Forming a Bollinger band squeeze. When stock moving on a sideways, Bollinger band is the best indicator.  Wait for breakout above 5.50.

Coastal

Bearish engulfing is observed. A filled candle engulfs previous day white candle (See oval highlight). It is also sitting on a resistance line of 1.99. Not a good time to buy. Immediate resistance is 20-Day average at 1.87. If it breaks below 20-d avg, it may retrace to 1.77

We also briefly went through a few other stocks in the same manner; using Bollinger band, resistance and support lines, 20-day MA, and break out points.

*Source of all charts in this entry is from ChartNexus software. 

 

Now, my view on the whole session. I am not big on Technical Analysis. I acknowledge its importance as it reflects investor’s psychology, the herding effect, but using it alone to pick stocks is unconvincing. The trainer makes stock selection too simplified. Buy here, sell there. Strangely, his muffled voice doesn’t sound like he means his buy n sell calls. 

However, learning a trick or two on Technical Analysis is beneficial. I’d still like to be able to detect a change of trend at KLCI; something more than just looking at 20-day MA and Bollinger bands. 

ChartNexus runs a full 4-day course on Technical Analysis charting from Friday-Tuesday. The cost is about RM5000. Honestly, if I have 5K to spend on seminar, I’d go for Milan Doshi’s property course. But that’s just me.

When to buy shares?

In an uptrend, buy on dips. Buy after the price bounces off the support line. You never know if it breaches the support and reverses into a downtrend

Sell when uptrend reverses into a downtrend. Signs to look out for:
- 200-day SMA breached with STRONG volume

Buy when downtrend reverses into uptrend
Signs to look out for
- breaks above 200-day SMA with strong volume
At this point, the headlines are usually still full of gloom. Recession, high unemployment. The market always precedes the economic cycle.

That said, buy only when PE is below average or you'll be overpaying. market bottom, in dips, whatever. Never pay 2 dollar for a 1 dollar item.