Posts filed under 'tech sector'
Both the DOW and Nasdaq indices were being bashed down last night in US due to various bad news. In short, the “W” shape that I spoke about in my blog yesterday was no longer true simply because it will not be a “w” shape any more. The spike up in Nasdaq the day before yesterday was more like a false break on hind sight.
Hence, we shall square off (i.e. lock in profit or cut loss) all our tech trading positions immediately. For those in Singapore, I have noticed that Venture had surged more than 5% yesterday and if you sell now (around S$9.95) you could still make about 3% after netting off the trading expenses. While this is not truly a great trading opportunity on hind sight, we shall be fast to react to new info.
We shall remain at the sideline with zero position and forget about the “W” shape for the time being. Nevertheless, we shall continue to monitor the markets in search for another good trading opportunity.
Master “The Essence of Stock Investment” and ride towards the journey of your financial freedom to be the “Master of Your Own Destiny”! Welcome to visit the #1 value-added stock and option investment education website in the world, www.master-rider.com!Disclaimer: Investors are investing at your own risk. Please read full disclaimer at the end of the blog or from the main page of the website.
June 27th, 2008
NW Teong
Despite my bearish view on the macros in my past few blogs, I feel that we should not miss out on short term opportunities (provided we can spot them).
Purely from chart point of view, tech stocks are poised to bounce strongly (from NOW onwards) and could last at least the next 3-5 trading days of course bearing unforeseen circumstances. Please see Nasdaq chart below:-
The Nasdaq has just formed the second base of a nice “W” shape. This is what we called a double bottom in technical analysis and is a strong signal for a reversal. Of course, nothing is 100% sure, what we can say is that the probability for reversal is very high when we see this signal. If we look at the SOXX index (see below chart) which is a leading indicator for tech stocks, it has a similar “W”
While I see this as a good short term trade, it does not indicate anything on the long term outlook. Hence, we shall not be too greedy and always remember to set a target price (set a trailing stop when positions already in profit) and a cut loss price (e.g. event risk). Never let your winning position to become a losing one.
Please note that you are responsible for your own trades and you are reminded to read the disclaimers at the bottom of the home page of www.master-rider.com. Good luck!
Master “The Essence of Stock Investment” and ride towards the journey of your financial freedom to be the “Master of Your Own Destiny”! Welcome to visit the #1 value-added stock and option investment education website in the world, www.master-rider.com!Disclaimer: Investors are investing at your own risk. Please read full disclaimer at the end of the blog or from the main page of the website.
June 26th, 2008
NW Teong
I first posted my blog “A Tale of Two Markets” on 16 Oct 2007. When I read it again 10 minutes ago, it is still very relevant. In fact we have seen the events being played out in these two markets, namely those in US vis-à-vis Asia markets. While on one hand you hear lots of concern on the housing problem in US expressed by big names such as Soros, Bill Gross, Alan Greenspan and so on in the past few days, and on the other hand Asia markets continue the bull run best represented by the IPO of hot internet stock, Alibaba.com which was listed in Hong Kong Stock Exchange yesterday. Alibaba.com ‘s share price closed at almost three times its IPO price at the close of its first trading day. Before this news, we have also heard the news of PetroChina becomes the first US trillion dollars company in the whole wide world after it has listed its shares in Shanghai Stock Exchange few days ago. I can only use the word “crazy” to describe the euphoria in both China and Hong Kong markets and to certain extend other markets in Asia too.
Most of the things that I talked about in my previous blogs are being played out now: US$ is weakening, commodity prices have surged and are still surging, crude oil is breaking new record high, same go for gold price, more bad news in US subprime loans, liquidity driven bull run in Asia markets will continue, tech stocks are doing well in US (be more selective) and also present value buy in some Asia markets. Please also read my comment yesterday posted under the blog “A Quick Glance”. So far so good, as I mentioned before, all these will go on until some triggering events occur. For instance, a big blow up of the subprime loan problem in US, crude oil shoots pass US$120 per barrel in a short time, policy risk (US, China and others) or simply an event risk such as a terrorist attack.
In fact, as argued before, US is in an awkward situation, its domestic housing problem has forced Fed to lower interest rates which it would otherwise not willing to do so in view of high commodity price, especially the crude price, potential of higher inflation, weakening of US$ etc. This would expedite the liquidity outflow from US into the emerging markets. It seems like the US markets are asking for more interest rates cut from the Fed. Cut or no cut, this remains to be seen, however, the liquidity bull run in Asia is likely to continue, at least in these two months! Always invest prudently and be very conservative, this is the only way to win big money (and avoid losing money)! For those Master Rider Club members, you would receive a stock recommendation email today. Cheers!
Master “The Essence of Stock Investment” and ride towards the journey of your financial freedom to be the “Master of Your Own Destiny”!
Disclaimer: Investors are investing at your own risk. Please read full disclaimer at the end of the blog or from the main page of the website.
November 7th, 2007
NW Teong
Yes, US Fed cut its fed-funds rate by another 25 basis points yesterday. This is largely as expected and it shows that at the end of the day, the Fed can ill afford to take the risk of a potential economy implosion caused partly by the severe slow down in housing sector. In order to address the housing problem as well as to prevent the economy from slipping into recession, the Fed has to bite the bullet. The side effect of course is creating a bull run in other sectors that already enjoying superd growth. As already described in my earlier blogs, we are likely to see new records for emerging stock markets, new level for commodities prices.
Regional currencies will continue to strengthen vis-à-vis the US$. However, this process of strengthening of regional currencies will be more gradual from now onwards as the central bankers would not hesitate to intervene in the currency market to prod up the US$ so as to maintain the competitiveness of their own currencies. One has to note that if your currency is too strong, the products that you produced will be less competitive as compared to products produced by another country with “cheaper” currency with all other factors being constant. In short, every country would want its currency to be very competitive as compared to others. This is also a reason why US, EU and some other countries would want China to let the Chinese RMB or Yuen to appreciate faster and at higher quantum than what it is doing now. This is also a reason why EU has started to make noise of a weak US$ vis-à-vis Euro which is already at historical record now.
Thanks to US Fed, the momentum in the regional stock markets should continue and will enjoy the classical liquidity bull run till end of the years barring unforeseen circumstances. Those markets and sectors that are doing well will continue to do well and some of these will continue to see new records. Yes, this includes the gravity-defying markets such as China and India. After recent consolidation, China market is likely to continue its super bull run. I reckon this bull run may stop months before the Olympic start in August 2008.
A quick look at the macro indicators that I monitor (please note that these indicators can be found in The Master Rider System which is linked to various websites to give you live or near live data, you can find this spreadsheet in the website: www.master-rider.com) confirmed what I have described above. In fact, it has confirmed my forecast days if not weeks ago. Holly cow, look at the price of crude oil, it is again at historical high of around US$95.85 per barrel at the moment! It is just a ‘whisker’ away from the US$100 that I talked about days ago. While the Baltic Dry Index has started to correct in the last few days, it is likely to set new record in the days to come, thanks in part to the US interest rates cut.
Besides the usual booming sectors such as oil and gas, shipping and marine and so on, I continue to be bullish in tech sector which is well represented by US Nasdaq index. Please look at the Nasdaq chart below:-
At yesterday closing of 2859, it is the highest level since Jan 2001, i.e. post-internet bubble days. While it still has a long way to go before reaching the historical peak of about 5132 achieved on Mar 2000, it is surely on a uptrend. As for regional tech stocks ex-Japan, the tech stocks in Taiwan and Korea will be the preferred choice followed by Singapore and Malaysia and others. Please note that the tech sector in the region are highly related to the tech sector, especially the tech leaders in the US. Hence, one simple strategy to play regional tech stocks is to follow those stocks that have derived huge sales from the tech leaders in US that are doing exceptionally well at the moment. Those tech leaders in US that are doing exceptionally well currently include Intel, Apple, Google, Microsoft, and so on. The semicon related stocks are still not performing well at the moment (please see the SOXX chart), it seems that these stocks are still searching for a base.
For domestic investors in the region, we will continue to ride on finance sector, marine and shipping sector, oil and gas sector, commodity or agriculture sector, real estate sector (watch out for policy changes), and tech sector (selective stocks). It is always prudent to have a basket of stocks to achieve what I called a natural diversification. However, one should bear in mind that we should not diversify for the sake of diversification, we should still need to follow our investment process closely to derive our investment decisions (reference: The Essence of Stock Investment on www.master-rider.com). The key risks out there are policy risk as well as event risk. Both risks are something investors cannot control and they are hard to predict, However, this should not deter a smart investor from monitoring the situation closely and take appropriate action immediately should they happen.
Sit tight and enjoy your liquidity ride and make sure you build in some safety features in your investment stragegies. Cheers!
Master “The Essence of Stock Investment” and ride towards the journey of your financial freedom to be the “Master of Your Own Destiny”!
Disclaimer: Investors are investing at your own risk. Please read full disclaimer at the end of the blog or from the main page of the website.
November 1st, 2007
NW Teong
Quick overview: US economy is slowing while world big economies such as China and India are humming along well. More ugly stories linked to sub-prime saga are going to unfold in the next few months with England probably one of the potential countries that is at least as badly hit if not more badly hit than US. This will probably cause some degree of damage in term of investors’ psychology. Oh yes, US Fed most probably will cut its Fed funds rate by 25 basis points. This probably disappoints some investors who have expected a higher cut. More importantly, we have to read and analyse the forward looking statement issue by the Fed. My take is that while they express concern on the sub-prime saga, they feel that it is prudent to have a more manageable cut in view of inflationary pressure. Bear in mind that we just witnessed a record high crude oil price. On the positive note, tech sector might be on its cyclical up swing soon and final quarter is a typical strong quarter for tech sector. For this, we have to continue to monitor the soxx index and the semicon book-to-bill ratio (please refer to my earlier blogs or e-book, “The Essence of Stock Investment”) so as to confirm the upswing (if any).
With the above as a backdrop, markets would still be volatile in the short-term. This volatility could probably continue till end of Oct. Please note that October is the typical jinx month of the year where there were huge market corrections happened in this month. The famous one is the Black Monday that happened on 19 Oct 1987. If there is any market crash, it is more likely to be in this month. The investment strategy for 4Q07 would be to accumulate good stocks with great fundamentals, earnings visibility and potential, as well as attractive valuation. For Asian markets, it is prudent to buy stocks that ride on the booming local economy. As a tech lover, I am also feel that this is one of the best time to accumulate tech stocks to prepare for the up swing in the last quarter. As mentioned before, it is also prudent to buy some insurance (hedge by buying put warrants/options for indices) for your portfolio. This hedge is needed in case there is a market crash in the month of October, or a market melt down due to any other events.
In conclusion, I think world economy is still growing at a respectable pace despite the sub-prime problems in US. Thus, I am still positive about equities, especially in the next few months (except October, hahahahaha!). However, we need to be very careful come 2008. I shall share my view on this when the time is right. Cheers!
Master “The Essence of Stock Investment” and ride towards the journey of your financial freedom! Be the “Master of Your Own Destiny”!
Disclaimer: Investors are investing at your own risk. Please read full disclaimer at the end of the blog or from the main page of the website.
September 18th, 2007
NW Teong
I know I know, I am a bit crazy to talk about tech sector three times in a space of 8 days. I simply cannot help it as I think that at current level, it is still very good level to accumulate and build up my tech portfolio (One, please be selective in your stock picks and two be sure to allocate your funds prudently, i.e. diversify whenever possible).
Other than monitor some macro indicators such as the semicon book to bill number (refer earlier blogs), I noted with great interest on some recent news. Both TSMC and UMC has just reported good sales and bottom line numbers for August 2007 and more importantly have improved their guidance for third quarter. Please note that TSMC and UMC are No 1 and No 2 semicon foundries respectively in the world. What does this tell you? Sure, as No 1 and No 2 foundries in the world, they are surely indicative of what this industry is performing few months down the road. In fact, their results are important indicator of what will happen to the entire tech sector in the world as most tech products need semicon components to a varying degree. They give me a very positive feeling and reinforce my positive view on tech sector in the next six months (at least till end of the year). Another piece of positive news came from the No 1 semicon stock, i.e. chip maker Intel which has also upgraded its gross margin and sales guidance for third quarter. Intel cited better world wide demand for the upgrade.
In fact, some of the tech stocks that I am monitoring have, on average rose by about 10% since I first made the buy call in tech stocks. However, these stocks still have the potential to rise another 20%-30% by the end of the year albeit unforeseen circumstances. Having said that I must point out again that markets would still be volatile (by now some of my readers may complain that I am really “lor so” which is a Hockkian phrase for being long winded in English as I have already cautioned a few times in my earlier blogs that 3rd Quarter is one of the most volatile quarter in a year, especially now with the unfolding of the sub-prime saga). However, this also makes it a great quarter to cherry pick the stocks you really like!
Remember to use the strategy that I mentioned before: buy core stocks + insurance (hedge). Ideally, our portfolio should consist of stocks that rely heavily on domestic market (I am talking about Asia Markets, especially, markets such as Singapore) such as the construction sector and other sectors that depend on global trade such as tech sector. My objective on this is to achieve a natural diversification. If we really cannot find good stocks in different sectors, then we should forget about diversification, remember do not diversify just for the sake of diversification. I always urge people to understand the essence of things that they learnt. Diversification is a simple term that most people can understand, however it is also most widely abused by investors.
Another example is dollar-cost averaging. We always hear this from unit trust sale persons, especially when market is on the down trend. They would advise customers to invest more when market is falling so as to achieve a lower averaging cost. If you blindly doing this dollar-cost averaging, you could stand to lose big, very big! Of course, this technique has its own merits but only applicable under certain condition. One scenario that you can use this technique is when the stocks/funds that you like are already at screaming buy level (obviously, you have done your home work…..macro analysis, company in-depth analysis, valuation….TA etc to derive this conclusion) and they are still falling due to extreme bearishness in the markets.
Master “The Essence of Stock Investment” and ride towards the journey of your financial freedom! Be the “Master of Your Own Destiny”!
Disclaimer: Investors are investing at your own risk. Please read full disclaimer at the end of the blog or from the main page of the website.
September 11th, 2007
NW Teong
US markets surged yesterday mainly due to the same factors i.e. the ease in sub-prime loan saga and the expectation of interest rates cut by US Fed. This expectation is further strengthened by the latest ISM survey of the manufacturing sector, it registered 52.9 in August versus 53.8 in July. Investors cheered on this number, why? Reason: economy continue to slow down (hence Fed can go ahead to cut the interest rates without the ill effect of stimulating the economy too much so as to stir up the inflationary pressure) and at the same time not slowing down at a greater speed so as to have a recession. (For those who do not know how to interpret ISM data, please refer to my e-book, “The Essence of Stock Investment”, via www.master-rider.com)
Nothing really new at this juncture, as you can see investors are dancing with just two key issues at this moment: interest rates cut vis-à-vis sub-prime loan saga. What changes constantly is the expectation of the investors with regard to these two items, hence, the gyration of the markets.
Today, I would like to share with you this interesting and important feature: Nasdaq
At yesterday closing of 2,630, it had convincingly broken up from the down trend. Not only it had broken up the down trend, it had also pierced through its 50 days SMA of 2,595 as at yesterday close. It is very interesting to monitor for the next few sessions. If it can rise to 2,640 and maintain at least at that level, it has a great chance to re-test its recent peak of 2,720 registered on 19th of July. Frankly speaking, tech stocks (refer to my blog yesterday) purchased yesterday are already in the money! However, it will be prudent to accumulate along the way as the valuation remains attractive even at today’s level.
You see, there could be only two scenarios from now till 18 Sept, i.e the date for FOMC meeting where Fed need to decide on its interest rates policy. Scenario one is that markets are pessimistic and markets will fall to an attractive level. Under this scenario, I have better load up stocks that I want all the way before 18 Sept. Scenario two is that markets will surge substantially due to high expectation of interest rates cut. Under this scenario, I would still accumulate stocks along the way (but not as aggressively as scenario one). However, I may lock in my profit either right before 18 Sept or just after 18 Sept. It all depends on how crazy markets were at that time. My view is that, for scenario two, if markets have surged a great deal till 18 Sept, they may (or may not) get a last hurray right after Fed announced a cut in interest rates. I am prepared to lock in my profit under this scenario, why? 1) I think markets may correct if they have surged a great deal all the way till 18 Sept (hence I need to monitor the quantum that markets have moved), 2) There is still a certain degree of risk that Fed may delay the cut, especially if stock markets have done well, and 3) I still would like to sleep well knowing that there is still a Black Monday to bother investors about one month from 18 Sept!
Again, it is good to buy some insurance (hedge against own portfolio) in the form of Put options or warrants at this juncture. Cheers!
Master “The Essence of Stock Investment” and ride towards the journey of your financial freedom! Be the “Master of Your Own Destiny”!
Disclaimer: Investors are investing at your own risk. Please read full disclaimer at the end of the blog or from the main page of the website.
September 5th, 2007
NW Teong
