A multitude of second and third liners on the SGX have profitable potential!

It's imprinted in their charts. Some charts like VizBrands have extremely bullish ascending wedge patterns, while most others have cup-and-handle patterns that are bullish portents of prices that will exceed previous highs.



















Viz Brands(above) has a bullish ascending wedge pattern that seems poised for a breakout, considering that substantial shareholders have been buying purposefully.



















Beng Kuang Marine(above) has a developing cup-and-handle pattern that promises further explosive highs.Additionally, the company is in the current 'hot' industry of marine and shipping.

A hum-drum day on the performance front

As it turned out,in terms of gains, TA(+6.4%) turned out to be the best performer of all my open positions, followed by WTK(+6.0%), while Keladi gained me coffee change by rising 3.7% before I disposed of it.MPI brought up the rear with a 1.8% gain.

Most second liners, including Keladi softened considerably by the close,and, as a result, the rest of my open positions(with the exception of MAA Holdings) actually fell by the close so I would have been better off buying them today, BEFORE the humongous Dow surge, than yesterday!


Why did I enter the market yesterday? It was due to sense of something positive brewing, especially seeing the market action after 3pm. The KL Composite Index actually made a V-shaped recovery intra-day, and having only entered TA and MPI until 2pm, I was emboldened by this seventh sense to increase my long positions.

The bulk of my gains for the day came from DBS Holdings' call-warrants expiring March '08. However, it wasn't an easy battle to resist the temptation to sell in panic after I missed the 16.5c opening price as the mother share hit $20 only to see it slide to 14.5c/15c as DBS slid down to 19.60/19.70.

I had averaged down from 16.5c since Friday, and finally made my decision to go for broke at 13.5c just an hour from the close yesterday because, after poring over 20 charts of DBS with various indicators, I decided that a temporary triple bottom was taking shape.

The warrant taunted me the whole trading day as it refused to go past a big block queueing to sell at 16c but hung anaemically at 15/15.5c, a paltry 10% rise from its previous 14c close. It only rose to 15.5/16 when the mother decisively broke 19.80 and went past $20 in the late afternoon!


I was actually spooked enough to throw down almost 30% of my holdings to 16c, and this was done only barely in time.

The decisive moment came at around 4.20pm. when buyers started clearing the 20.10 overheads in the mother share. Because I had queued since 9.10am, my remaining line was nearly in front of the more than 3000 lots queued to sell at 16.5c.

Mercifully, at 4.27pm, the confirming SMS came that all my lots were sold.


I would have been much better off conserving my time and effort on the Merrill Lynch warrant which rose 25% with no difficulty, and was cheaper to boot!



I was happy with my Creative position that I had queued for at around 10.15am, was done 15 minutes later, and closed 1.6% higher than where I bought it.

Dow revisits the 13,700 level.

As predicted, the Dow Industrials breached this key level, as I had forecast in August(see earlier post).

Im Malaysia, I have open long positions in Malaysian Pacific Industries(bought on Monday), WTK Holdings(bought Monday), TA Enterprises, Keladi Maju, Zecon Engineering, MAA Holdings and Measat Bhd(all bought on Tuesday), totalling about RM 14 000.

In Singapore, I have open long positions in Contel, Fabchem and ManWah(bought last week) and DBS call warrants, Surface MT and ChemOil( bought Tuesday) totalling over S$ 25 000.

However, I also bought some put warrants to hedge my longs and I may have to cut losses on them.

My broader strategy has worked quite wonderfully so far...

This past week saw frenetic trading on my part, as the contra selling(selling without paying for the shares before they come due) of intraday, intra-week and intra-fortnight positions amounted to over twice the value of my stock portfolio, and I made more profits this week(mostly on a contra basis as well) than I have in any week over the past 11 years, when I bought Transmarco in August 1996 at prices between $3.92 and $4.70 and sold them at between $6.20 and $7.50.



To hedge my bets, I dipped my toes into some put warrants on the Hang Seng Index as it touched a new record so I am hoping that the Dow's 240 point drop last Friday will allow those positions to turn in a small profit. As at last Friday, they were still at the same price I had bought them three days before.



Also, I liquidated half of my short-term portfolio that had turned in small profits since I bought the shares in August, including Equation, Plastoform,Firstlink and Lereno while also taking some losses on China Sunshine and China Yuanbang. Therefore, I can use these sales proceeds to selectively pay for shares coming due next week.

In fact, I am comfortable with holding most of my short-term purchases until the end of September because I believe the Dow Industrials will explore the Aug 17 bottom and them rebound by at least 10%.

These purchases include Longcheer at 60c, Giant Wireless at 15.5c, 8Telecom at 14.5c, Celestial at 1.15 and others.

However, seeing the Dow futures dropping near the close of the Singapore market did not prevent me from disposing of a further $18,000 of open positions in ASTI, Asia Environment and Longcheer(partial) in the last minutes of trade.

I would advise my readers(and myself especially) PATIENCE to wait a day or two for panic to set in to ensure they get the cheapest goods( I remember fondly my profitable foray into the market at the height of the sub-prime related selling panic on August 17th).

For instance, I would start considering entering DBS call warrants once the mother stock drops below S$19.

Let me post some charts of 10-year Treasury bill yields(which drop when investors flee equities for save 'haven' bonds, the Japanese yen( the mother of the carry trade) and Countrywide Financial, which precipitated the panic back in August.









































































In summary, all three charts are oversold and overbought as the case may be, signalling that the time may be near(thought it may take another two or three days) for the 'elastic band' of demand and supply to snap back.