Contents:
Malaysian Elections 2008: Uncertainty is Certain
Markets anywhere loathe uncertainty. Although the results of the Malaysian Elections 2008 are out, the political landscape is far from certain. The Malaysian Composite Index signals it may test the 1000-level within the short to intermediate term. Last Friday, the market closed at 1194. Here’s why.
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Malaysia Elections 2008: The Aftermath of the Tsunami
A political tsunami it may be, Malaysian voters decided to send a strong message to the ruling incumbents, the National Front headed by Abdullah Badawi. The National Front lost its forty years record of having a two-third majority in parliament as well as losing five key states to the opposition.
The five states include Kelantan, Kedah, Penang, Perak and Selangor. Penang is 'Malaysia’s Silicon Valley' while Selangor is the premier state.
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Technical Analysis Spotlight: General Motors Ticker Symbol GM
General Motors, the world’s largest automaker, is poised to stage a rebound after an inverted head-and-shoulders pattern appeared recently. Here’s why.
An inverted head-and-shoulders pattern is bullish in the immediate term. Measuring the distance from the low of the “head” to the neck line, as shown in the chart below, I expect General Motors to rally to around $37.
This is confirmed by two pivot points of similar price range on 2007—02-14 and 2007-06-29.
Our own market psychology barometer reading also showed a bullish divergence in the current inverted right shoulder.
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Malaysian Elections 2008 Special: Can Stock Markets Predict the Winds of Change
The Malaysian stock market showed a classic head-and-shoulders formation. This means the market is poised to hit at least the 1160-level in the immediate term. This represents a drop of 13% against the last closing of 1357.
The challengers, the People’s Front (Barisan Rakyat), view March 8, 2008 as a possible turning point in Malaysian’s history, a pivot point in market jargon. On the evidence so far, the Malaysian stock market may agree.
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Technical Analysis Spotlight: Sara Lee Ticker Symbol SLE
After hitting our market psychology barometer reading of 31 on 2008-02-21, it’s fourth lowest since 1991, Sara Lee is a buy. Here’s why.
The chart below shows these four dates marked A, B, C and D. All showed recent steep declines.
After these declines, prices rebounded 30%, 77% and 41% respectively within one year. If history is to repeat itself, I expect Sara Lee to have a similar rebound.
The upside target is $17 while the stop-loss figure is $12. The current closing price is $13.13.
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Technical Analysis Spotlight: Comcast Ticker Symbol CMCSA
During the last six months Comcast has lost almost a third of its market capitalization. With its recent fourth quarter results, Comcast is a buy. Here’s why.
There are two resistances as shown by the trend-lines in the chart below. On 2008-02-14 and 2008-02-15, prices crossed both resistances decisively.
Both lines are significant as they crossed each other at $18 recently.
Our own market psychology barometer reading was 51 and 55 respectively signaling there are more bulls than bears for this ticker.
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Technical Analysis Spotlight: Microsoft Ticker Symbol MSFT
The world’s largest information technology company made an unsolicited offer of $44.6 billion for Yahoo just over a week ago. Since then Microsoft has lost over $37 billion on its market capitalization.
More than 50% shares of Yahoo had changed hands since then, purportedly in the hands of hedge funds.
Yahoo’s board is expected to reject this first offer.
Google was vocal to urge regulators to block this deal. Given Google’s number one position in advertising revenues, it may betray their worst fears of seeing their next two largest competitors combining forces.
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Technical Analysis Spotlight: Dell Ticker Symbol DELL
The world’s largest PC-maker usually confounds its critics, skeptics and competitors. This is why Dell is a buy.
The trend-line shown in the chart below clearly signals the support at current levels. Each time prices tested this support, Dell rebounded about 50% within six months.
This has happened in December 2000, September 2001, July 2006 and lately.
Our own market psychology barometer reading on 2008-01-23 was 35. There was no divergence, suggesting that Dell has a steady increasing percentage of hard-core bulls or long-term admirers.
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The Futility of Online Polls for Financial Markets
Everyone should be familiar with this type of opinion polls prevalent in many financial websites. These ask the typical question – are you bullish, bearish or undecided. These polls are often wrong especially at crucial times.
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Technical Analysis Spotlight: Motorola Ticker Symbol MOT
As a contrarian and rare-event observer, Motorola is a buy. Here’s why.
Our own market psychology reading on 2008-01-24 was 19, the lowest on record. The closest was nearly 20 on 1987-10-26, more than twenty years ago.
From a low of about $2.40, it hit $3.60 twice, once within three months and another within nine months.
If history were to repeat itself, I would expect Motorola to hit $16.00 within similar time frames.
What about the potential downside? Drawing a trend-line, you can easily see the support at just above $8.00.
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