Starfish Trading School

M&A

2006-04-20T17:46:00.000+08:00

Dear faithful blog readers,

I am pleased to announce that Starfish Trading School is now part of the Ninja Trading Group I have agreed to be one of the contributors there instead of running my own school. The archives here will still be kept here for reference.

Having said that, the Starfish Newsletter has been very active with good participation from participants. If you want to keep in touch, you can join us there.

Major Revamp

2006-04-19T11:30:00.000+08:00

Dear all,

i am doing a major revamp on my blog so that i can better share the information which you need with you during trading hours. I am testing out the email updating service and if it is satisfactory will launch the new service this week.

Cheers.

Starfish Swing Fund Update

2006-04-19T09:54:00.000+08:00

Yesterday i sold off all my portfolio shares.

20 lots of Bio Treat at 129

20 lots of China Sky at 105

30 lots of Beauty China at 865! (can you believe it?)

30 lots of C&O at 495 (can you believe it?)

These must be stupid mistakes which i make of selling early again. I would have make much more by selling one day later.

The reasons for selling is actually very stupid. It is because I was too busy to monitor the market this week as i had tons of work and meetings to attend, so when i see a correction on China Sky, i just throw everything away as i didnt want to be caught in a swift selldown. Isnt that stupid?

Anyway, i will update my Starfish Swing Fund again later this week. While the return from Jan to April has been 15%, somehow i got this feeling that i have 'underperformed' against the market!

This morning Kim Eng recommended Asia Tiger as laggard play while OCBC recommended Stamford Tyres again. These stocks immediately gapped up. While i wont encourage you to chase the stocks, it once again reinforce my trading methodology of trading good FA stocks that analysts cover because you need them to help you push the share price up.

I would be very careful with the market whenever i see the following "signs":

- stocks gapping up whenever a brokerage house covers. (btw, these brokerage houses are conflicted)

- brokers using the valuation PE of 2007 and 2008 figures when 2006 is not even half way there.

- lousy pennies starting to run

- someone who has never buy shares start to get interested in the market.

Anyway have a good trading week.

Do you Yahoo!?
Yahoo! Movies - Search movie info and celeb profiles and photos.

Hong Guo Versus China Hong Xing

2006-04-17T09:08:00.000+08:00

Hi Investoman,

As requested, a good reference point for you regarding Hong Guo.

Cheers.

Shanghai Turbo

2006-04-15T01:01:00.000+08:00

I had a good 'scolding' from my trading khaki via the MSN last night. He said i have been selling my stocks too early for many of my stock picks and i should have more conviction in my stock picks. My argument to him was that i have less money than him and i was trying to reduce my exposure to China stocks. Anyway, he told me i will 'regret' selling Shanghai Turbo and i tend to agree with him. :( sian liao lor.

Starfish Swing Fund

2006-04-14T00:13:00.000+08:00

Shanghai Turbo ~ I sold my 50 lots at 45 cents today. The reason for selling is actually more from a risk management point of view as I am too 'exposed' to China stocks, so i was trying to cut that exposure and risk. The moment i sold, it broke the 46 resistance and closed at 47! Since i have already sold off, i will not do up the chart of Shanghai Turbo. You can find the most updated performance of Starfish Swing Fund here.

Beauty China ~ Still holding on to it but i must say i hate the 'never-ending' sellers that appear. It is in a 'triangle', if the share price can break above 87 convincingly, it should head towards the 94 cents target. The substantial shareholder has increased its stake again!

Bio Treat ~ Still doing fine and if it can break 128, it should head towards 140 zone. CIMB has a 144 target and if it breaks 128, the technical target will be around that 140-145 area.

China Sky ~ View earlier is unchanged. See if it can break the 102 level :)

China Sky

2006-04-13T10:45:00.000+08:00

China Sky ~ SSF initiated 20 lots in China Sky yesterday. The rationale for making the trade were as follows:
(1) Quek Leng Chan ("QLC") bought another 31m shares at 945-95 average and increased its stake from 7.4% to 11.75%.
(2) The fundamentals of the company was actually quite impressive with healthy margins and earnings growth. The PEG (price-earnings-growth) for 2006F is only 0.26! (Below 0.5 means undervalued).
(3) The technical chart points towards 102 target and 118 target should 102 gives way.

Charts Request (FATA)

2006-04-13T10:04:00.000+08:00

My trading khaki who trades full time has volunteered to help me do up the Fundamental and Technical analysis for those who need help so that i can concentrate on running my school and Starfish Swing Fund. BUT he can only do it at night when he is not trading. So when you drop your request at the shoutbox and he will try to do it at night. If he missed your requests, just shout somemore. He helped me with Memtech and Asiapharm as requested by XiaoXiang.

What is FATA? It means doing a Fundamental Analysis and Technical Analysis on the stocks.

Starfish Swing Fund

2006-04-13T00:33:00.000+08:00

Lets just do a quick update (charts will come tomorrow, very tired now) on the Starfish Swing Fund. SSF bought the following stocks today:

(1) Bought 50 lots of Shanghai Turbo at 43 cents today.
(2) Bought 20 lots of China Sky at 96 cents today.
(3) Bought 20 lots of Bio Treat at 123 today.

Still holding on to my Beauty China.... hate to see the strong selling. Will update with charts tomorrow...

Regards

New Kid on the Blog

2006-04-12T09:28:00.000+08:00

While i have already given up on Google Adsense, one of my old trading khaki who shared the same methodology with me actually started his own blog!! We were both very heavily influenced by the 'teachings' of Dr Alexander Elder who wrote the book "Trading for a Living" and I promised to give him a little help to boost his traffic but please do not 'click' on his ads. He doesnt need your clicks, he just need your traffic....

He was telling me to buy Want Want a few days back but i was too busy writing my appeal letter (which by the way, Decipher, has already been REJECTED!).

Beauty China cheong ah!! :)

News on the Go ~ 12 April 2006

2006-04-12T09:08:00.000+08:00

1.CDL - Macquarie downgraded CDL to Underperform with 25% downside based on NAV of $8.15. Prefer Cheung Kong & HK Land for property plays or AREIT & CMT for S-REITs.

2.CWT - Takes 25% stake in thai warehouse leasing firm for $3.06m & sees growing demand for quality logistics facilities in Thailand. BUY.

3.DBS/UOB - Macquarie recom BUY with tgt value @$19.00 for DBS & $18.00 for UOB!

4.F&N - Proposes 1:5 stock split.

5.HTL - DBSV recom BUY with tgt value @$1.71 (XB 1:4 on 7/4) on 10X FY07.

6.INNOVALUE - BNP recom BUY with tgt value @$1.12 on 12X FY06 with strong orders from TI for its auto division!

7.KEPCORP -Completed 1st Super B class jackup rig for Sinvest ASA to drill in deeper waters & harsher conditions. Citigroup upbeat on offshore sector & reiterates BUY on Kepcorp with tgt value @$$16.10 on 19X FY06.

Broker UOBKH Citi
Tgt Value $15.50 $16.10

8.KEPLAND - 1 K-REIT Asia for every 5 KPLD shares approved at EGM. XE on 13/4.

9.KS ENERGY - Indon tycoon Kris Witakes 29.98% stake in KS Energy or $3.05p.s.(XB $2.54p.s.) & 16.4% deemed stake in Aqua-Terra. Wiluan has acquired 29.2% stake in SSH earlier & owns Indon-listed PT Citra Tubindo which manufactures drill pipes.

10.OCBC - Will book $260m gains in 3Q on sale of Kim Seng Rd site to Lippo Grp. awaiting sale of 36% stake in Robinson.

11.OUE/UOL - Analysts speculate that OUE may be sold as a hotel co. after $73m asset swaps by selling OUH & Change Alley Aerial Plaza to a JV with UOL! Move seen as a precursor to UOB cutting its 57% stake in OUE. Sold 26.1m UOB shares in open mkt to fund a $2.00 special dividend & still owns 23.3m UOB shares! FY05 profit +5X @$64m & recom final 6 ct DPS less tax, special $2.00 less tax & special TE payout of $1.60. XD 19/4. NAV rises to $9.89p.s.

12.OLAM - Russell AIF pares stake from 8.33% to 7.67% after 31.96m shares placement @$1.65p.s.

13.SCI - Sembcorp Utilities bags US$1.35b Abu Dhabi power & desalination plant deal.

14.SMM - Won US$165m jack-up rig deal from Larsen Oil & Gas. Rig orders catching up with Kepcorp's est US$500m conversion contract of 2 semi-submersibles to be won from Noble Drilling. Nomura & Macquarie recom BUY with tgt value @$3.26 & 43.60 respectively.

15.SGX - 3Q profit doubles to $50.1m & 9-mth profit +74% @$132.5m. DB recom BUY with tgt value @$4.70 & expect higher volume with the easing of clearing membership rules for banks! Stepping up efforts to develop the ETF mkt.

16.SIA - Qantas to acrap Australian airlines & focus on Jetstar with plans to start flights in Asia Pacific!

Starfish Live!

2006-04-11T18:11:00.000+08:00

Starfish classroom will go officially live on 12 April 2006. The purpose of the live classroom is as follows:

(1) Make money trading stocks together.
(2) Share information on the market.
(3) Learn how to fish by trading on the right side of the chart.
(4) Avoid paying school fees to the market
(5) Retire early

Enjoy.

Beauty China

2006-04-11T01:27:00.000+08:00

I really dont like the look on the Beauty China. It doesnt look beautiful at all. I draw out the various levels of resistances (red lines) and supports (green lines) and try to make some sense out of it. It is currently sitting on the 50-day Moving Average. Let's just hope that it can 'hold' on to that support for now, otherwise will have to "do the necessary" when the time comes.

Toilet Paper Ruins the Day

2006-04-07T00:21:00.000+08:00

We should call 6 April as the Toilet Paper that caused the lao sai on China stocks on SGX. The founders of China Paper found it so tempting to sell their own shares on the market despite reassuring the public some time back that they will not be selling the shares! This draw a strong criticism from Gregory Yap from Kim Eng and the share price dropped from the opening bell. The drastic fall also resulted in most other China stocks getting dragged down as well despite a firm opening in the morning.

Starfish Swing Fund Update

I sold off Full Apex at 37 today. I was starting to get wary that Chinese stocks may have run a little bit too fast and too quickly. When all the China stocks start to get upgrades and gapped up at any good news, it is time to be very careful!

I also sold off Tat Hong at 895 at pre-close and you know who bought it from me? It is CSFB!! At least they put $ where their mouth is and bought the shares recommended by their research report. :) Perhaps i should buy back the shares soon? kekeke lets' see how.

I only have 30 lots of Beauty China left in my trading portfolio. Anyway, here is an updated look at my Fund (only March-April trades shown here to make the picture clearer).

Beauty China

2006-04-05T23:42:00.000+08:00

Beauty China - Today i added 30 lots of Beauty China at 86 cents. In any case, you can see that the consensus target price (ML + CIMB + UOBKH) is about 97 cents. My view is that it is likely to break the recent high and head towards 94 cents in the coming weeks.

Full Apex - still looking fine and my target price of 40 cents remained unchanged.

Tat Hong - This stock is like a tortoise. Slow and steady. A rabbit like me watching this stock will fall zzz...zzz....zzz

SPC - finally moved today after more than 1 month! Although i have already liquidated this position, it always feel good when the stock moves in accordance with what you project it to do.

CG Tech - wanted to buy at 385 but missed it! :(

Luzhou - wanted to buy this at 60 cents after having lunch with a friend. He told me that China Sun is running due to high sugar price but Luzhou is the one that will really benefit from the high sugar price. Too bad i was really too busy with my work this week. :(

Full Apex

2006-04-04T00:24:00.000+08:00

Full Apex

Starfish Swing Fund added 50 lots of Full Apex at 36 at pre close today. My target for this stock is about the 40 cents level.

Tat Hong

Tat Hong finally moved today and broke the 88-89 resistance. It closed at at 52 week high of 895. My initial projection is that it will head towards the S$1 mark in the coming weeks.

I am still looking to add on to my portfolio and will update all of you accordingly. :)

Cheers.

A Publisher's Nightmare.

2006-04-02T00:21:00.000+08:00

Today i received a 'machine generated' email from Google to say that i have been suspended from their adsense programe. That was painful as i have just received my first cheque this week only to see my account being suspended today.

Frankly i dont blame Google as they have to protect their advertiser's interest. I believe the suspension is also 'automatically picked up' by the google technology as they would not have the time to manually monitor hundreds of websites. The main content of the email is as follow:

It has come to our attention that invalid clicks have been generated onthe Google ads on your site(s). We have therefore disabled your GoogleAdSense account. Please understand that this step was taken in aneffort to protect the interest of the AdWords advertisers.

A publisher's site may not have invalid clicks on any ad(s), includingbut not limited to clicks generated by:
- a publisher on his own web pages
- a publisher encouraging others to click on his ads
- automated clicking programs or any other deceptive software
- a publisher altering any portion of the ad code or changing thelayout, behavior, targeting, or delivery of ads for any reason

Well i am very sure i had complied with the rules as i have never encouraged anyone from clicking my ads. In fact, I have actually asked readers not to click on my ads but i guess the actions of readers are beyond my control.

Let me give you an example.

If someone visit my blog and click 5 ads in a row, that would be deemed to be an invalid clicks being generated as Google technology will be able to pick that up since the clicks are coming from the same IP address and disable the account.

For those who visit my blog and has contributed to the 'invalid clicks' by clicking all the ads in row, i really wish you can write in to Google at adsense-adclicks@google.com to tell them when and why you did it and promised them you wont do it again so that i can be re-instated. (A fat hope on my part i guess...)

Anyway, it makes all the efforts of staying up late till 2am to maintain the blog gone down the drain. :(

But i guess it is not the end of the world :)

Starfish Swing Fund

2006-03-30T16:53:00.000+08:00

Starfish Swing Fund closed off its position in Star Pharma today at 615. It currently has only one position in Tat Hong. I reckon i cant be a long term trend trader as i like to watch the market too much and want to participate in the action every day. If i manage a larger fund of say S$20m, i would then have to employ a different strategy as i will not be able to get in and out of market so easily.

Today is near the close of March 06, 3 months have passed and the return is 10%. I should be able to achieve my objective of 20% return p.a. for 2006.

Star Pharma

2006-03-29T23:55:00.000+08:00

I really dislike seeing long tails and today not only did i see long tail, i see increased volume with no change in share price (distribution?) and a shooting star formation on Star Pharma!! How it rhymes, "shooting star on star pharma".

The tail of the star is now the resistance level. Star Pharma must overcome 63 to take away that bearishness and may face short term weakness as it has risen significantly in the last few days and is now outside the upper end of the bollinger band. A possible correction down to 57 could be possible.

There are 2 ways to trade this:

(1) Sell on strength tomorrow;
(2) move your stop to the 60 cents level and see if it is triggered.

I will be sellling into strength tomorrow. Hope US closed positive tonight :D

IPO ~ Sun East

2006-03-29T00:18:00.000+08:00

(extracted from email i sent out to my yahoo group this morning)

Remember to buy the IPO Sunshine and Sun East

Personally i prefer Sun East to Sunshine but unfortunately, the public tranche for Sunshine is bigger than Sun East, so i suspect it is easier to get Sunshine than to get Suneast. Sunshine is a property developer, if anyone can still remember Dragon land, it was a total failure. But then, i may not be comparing apples to apples. Dragon land has already been acquired (by Keppel Land if i remember correctly). If this Sunshine were to IPO one year ago, i guess it will not do well but since China stocks is the flavour of the month, I guess you can still make money from this. I spoke to the UOB manager from Hong Kong 2 weeks ago when they were doing roadshow here. He told me the response was overwhelming for the placement tranche but then hor... you never know as they are forever very positive about their own stocks...

As for Sun East, the breast enhancement cream is a must try. You just have to know what is the KEY WORD for success. The key word is not breast enhancement but HL Bank. HL Bank is on the roll with all its IPOs running like crazy. The demand is overwhelming. I have not done any work on this company but a peer comparision will be Beauty China. Just buy this and hope you get it.

Starfish Swing Fund

2006-03-28T23:58:00.000+08:00

I sold off my position in CG Tech to lock in my profits at 40.5 cents today. I am not sure if this is a good reason but sometimes after making 3 losses in a row, you just need a morale booster. The profit from CG tech managed to recover what i had lost from Onion and Midas. The "joke" is that Midas would have turned profitable if i had held on till today. hahaha. This reinforce two points:

(1) Always buy fundamentally strong stocks for trading
(2) Dont anyhow set your stop loss level. Midas didnt event hit my stop loss level as it didnt break the support level. But then hor, it is always easier to say this on hindsight.

The updated Swing Fund has resumed its uptrend. Phwee...

Starpharm

Broke out today. Reached my first target of 60 cents. See if it got strength to hit my second target of 65 cents.

Tat Hong

Got this feeling it is going to run soon. :P This will happen if it breaks 88-89 resistance zone.

Starfish Swing Fund

2006-03-27T20:40:00.000+08:00

I sold my position in SPC today for a small loss. I was stuck in this position for about one month already, most of the tech & oil gas stocks have moved since i first initiated that position. This is the trouble of picking the right sector but chose the wrong stock. It is like going to the race course, entered for the right race but picked the wrong horse. Anyway, i felt that it was time to move on to the next trade as my profits from CG tech will cover this loss.

Anyway here is the updated return of Starfish Swing Fund.

30 lots of Star Pharma at 57.5 cents

I also initiated a new position in Star Pharma today. I had wanted to buy at 56.5 cents (at the initial break of the triangle) but was caught up in a meeting :( In the end, could only get at 57.5 cents. BNP has a target price of 76 cents.

CG Tech

It formed a doji today. It is time to watch this position closely and move the stop up to about 39.5~40 cents region. I may take profit on strength tomorrow but will be in a meeting. See how tomorrow.

Tat Hong

Still okay i guess. Waiting for it to break out.

Starfish Trading School - Opening Soon?

2006-03-27T00:32:00.000+08:00

It has always been my intention to start a trading school but there are many reasons that hold me back. One of course is the lack of time (sleep) and the other is the fear that when i make bad calls, everyone suffer from it. The worst of all is of couse i dont get paid for it. hahaha :P

A few of you asked if i can be their mentor, while that 'name' sounds nice, it also brings with it a lot of reponsibilities. I had a long thought about it over the weekend and decide that perhaps i should just do it.

I am really NOT a very tech-savvy person, so to ask me to run a online school is like asking someone who dont know accounts to read the financial statements. I guess the easiest way to conduct an online "school" is still via the email and i decide to harness on the Yahoos group to run this school to make it more interactive and responsive since everyone has access to emails. (However, since i have never used Yahoo Groups before, i am not sure if it is the best way either).

The school is open to anyone interested in investing and trading the Singapore market. But before you decide to enrol in the school, you MUST read this statement of risk and by entering your email address, it will be deemed that you have understood the following:

I am joining Starfish Trading School on my own accord, i understand that trading involves significant risk and that Starfish Trader is not a licenced investment adviser. All emails and postings in the Yahoo Groups are for information and educational purpose only and cannot be constituted as an investment advice. As such, Starfish Trader (and postings done by any members) will not be responsible for any losses incurred by anyone who enrolled in Starfish Trading School.

Starfish Swing Fund Update

2006-03-25T00:51:00.000+08:00

I still can't bring myself to trade CFDs. The commission of 0.4% to 0.6% for each trade as well as the need to pay for interest made the trades very expensive and lowers the risk-reward ratio significantly. Lets do a quick update on the positions of Starfish Swing Fund. If you have been following my postings, SSF have 3 stocks under its portfolio, SPC, Tat Hong and Cgtech.

3 lots of SPC @ 5.15

SPC finally closed at 5.20 today. I am very 'lucky' that my $5 support level held on and it looks like it will finally move towards my first target of 5.50. Actually this trade is what i 'hate' most. Getting stuck in a stock that doesnt move. It also shows the importance of having a reasonable capital for trading so that you will not be 'forced' to cut a position while it is 'not moving'.

30 lots of Tat Hong @ 85 cents

The uptrend of Tat Hong is intact but again what i dont like is the low volume of this counter. You need volume to move a stock upwards and this 'volume' is definitely not in existence yet.

50 lots of CG Tech at 35 cents

CG tech broke up today with good volume. Fundamentally, the stock is still cheap at 6x PE versus a 8-10x PE for China stocks now. If you value it at 8x PE, that will translate to a price of about 8 x 40 / 6 = 53.3 cents. I will just let the profits run for now.

Singtel

2006-03-22T00:23:00.000+08:00

Singtel dropped 18 cents or 6.4% today following news that Temasek has placed out 770m shares. While the news of divestment is not 'unexpected', I personally dont like the way innocent investors/traders are being 'screwed' by this placement. If i were to trade this stock, i would have bought around 3 Mar around 262 and imagine my frustration if i let my profits run to 280 only to see it dropped to 262 today.

Frankly i also dont know if i would cut or average down if i had bought at 280 on Monday :(

I cant load the image from the blog. Anyway, if you are looking to buy, you can find a stronger support is found at 2.50-2.55 zone, or alternatively, you can wait for the selling to cool off and a reversal candle to appear (hammer, doji, morning star, engulfing), before you pull your trigger with a tight stop.

China Stocks Rule the Day

2006-03-20T20:54:00.000+08:00

China stocks rule the day today for as many days and many Chinese related companies (pure ones) continued its fine run on the stock exchange. Out of the top 15 most active counters, 13 counters come from there, perhaps some shareholders reading this blog can propose a name change for the Singapore Exchange in the coming AGM? :D

Lets do a quick update on my 'favourite' counter CG Tech today. It broke out from a flag formation, and the technical target of this flag formation is about 48 cents.

Tat Hong

2006-03-18T00:09:00.000+08:00

Tat Hong is the first investment which i make under my new 'resolution' to lengthen my investment horizon.

放长线，钓大鱼

2006-03-17T23:31:00.000+08:00

You must be wondering if I am talking about China Fishery? Well, sort of. I have been telling you previously that i am in the midst of revamping my investing strategy and the conclusion i derive is to have a longer time horizon in my investment horizon. Instead of trading positions in days, i should extend that horizon to weeks and months and perhaps even years. What triggered me to rethink my investment strategy was sparked off by an article in the Sunday Times a few weeks back where it talks about Gabriel Yap invested S$120k in Raffles Education and turned that sum into S$2.2m and has been holding on to the stock since 2002. I then took a hard look at my own style and portfolio.

If you look at my trading portfolio since January, you will see stocks like Pacific Andes, CG Tech, China Petrotech, Beauty China etc. These are stocks which if i have held on for a little longer, would have made me more profits then what i had sold them for. As dreamer always like to say, money is made by sitting on the stocks. This i totally agree but found it tough to follow. My argument has always been that investing capital which i have is limited and i dont have so much money to put into so many counters. I have to put my $ in the stocks which i think will move. That is the reason why you see me moving in and out of positions fairly quickly. However, i do recognise that trading is rather time consuming and you need to watch the market closely. If i have had a longer time horizon, many of my investments would have paid off handsomely than the peanuts which i had made. :(

I remember sharing about how time horizon determines the kind of traders you are. Be it intraday, swing, trend, invest and different styles have different timing horizon and different cut loss levels. The 'faster' your style is, the lower the time horizon, the more important the cut loss level is. But the really rich people has no timing horizon. Look at Tommie Goh, Koh Boon Hwee, Ooi Hong Leong, they invest. They are willing to spend years to nurture the companies and they dont watch the stock market everyday. I think i should really resolve to watch the market less. hahaha. That is the reason for my topic today. To catch a really big fish, you need to let the line run. The longer the line (time horizon), the bigger the fish (returns). Frankly, i am not sure if i have the temperant and patience to be a good fisherman, but i guess i would have to try as i have been vey busy lately and i dont think i can trade as much as i would love to.

The reasons why i tell you all these is because i really want to retire early! :) and perhaps we can all work towards this goal of finding good investment gems together and retire early and wealthy. Let's go fishing together!

Global Voice (dedicated to Gilaone)

2006-03-16T23:43:00.000+08:00

Global Voice ranked 2nd in volume today. Lets take a look at the chart first

GV was a neglected stock until Fidelity took a stake in the company and suddenly the stock was very well researched and well covered. As of today, CIMB, DBS and Kim Eng all issued buy recommendations with the consensus price at 27 cents.

FA - Fundamentally, the stock is well researched but it doesnt always mean the analysts are right. I for one, think that the over capacity in the optic fiber sector is not 'out of the woods' yet. The over investment in the optic fiber sector during the booming tech bubble years are still under untilised. Personally, i dont really like the fundamentals of this company but whether i like it or not is secondary. The company is not expected to make a profit until the year 2007.

TA - Technically the share charts looks good. It has broken its neckline again today and managed to close above it at 16 cents. My view is that if 15 cents holds, then it will be range bound in the coming days between 15-20 cents. This is not an easy stock to trade.

Target price - Range bound between 16-20 cents in the coming days/weeks if the support at 15 cents hold.

Volume as an Indicator (plus UTAC)

2006-03-16T17:33:00.000+08:00

Volume is a very interesting indicator. Why do people rely on charts and say that charts dont lie? One of the reasons is because of volume.

Imagine you are an insider and you know that the company has just won the most lucrative contract to build the biggest oil terminal in the world.

Imagine you know that the company has just been sued for infringement of copyright and the news will be released tomorrow.

Imagine you know the company will announce record profits this coming fiscal year.

What do insiders do when they know of information which others dont know? They either use other people's account to buy the shares or they passed on that information to their closed friends and relatives. When these insiders react to material information which they know but others dont know, how do the charts pick that up?

The charts picked these transactions up through the volume traded. These are the footprints left behind by those who 'know'. When the buyers are more 'bullish' then the sellers, they will push the share price up.

From today onwards, i think i will pick a stock from the top 10 volume counters to comment on. If you have any request, please drop the name of the stock in my shout box. :P I will then show you the analysts consensus target price (if any) and my comments on the stock. Anyway, lets take a look a UTAC, the 3rd volume counters today.

FA - The stock is covered by major foreign houses and is the favourite tech stock of JP Morgan. Its weightage has also increased in the STI recently and this coupled with today's news that it will likely beat its Q1 forecast send the stock soaring.

TA - Technically, the stock looks good with MACD sloping up from (bullish divergence) and Stochastic from oversold position. It is also supported at the MA 50 line.

Target price - I think it will head towards the most recent high of about 98 cents and could possibly break it in the coming weeks/months.

Starfish Hedge Fund

2006-03-15T00:32:00.000+08:00

I finally transferred about 20k into my CFD account. This account has been dormant for some time because i dont like to pay for the high commission and the interest charged. Unfortunately, it seemed the most feasible instrument around for shorting shares (other than futures). Obviously i still prefer shorting the market through futures SIMSCI but i guess this provide an extra avenue for trading. As such, i am renaming my Starfish Swing Fund to Starfish Hedge Fund. :P sounds more professional? It is obvious that CFDs are expensive instruments to long and are for short term basis only. As such, i will be using CFDs mainly for shorting stocks.

I scanned through the charts everyday (almost) for potential trades and since i am doing that, i might as well look for both long and short trades. LMA is one potential short trade which i may take tomorrow. See how it goes. (cannot post chart, technical error...)

Your first loss is usually the best loss

2006-03-13T20:42:00.000+08:00

I cant see any interesting trades to long in the recent days except for short positions in certain counters with long tails (shooting stars). I am serious considering CFDs as a trading instrument for short positions and may change the name from "swing fund" to "hedge fund" :P I will update you again on my plans as i am in the midst of overhauling my personal investment/trading plan. Lets do a very interesting sub-topic on Cutting loss.

You must be wondering why i said "your first loss is usually the best loss". That is speaking from experience actually. Let me give you a very familiar scenario.

You entered a position with a certain view on a stock and has set in the target price and the cut loss price. However, the market started to correct and your stock start to get weaker. You felt really uneasy and wondered if you should get out. "Haiz, what is the hurry, my cut loss level not reached yet". You thought. It should rebound the next day. (this is the point where you hesitate about your position, sometimes it may be good just to get out if you feel 'unsure'.)

Next day came and the stock price continued its decline. It broke the support and reached your cut loss price. "shucks, you said. Never mind, I will see on a rebound soon". (this is the point where you deviate from your plan and shifted the cut loss level downwards. This is very dangerous! You can be lucky once or twice but if you keep doing this, it will haunt you one day. Your first loss is usually the best loss taken)

The stock did rebound and you said "now it is back on track, let's see it will move up the next day". (changed plan again!)

Unfortunately, the rebound was shortlived. The stock crashed and you had no chance to get out at your cut loss price. "Never mind, this is a fundamentally strong stock, i will HOLD". (this is the point where many short term trades becomes a long term investment. By NOT cutting losses, it may affect your judgement going forward. By not admiting that you are wrong and get out, you will never be able to fight Mr. Market. I have never shy away from taking my losses because i know i will make back my losses again. )

The price kept going down every day until you cannot bear the pain any more. You kept thinking about your losing position and kept punching your calculator. "I cant take this anymore, you called your broker to put in the cut loss order". (The stop loss at this point is usually too painful and too far from your original plan. The worst thing is that it is usually the lowest price we got out before the price rebounded strongly)

The stock price rebounded after you cut your losses. (Your start to blame everyone for your losses except yourself and wondered why you were so panicky and sell at the lowest point).

The worst thing to occur after this is the cycle repeats itself again. (A wise man never makes the same mistake twice?)

Straits Time Index

2006-03-11T00:59:00.000+08:00

Let take a quick look at STI after my last update. STI reached my short term target of 2500. I must say that the performance of STI has been outstanding in view of the regional market sell down in recent days. STI must have outperformed all the world markets during the last 5 trading days, no wonder we all call STI a "WORLD CLASS MARKET". :P

While the long term uptrend is intact, my view is that the possibility of a correction in STI is still very high. My first target is 2450 for STI and followed by 2400. This view will be invalidated if the parabolic SAR reversal is triggered (which currently stands at 2516).

SPC

I am still holding on to this SPC. While Keppel Corp has been buying back this stock in recent days at around 5.05 to 5.10, I really wonder why they sold it off partially in the first place?! My "anyhow" guess is that Keppel Corp is trying to buy enough shares to reach the 50% mark so that they can 'consolidate' SPC's revenue and profit figure rather than 'equity account' the good figures of SPC. (You need some accounting knowledge to understand what i am saying). Anyway, the momentum is weakening, i just hope the share will move up soon.... :( With Keppel helping to block the $5 support, i guess i will be safe for now. :P

Starfish Swing Fund Update - SPC

2006-03-04T17:48:00.000+08:00

Starfish Swing Fund bought 3 lots of SPC on Friday at pre-close. The seller is Macquarie. I was very fed up with myself because on Thursday, i saw that the oil and gas sector stocks like Ezra are running and i was contemplating buying China Petrotech at 49. Somehow, i was too busy with work to seriously think about it. :(

Anyway, i think the increase in oil prices always had a positive impact on the oil and gas sector. I bought 3 lots of SPC at 5.15 at pre-close. I think it is very close to triggering the Parabolic SAR and is poised to run in the coming days with a tight stop loss just below the recent low. My first target is $5.50 followed by $6.

Smelly Onion and the Starfish who lost his Midas touch :P

2006-03-01T22:02:00.000+08:00

Today i am feeling damn down as i cut away my smelly Oniontech and Midas position. I cut Oniontech at 21 cents and Midas at 52 and the joke is that they closed at 22 cents and 535 respectively. I dont really regret cutting my losses, i did what i had to do but i was feeling down because CG Tech closed at 31 cents! hahaha. No lah, the reason why i was feeling down is because the Midas and Oniontech trades should not have been made in the first place. Sometimes there is a chain reaction, you made a bad trade and that result in a losing position, and it clouds your judgement for the other stocks which you have.

Anyway, i am 100% cash again. See how it goes in March :) There was an interesting article on Long Term investing where Daniel Chan from Lion Capital was interviewed. He said that he is trying to get his funds to focus on long term and reduce the portfolio turnover by 50%. hmmm... interesting food for thought.

Cheers.

Starfish Swing Fund Update

2006-02-28T16:45:00.000+08:00

Sorry i was too tired to update my trades last night. I was having a spliting headache and the doctor says must be due to the lack of sleep as my blood pressure was normal. hmmm... i must be getting old. :(

I was out of China Petrotech at 51.5 cents, Beauty China at 83.5 and CG Tech at 26.5 cents yesterday. The reasons are as follow:

China Petrotech and Beauty China has run quite a bit from my entry point of 47.5 cents and 79.5 cents and has actually reached a high of 53.5 cents and 85 cents respectively. The morning was strong but it turned weak in the afternoon and i exited. The reasons is that i dont like to see "long tails" in my candles. See charts below.

Beauty China

China Petrotech

CG Tech

I exited at 26.5 cents due to the lack of follow through buying. Must be the lacklustre Q4 results and i felt that i should have run at 27.5 cents early in the morning. :( I must admit i am locking in the profits from the above 3 stocks to 'fight' the remaining 3 positions which i hold.

Starfish Swing Fund as of 28 Feb 2006

February turned out to be an interesting month. It looks like my last 3 trades in China Flexible, Oniontech and Midas should have been avoided and i would have closed off this month on a high note. :(

Oniontech

As i said in my blog earlier, i regretted buying this stock as it wasnt ready to 'run' yet. The resistance at 24 cents proved to be a major one. It closed with a doji at 22 cents today. I am not sure how significant is this doji as it is not one that appears after a prolonged downtrend. The volume is low. I was tempted to average it down at 22 cents and then sell some at 23 cents to mitigage my risk but i have always been against average down a losing position. I prefer to cut my position rather than salvage it as the entry has already been a mistake. Let's see how it goes.

China Flexible Packaging

Still looks okay to me. I think it is in a consolidation mode and will resume its uptrend once that consolidation is over.

Midas

I have not studied the impact of its results but CLSA has slapped it with an underpeform (or hold?) rating with a target price of 50 cents. It is still sitting on its EMA 39 line and has not broke my cut loss level yet. I still feel okay about this position and as i have built up buffer from Beauty China and China Petrotech, i will leave this position alone for now.

So long for now. :)

Starfish Swing Fund Update

2006-02-26T01:48:00.000+08:00

I was listening to the newsradio 938 in my car on friday morning where it talked about the rising middle income group in China and how it is affecting the economy as they become more affluent.

I was rather crossed with myself as i had wanted to buy China Hongxing at 89 cents and Celestial at 94 cents on Thurday. If you noticed, all the stocks which i have bought, CG Tech, China Petrotech and Beauty China are all China related stocks. My view is that Chinese stocks will continue to be in play from now till the relisting of CAO in March 06, thus i am still overweight in this "China" sector. The strong debut of Luzhou is a strong indication that Investors are looking at China stocks again. I continue to load 3 more stocks today, China Flexible, Midas and Oniontech. I will go through my portfolio below.

Luzhou (Braised Porrige)

I sold off my 2 lots of Luzhou at 39 cents. I can imagine Tradesman laughing to the bank with his placement shares. :P But anyway, the strong debut of Luzhou contninue to signal the good old IPO days are definitely back. SGX would definitely loved that as i heard many Chinese companies are now checking out to be listed on SGX instead of on the HKSE.

STI

STI definitely has an interesting day. It finally broke the 2450 resistance in an ascending triangle sort of formation. My short term target is 2500 while a longer term target stands at 2600.

Beauty China

The chart looks very nice and closed at 83 cents. I am still holding on to it and my view expressed yesterday is still valid.

China Petrotech

The chart looks very nice and closed at 50.5 cents. I am still holding on to it and my view expressed yesterday is still valid.

CG Tech

CG Tech announced a decent 2005 results. I am personally disappointed with its Q4 performance as i have higher expectation but on an overall basis, its 2005 results is still good. It had announced an attractive dividend as well and its NAV is 22 cents and trading at 2005 historical PE of only 3.9x!! A simple 6x PE fair value will mean a price of 40 cents!! With 2006 prospects getting better with increased capacity, i believe that a re-rating could be on the cards if more research anlaysts cover this counter and a 40 cents target is definitely possible.

China Flexible Packaging

I bought 30 lots at 50.5 cents. I was trying to find a 'nice' looking China stock chart and decided to re-look at this counter which i bought in Jan. The chart still looks good technically and i think will retest 60 cents again.

Midas

I bought 30 lots of Midas at 55 cents. Midas is one of the few suppliers qualified to supply "Aluminium" to the highspeed railway foreign companies in China. With rapid development in the rail system, Midas should continue to do well. The chart looks well supported at 50c and may have resumed its uptrend. My view is that it will break 60 cents in the coming weeks.

Oniontech

I bought 50 lots at 24 cents and i felt that I should have queued at 23.5 cents :P The only counter which i am not sure if i had made a wise choice as technically, the stock is trading below my 3 EMAs of 13, 26, 39 and usually i dont buy the stock when they are trading below my EMAs. The only consolation is that it is sitting on its 50-day MA.

I bought because i think the substantial shareholder Vision Capital will push up the share price going forward. Small caps stocks are currently back in favour again.

Okay so long for now. It is already 2.21 AM Sunday... zzzzz.zzzz.....better get some sleep before the little rascal wakes up...... oh yeah, before i forget, DBS refunded the S$2 liao. :P

Starfish Swing Fund Update

2006-02-24T00:20:00.000+08:00

Luzhou Biochem

Today must be my lucky day. Despite the small public float and success balloting ratio of 9:99, i actually got 2 lots of Luzhou. yippeee... but considering the hype over this stock, i guess i should sell it first thing tomorrow morning!?

I was rather fed up with myself because i had wanted to buy MFS and Celestial but somehow was too busy to watch the market these few days. There were several other stocks that i was eyeing but somehow missed those trades as well. Perhaps i was half-hearted to enter in new positions for fear that i will get 'stuck'. Anyway, i got into 2 new positions today. I am not sure if they are wise decisions but let's see how it goes.

China Petrotech

There were no analysts covering this stock except "Gallen" from Kelongstocks :P His fair value for this counter at 10x 2006 EPS is 65 cents. I bought 30 lots at 47.5 cents. My target is 50 cents and perhaps 55 cents.

Beauty China

Bought 25 lots of this 'beauty' at 795 cents, target is 84c followed by 90c. ML and CIMB covers this counter with target price of about 96c.

CG Tech

Still holding on to my 50 lots at 255. Got this feeling it is going to run soon. Either run up or run down :P

I want my $2 back

2006-02-23T00:11:00.000+08:00

Unza withdraws its IPO

In light of the potential impact of Financial Reporting Standard ("FRS") 39, Financial Instruments: Recognition and Measurement on the Group's profit and loss account for the current financial year ending 30 April 2006 arising out of the premium paid in respect of the Company's purchase of RM65.0 million (approximately S$28.9 million) of serial fixed rate bonds issued by its subsidiary, Unza Nusantara Sdn Bhd, the Company has decided to withdraw its application to list on the Main Board of the SGX-ST. Under the circumstances, the Company felt that this was the most appropriate decision to take at this particular time notwithstanding that there is no change to the underlying financial health and standing of the Company.

This is one of the crappest excuse i have ever see. Which party has been sleeping?

The reporting accountants? The Underwriters? The Manager? MAS? SGX? The financial year is from 1 May 2005 to 30 April 2006, it couldnt be that at the point of listing, the company still have not valued their finacial assets/liabilities are properly ?!

Frankly i dont care if the application is withdrawn at the last minute, as a matter of principle, the company must REFUND me back the S$2 which i lost when i applied for Unza using DBS internet banking platform. :)

TAMMY NYP VIDEO CLIP

Questions to ask yourself before you pull your trigger

2006-02-20T23:57:00.000+08:00

Someone emailed me an interesting question today regarding my post on 9 Feb 2006.

The question was how i was able to 'predict' that a correction is imminent and why i turned 100% cash on 7-8 Feb before most of the stocks came crashing down after that.

Actually the answer is very simple. It comes with practice and payment of school fees over the years. I have paid very expensive school fees to Mr. Market some years back and I do continue to attend refresher course (paying school fees to Mr. Market) every now and then. However, the frequency of refresher course gets lesser over time. If you make yourself look at the stock market every day, you will be able to feel the market flowing in your blood and breathe in due course. Since we are at this topic, lets start with questions which i ask myself before i initiate a trade.

What is the first question that goes through your mind before you initiate a position.

If your answer is "how much can i make", then i think you may still need some time before you graduate. Asking yourself how much you can make is very dangerous as the greed will blind you to the potential loss which you may incur if your view is wrong and these losses can be very painful.

Before i initiate any position, these are the questions which i ask myself:

(1) How much will i lose if i am wrong.

By asking myself how much will i lose, i am actually forcing myself to set a stop loss point for that trade. If my stop loss level is triggered, will i be able to take that loss and move on to the next trade?

(2) Is the quantum of loss less than 2% of my equity

Usually my stop loss is about 1-2% of trading equity, which means for a trading capital of S$100k, the stop loss amount is between S$1-2k.

(3) Where can i set an effective stop loss level?

Setting a stop loss is like buying an insurance policy, you hope you dont get to use it. However, it is critical to set stop loss levels correctly. My practice is to set my stop loss level just below a support level. If i am range trading, then the stop loss will be slightly below the lower support zone, if i am counter trend trading, then my stop loss will usually be slightly below the low of the hammer or doji star, etc depending on the pattern which i am trading. If you like to 'bottom pick' which is a very dangerous hobby to me, and the stock you bought today broke its previous day low, it usually means that the correction is not over yet and you have to get out quickly. The low can get lower.

If i cannot find an effective stop loss level or that the stop loss level is too far away from my entry point, i will usually pass that trade and move on.

If i 'die die' need to make that trade and the stop loss level is too far away, i will then reduce the size i take so that my stop loss (if triggered) will be bearable.

(4) What is my profit target?

After setting my stop loss level, my next question is what is my profit target? Is that profit level rewarding enough for me to pull the trigger. Or is the probability of the trade high enough for me to take that level of risk. The minimum i would go for is a 1-for-1 target. That is if my stop loss level is S$500, then my profit target must be at least S$500 or more. To risk, say $500 in order to make S$100, is pure stupidity to me. If the risk-reward is not justifiable, i will also pass that trade.

(5) What is the probability that i am right?

After answering questions 1-4 and i still feel good about that trade, i will then use TA to estimate the probability of success. If the probability is 70%, i will then go ahead and just do it. Using TA to gauge the probability of success is another whole topic itself which i will cover next time.

I hope these 5 questions will help you plan you trades whenever you initiate a position.

After scanning through the charts, i have to tell you that most of them are bearish. (kekeke) :P
These are the stocks that still look positive to me: City Dev, Capitamall, Enviro-hub, Mediaring, STX, Straits Trading and UIC. Happy trading.

Starfish Trader

ps- i just hope my CG tech stop loss level not triggered tomorrow :)

Starfish Swing Fund

2006-02-19T23:54:00.000+08:00

Starfish Swing Fund sold off 5 lots of its placement shares in Starpharm at 52 cents on Friday. The Fund holds 50 lots of CG tech and the updated returns from 1 Jan 06 to 18 Feb 2006 is 6.94%.

CG Tech - There is no follow through buying action on CG Tech. Lets see if the support at 24 will be protected this week :(

STI - The resistance at 2450 proved to be a tough nut to crack. Although the uptrend is intact, the situation might change this week when more people had time to digest DBS 'shock' loss over the weekend. A mild correction on DBS will bring STI down to 2400 level. Let's see how it goes.

DBS - All the analysts covering DBS is expecting a quarterly profit but DBS shocked the market during lunch time on Friday with a quarterly loss. The loss is due to the new FRS (Financial Reporting Standards) 39 being adopted for the financial years starting 1 Jan 2005 where all Financial Assets must be carried at fair value and be written off if there is an impairment in value (Whether it is 'written off' via the balance sheet or profit and loss will depend on which category the financial assets belong to). The whole idea of FRS 39 is that all assets and liabilities must be fairly valued although i really do question the usefulness of FRS 39 to certain industries. (Lets stop here in case i bore you further on FRS 39 but if you have questions on this, i can try to help with my limited knowledge).

To put it simply for DBS, it has reviewed the carrying value of its investment in Dao Heng bank and conclude that the current carrying value is 'not fair'. If DBS is to sell its stake in Dao Heng bank today, it is unlikely able to sell it for the amount it had paid for previously, hence it wrote down the value of its investment. If you think about it, there is really no 'cashflow' impact to DBS as these investments has already been paid for previously. It is an action just to write down the 'goodwill that was classified as asset' during this expensive acquistion from Quek Leng Chan.

Frankly i have no idea what methodology they use to decide that a write down is necessary as even the 'written down' value may turn out not to be "fair" at all. Thus, my personal view is that to write down the value of Dao Heng bank is really 'unnecesary' but of course, the auditors may feel otherwise. The negative impact from adopting FRS 39 is that it may cause the result of DBS (and perhaps UOB and OCBC) to be 'erratic' going forward as they revalue their financial assets on a yearly basis.

A review of the DBS chart showed 2 interesting thing. The volume on Friday is higher than usual due to the release of its results during lunchtime (perhaps they should do away with lunch time release and not the quarterly results announcements? :P) but the price did not break the $16 support yet despite the sell down. If the S$16 level is breached, then it will likely head towards the $15 support.

Starfish Trader Junior

2006-02-16T23:42:00.000+08:00

Little Starfish Trader

Trades done on 16 Feb 2006

2006-02-16T23:06:00.000+08:00

Today i bought 50 lots of CG Tech at 25.5 cents. I was scanning for other potential buys but in the end couldnt find anything interesting.

Fundmental reasons for buying - Its closest peers, China Sky is trading at prospective 10x PE, Fibrechem is trading at 11.1x while CG Tech is still at 4.96x despite its impressive Q-on-Q earnings growth. I think the discount should not be so wide. A simple 6x PE will imply a price of 32 cents. Currently there are no analysts that cover this stock except for a 'technical trade' by Kim Eng on 12 Jan 2006.

Technically, the chart has corrected from a high of 30 cents and has retraced to its breakout zone around 23-24 cents. It has since recovered today in a parallel uptrend line. With Fibrechem making new highs, a laggard play might occur at CG Tech as well. My first target is 29-30 cents followed by a second target of 32 cents.

I was talking about being impressed with OCBC latest tool, i.e., being able to track who you trade with even for internet traders. (This function was only available to dealers and brokers previously). I attach the counter parties for your information. Now you know why i am 'impressed'. I still owe you an article on internet trading platform... let me do it when i am 'free'. :P

Current portfolio of Starfish Swing Fund is 5 lots of Starpharm and 50 lots of CG Tech.

Interesting Stocks

2006-02-15T00:52:00.000+08:00

Many stocks look interesting today, forming hammers here and there...
but i wont be around to play it... :(

Good luck to those who bought today and those who got IPO of Star Pharm... :)

A Star is Born

2006-02-13T18:25:00.000+08:00

A little Starfish is Born

You must be wondering if i am talking about any stocks with "star signs" or if i am talking about the Starpharm IPO, well i am not. A little starfish is born today :) and i will be missing in action for the next few days. Ironically i was just in the midst of analysing of the Starpharm IPO when nature calls. Too bad i cant call him a Valentino starfish but i am just glad the ordeal is over. I havent slept in the last 12 hours. Anyway, i need some $ to buy milk powder so ah em.... please 'chor kang' in my absence for the next few days. :P

Anyway, here is the 'half-done' analysis on Starpharm. I have 5 lots from the placement tranche. My fair value is more than 45 cents.

The float is 234m but 75% of the shares are under moratorium for 6 months with the largest shareholder owning 65% of the company. This imply only a free float of 58.5m shares so you can try to see if the shortist are squeezed on Wednesday.

Rating Systems and Ang Mo Houses

2006-02-12T15:23:00.000+08:00

Futher to some questions from Bob, i will elaborate further on the rating system and the brokerage houses.

Ratings System

There are 2 main rating systems, one is Buy-Hold-Sell and the other is Outperform-Neutral-Underpeform. While these are still recommendations, there is a slight difference, so open your eyes big big when you read the research report to see how their rating system works.

Buy-hold-sell as the names imply, is fairly straightfoward. On the otherhand, Outperform-neutral-underperform is a 'relative' system. It could be the stock will Outperform by +10% vis-a-vis the ST Index or vis-a-vis comparative stocks. In other words, it does mean that a stock will make money for you, it means that relative to the STI, if you buy the stock today, you will 'outperform' the STI. If the STI rise, you will make more money, if the STI crash, you will lose less money! :P It is somewhat like unit trust where you have a benchmark. As long as you outperform the benchmark, you are 'outperforming'. Whether the unit trust make money for you is secondary as the fund manager has done his job! (Talking about the Unit Trust can form another topic for another day. I will tell you why i give up on unit trusts next time but it doesn't mean you can't make money from them :O) )

Which are the houses with better research reports?

First let us define what are the foreign (ang mo) houses and what are the local houses.

Foreign houses can be broadly defined as global investment banks. E.g. Merrill Lynch, Goldman Sachs, Citigroup, BNP, CSFB, Nomura, Daiwa, JP Morgan, Macquarie, Morgan Stanley, UBS, CLSA etc.

Local houses are like DBS Vickers, UOB Kay Hian, Philips Securities, Kim Eng, CIMB-GK Goh, OCBC, etc.

Ang mo houses are be further classified as active and not-so-active types. Some are really not to bothered about the stocks listed on SGX as these companies with market cap less than S$200m are too small for them, as such they dont cover many stocks listed here. (eg. Goldman Sachs). Others have a bigger team, thus they can cover more stocks listed on SGX. Usualy foreign houses cover the bigger cap stocks, but BNP and CLSA have been researching into the less researched small cap companies in recent years. The "buy" recommendations on small cap stocks by foreign houses have a much greater impact then a buy recommendation on big cap stocks due to the small free float and they can push up the share price of these small companies very quickly. Ang mo houses have more quality and stricter methodology and rules to follow. They need to pass through more layers before a report is issued. Personally i prefer to read reports from UBS, JPM, CSFB, BNP, ML and CLSA.

You must also understand how analysts in Ang Mo houses operates. Most do not cover Singapore alone. The analysts cover the whole Asia Pacific (ex Japan) by sectors. They cover companies in the North Asia out of Hong Kong and South Asia out of Singapore. They classify the companies listed in the whole Asia Pacific by industry and sectors and a specialist analyst will cover all the shipping companies, another one will cover all the technology companies in the semiconductor industry, another one cover the conglomerates, another cover the airlines, etc. So to me, this makes perfect sense as the analyst can 'cross-check' each company that he covers in this sector to see if the overall industry is growing and to invest in the best company in the sector with the best outlook and value. The analyst will also become the 'industry expert' because the more 'exposed' he is to the sector, the better he becomes in forecasting. The market now is a very globalised one, it doest really matter where they are listed as most bourses welcome foreign money. So global houses can advise their clients where to put the money into. For example why China Hong Xing (listed on SGX) do not use Hong Guo as its peers but uses Li Ning (listed on Hong Kong) as its comparables. China Hong Xing is doing a 'catch up' with Li Ning in terms of PE multiples. Nowadays, even local brokerage houses also allow you to invest in Hong Kong, Thailand etc. The world is your market now so it makes much sense to broaden your perspective and look beyond Singapore.

What is the strength of the research reports issued by local houses then?
My personal opinion is that the research reports issued by local houses are not as detailed or well thought-out. That is because the local houses usually only cover local companies, thus they have less resources and expertise to tap on. They cannot call up their counterparts in Korea to check if the global shipping market is indeed weak, etc. I would attribute it to less resources available (local analysts are less paid as well of course). As such, I would classify their strength in the small cap sector. Big boys dont really pay attention to small caps, so this sector is still under-researched (except for perhaps BNP and CLSA). For example when i first bought Sarin more than 6 months back, only CIMB (then GK Goh) issued a buy report on it. Later DBS also cover it. In fact, i believe Sarin is currently still only covered by the local houses. However, you have to be very discerning with regards to small caps reports issued by local houses lah. Air Ocean is also rated Strong Buy by DBSV since 2-3 years ago... kekeke.... :P

So open your eyes when you read the reports, dont just read the "buy" and the "target price".

How to trade using Research Reports

2006-02-11T10:04:00.000+08:00

There are many ways to trade research reports.

(1) If you are can get the research reports before the market does (due to your close relationship with the analysts and owners conducting road shows), then you can buy before the report is released and then sell whenever the report is out to incoming buyers. This, by the way, is illegal and unethical. So dont be caught doing this.

Frankly i heard of analysts buying the stocks which they cover using other people's account and then sell when the report is released to the market. This is usually because if these analysts want to buy the stocks, they can only buy it only when they have issued the report and only after strict internal approvals. This is really too troublesome for them so they use other peoples' account as the quick money is too tempting for them! That is why whenever i received a research report, especially those initiation reports, i checked if the share price has moved up prior to the release. If it has already moved up one or two days before the release, i will give that stock a miss. However, if the stock is still in a base and has yet to move, i will then buy the stock if the brokerage house recommending it is a reputable one.

(2) Alternative, if you can get the reports faster than other people legally, just when it is released to in-house clients and the stock has yet to move up, then you can quickly buy the stock and wait for the report to be known to the rest of the people (non-clients) later. You can still make money this way but you have to be nimble and fast.(That is why you cant usually make fast money reading research reports printed in the newspaper the following day).

I have made money receiving reports 'earlier' because i trade from the house. E.g. if the broker release the report at 9 am and you received it at 9.05 am (fresh from the oven) and the price havent move, you can buy at 9.10 am after reading the report and find that it makes sense. When the report reached the non-clients and the price moved up, you can then sell (provided those who read the report react by buying the stock). I have actually emailed my complaints to a brokerage house that why I being a trading client of the firm dont receive the reports earlier then the non-clients. My argument is that what is the incentive then for me being their client if i receive the reports at the same time as the public :P

(3) I usually use research reports in this manner. I scan through the reports to look at the valuation and the basis. Is the 'fair value' reasonable and does the research report makes sense. I will then 'record' these companies in my brain and use it as a filter to buy the stock whenever it is in the 'correction' or 'consolidation' phase. This is because when the correction is over, the first one to run will be the good FA stocks because the brokerage houses will be busy recommending these companies all over again and the cycle starts again.

One of my most basic criteria of selecting a stock for trading is that they must be fundamentally sound stocks and if you notice, most of my stock picks are 'backed' my brokers. Why? This is because i rely on them to help me push up the price after i buy. If you look at the example of Stamford Tyres, the stock is not heavily traded when i first bought it at 51 cents and it is still in a base and covered by 1 or 2 analysts a few months back. The day OCBC came up with a maintain 'buy' recommendation, the stock rocketed to >55 cents and i can then decide if i should take profit or let it run, depending on how the trading goes.

(4) My observation is that most people only read two things and ignore the whole body of report. Most people only focused on (a) BUY SELL OR HOLD (b) WHAT IS THE TARGET PRICE?

If you just read these two items, then you have to be careful lor. Not all reports are made equally. Some analysts are better than others, some brokers are more 'conflicted' then other due to corporate banking relationship. Usually most brokerage houses are unwilling to give "SELL" or "UNDERPERFORM" recommendations because they want to continue to have access to the management or that the banking arm is doing a lot of business with the company. If they give SELL recommendations, the first thing the analysts kana will be from the CEO of the company. No more invitations to lunch, factory tour, no more face-to-face meeting. In addition, the corporate banking department will also be receiving cold shoulders and less business from the firm. Thus to me, HOLD is as good as SELL most of the times.

(5) Usually ang mo research reports carry more weight than local houses. Why? I dont know frankly. Perhaps the perceived idea that most analysts are ang mo houses graduate from reputable MBAs so they can think better. Or that these ang mo houses have more money to buy up the stocks they recommend, etc. It could also be a perception that local houses just want to generate trading volume. However, the tide has turned in recent years with many local houses winning prestigious research awards. So we just have to be discerning when we read the reports. Usually ang mo houses will cover only big caps stocks, so if they cover small-cap stocks, the stock will usually move up rapidly as the float is limited.

There are still many things i can share about research reports but i have to go now. I have set up a blog to log in the daily brokers recommendations at Starfish Research . so make use of it to select your trading stocks.

Starfish Swing Fund

2006-02-09T01:18:00.000+08:00

I was really too tired to post last night, my sincere apologies.

I sold off Stamford Tyres at 55 cents and Fischer at 40.5 cents yesterday and Electrotech at 55 cents today. The reasons for selling may not seem rationale as I sold basically because i think a correction on the China stocks is imminent and if it comes, it will be swift and deadly and i do not want to be caught in this sell-down. Perhaps i am over-reacting, but when i am in doubt, i will stay at the sidelines.

The reasons why i thought a correction is imminent because the regional markets has started their correction (Nikkei and Hang Seng) and the US market has already corrected for sometime although i must admit that Singapore has been fairly resilient! :)

Frankly, i also dont know why but i just feel like being 100% cash. In fact i would have shorted SIMSCI this morning if i am not tied up with meetings! :(

Anyway, here is the updated result of Starfish Swing Fund. Nothing fantastic i guess. :)

Starfish Swing Fund

2006-02-07T01:20:00.000+08:00

Starfish Swing Fund Portfolio Update

Stamford Tyres

Stamford Tyres finally moved today! I believed this is due to overall postiive sentiment in Singapore and possibly upon a buy recommendation by OCBC again. I am still holding on to my 30 lots bought on 2 Feb. My target is about 60c for this run up.

Fischer Tech

I bought 50 lots at 395. I had queued at 39 cents but remembering my 1/2 cents experience, i decided to 'jump' gun today. heng ah.... Anyway, besides the fact that i thought the chart looks good, another reason is that BNP has a 55c target for this (if i remember correctly). I somewhat like recommendations from BNP because they follow up their recommendations with 'real action'. Look at Midas (another BNP recommendation). :P I think it will break 43 reistance in the coming days.

Electrotech

I bought back 25 lots of Electrotech at 555 more on FA reasons. The low PE is still compelling and that coupled with a possibility that it might resume its uptrend made me buy the shares again.

Starfish Futures Fund

I covered back my 2 lots at about 2375 (shorted at 2388). The profit from this short is about $480. . The reasons for closing my shorts was that even though US looks weak, there was very good support on the Singapore bourse. I think the 'evening doji star' may be overwhelmed by the Singapore bull in the coming weeks. As you can see, futures trading can be very volatile. If i have not covered early in the morning, by end of the day, i would be sitting on losses again. :) As such i think it may not be appropriate to share my futures trade here.

So long for now, good night.

Starfish CANSLIM Fund

2006-02-06T00:00:00.000+08:00

I like the CANSLIM principles written by William O' Neil. It combines the essence of Fundamental Analysis with Technical Analysis. It forces you to put money in stocks that are doing well fundamentally and technically and to skip the mediocre ones. The reasons why i think the CANSLIM system is complete is because it teaches you how to select stocks by its quarterly earnings growth (earnings, earnings, earnings) but at the same time, it dont just tell you to 'buy-and-hold'. It teaches you when to buy and when to sell.

Many times we like to invest in mediocre companies which we are familiar and comfortable with. I think this old mindset needs to be changed as well. And because the capital we have is limited, thus we must put the $ into stocks that has the best probability to succeed.

I remembered saying the Celestial is a potential CANSLIM stock last Sep when it is about 48 cents. Today, it has more than doubled in price. I wondered why didnt i 'invest' some shares in this company?

I am going to set up Starfish CANSLIM Fund. This is where i am putting my personal hardearned money here based on the principles of CANSLIM (but let me read through the book again to refresh my memories :P).

Now that my blog is up and running, i hope to be able to start focusing more on investing/trading, do research on companies and write on the blog. I will not attempt to 'beautify' this blog any more so that i can spend more quality time on the content of this blog. Beautifying the blog can be very stressful! :)

China Essence

2006-02-05T23:26:00.000+08:00

If you ask me whether China Essence can buy without doing any Fundamental Analysis on the company, i can tell you it will very likely be a stag on IPO date based on 2 reasons:

(1) It has a auspicious CHINA in front of its name (excellent IPO timing!)

(2) It is managed by HL Bank. HL Bank is currently on a good run where the IPOs underwritten by it performed well post IPO and this creates confidence in the IPO Manager. (Look at China Fishery).

My conservative fair value of this counter is 55 cents based on only 30% growth for 2006 (very unlikley the growth rate is so low) and based on 8x 2006F PE.

The next IPO by HL Bank will be China Milk!! I have requested for some placement shares but not sure if i will get it now that IPO market has heated up again.

Straits Time Index

2006-02-03T23:37:00.000+08:00

STI made a evening doji star formation today. While STI is bearish, this may not be reflective of the underlying market as it represents only a small basket of stocks. The magical word is still "China" and all things Chinese looks good at the moment. My only hope is that the brokerage houses who started all this dont burst the balloon with a 'credit' exposure cap on its remisiers and dealers. When that happens, the market may just 'collapse'. It would be a healthy sign if the sector rotate out of China stocks to other sectors and that will sustain the mass market bull run for a while.

I shorted SIMSCI Feb futures at 2888 today and it dropped all the way to 2876 but amazingly, it closed at 2890. sigh. This shows you just how volatile futures trading can be. Lets see how it goes next week. The stop loss is at the high of yesterday's doji.

Starfish Swing Fund

2006-02-03T23:18:00.000+08:00

I sold off Electrotech at 565 and Huan Hsin at 66 today. There were a few reasons for doing that and as they do not relate to the stocks themselves, you can regard the reasons as "invalid" reasons:

Basically

(1) I am bearish on the US market. My view is that the correction on US has some way to go.
(2) I am bearish on STI (not the small caps though) and my view is that the formation of the evening doji star is to be respected.
(3) The China stocks has been running for many days already and even the not-so-good China stocks started their 'laggard' run.

Anyway, here is the updated return on the Starfish Swing Fund with only 1 stock remaining in the portfolio - Stamford Tyres. Sigh. Now i am really wondering why i didnt buy China Wheel instead!

You can see that the Fund returned about 5% so far. If only I can repeat this performance every month, 2006 will be a good year where the annualised return is 60% (zhun bo?!). Frankly, I would be happy with a annual return of 20% every year. :)

Trade Updates 2 Feb 2006

2006-02-03T00:49:00.000+08:00

Today was one of the most frustrating day for me. I was just seconds away from getting my trades done at 113 for First Engineering (early in the morning ) and 275 for CG Tech (about lunch time) when the market moves away from me. Both the trades were not done. This happens sometimes when you argue over 1/2 cents bid. sigh. (cheapo?!)

Huan Hsin

I bought 30 lots of Huan Hsin at 655. The results for 2005 will be released shortly and i expect Q4 to be mediocre. However, looking at the strong performance from the Taiwan NB manufacturers, i think the performance for Huan Hsin will not be that bad. Hopefully the outlook will be good when it release its results.

Stamford Tyres

I was deciding between China Wheel, Junma, YHI and this one, trying to think who will benefit most from the China consumer theme that is occuring on SGX right now and frankly, i also dont know why i chose this one out of the other 3. hahaha. See how it goes.

Electrotech

Still holding on to it. See how it goes tomorrow.

Straits Time Index

STI is at an interesting juncture today. It showed the first sign of weakness today with a 'doji' display. Whenever doji appears, i will tend to respect it, especially it is close to a psychological resistance of 2450 as well as the resistance line linking from all the way back in 3 Aug 05. Steve Nison said that doji needs to be confirmed. In other words, if tomorrow is a down day, then the doji would have been confirmed and a reversal has occured. If tomorrow it gapped down, then it would have formed a bearish evening doji star formation and if that happens, my view is that it will correct to the 2380-2400 level support in the coming days.

Starfish Swing Fund

2006-02-02T00:28:00.000+08:00

Starfish Swing Fund initiated a position in Electrotech this morning at 54c. The rationale is in the chart below:

Starfish Swing Fund and Starfish Futures Fund

2006-02-01T01:07:00.000+08:00

Starfish Swing Fund had a decent month in January. It made $4,196.28 and would have performed much better if not for that final xxx trade. Anyway, I am supposed to forget the PAST and move forward. Starfish Swing Fund will start at S$100,000 again.

Starfish Futures Fund will start with a capital of S$50,000. I am not sure if the information on this Fund will be timely because prices for futures moved extremely fast, but lets just start for the sake for some of you who are keen to learn more about Futures Trading.

So long for now. Once i get over the admin stuff, i can concentrate fully on trading and write some educational emails as well. If you have any topics which you want me to cover, like how to start trading, which online broker to use, etc etc, feel free to ask and i can share my 2 cents experience on these topics as well (when i am free lah!).

Singapore Propery Outlook?

2006-01-31T23:59:00.000+08:00

Coming back to where i left off last night, i realised i didnt really have much money in CPF (how to run a Starfish CPF Fund?!). I am one of the rare breed who lost money buying a flat directly from HDB. Using a simple arithmetic computation between the purchase price from HDB and my sale price (before interest and broker's commission!), my loss was a heartbreaking S$80k.

Initially i was quite angry with HDB for selling me the executive flat in the North at such a high price of 380k, but after reviewing my transaction and analysing the reasons for my losses, i was actually quite thankful for the lessons learnt! Originally i had the pre-conceived idea that buying a flat from HDB is 'sure make', as in trading, nothing is 100%. kekeke.

The loss helped me take a very pragmatic approach to property investing and realised that location, location, location makes all the differences. Basically there is little demand for my HDB due to its "no birds lay eggs" location. Look at the prices for the Sail at the 2nd launch at S$1080 psf! I have to eat my words that it is stupid to pay for a 99-year leasehold propery at S$900 psf for the first phase! A high flying property agent at The Sail told me that to make money in the property market, i have to 'wash away' all my old mindset. Somewhat like trading isn't it?! She asked me, "if you have S$600k, would you buy a 1200 sq ft condo unit at Savannah or would you buy a 600 sq ft studio apt at The Sail?" She followed by saying "Why wouldn't you consider buying the studio at The Sail, renting it out at 4k a month and then use 2k to rent the unit at Savannah and the balance to pay off the loan?" The simplicity of that answer stunned me. "Yeah, why not" was my reply. "It doesnt sound unreasonable, isn't it?" But i guess many are not doing it that way because they are house-proud. They like to own the properties which they stay in. Anyway, that had a lasting impression on me.

As HDB rules prohibit me from buying a property for the initial 5 years, it had actually prevented me from making huge losses! If i had purchased a private property during the 1999-2002 period, i would have lost even more. While hunting for a unit to stay after selling my HDB last year, i met some of the property owners in The Bayshore, Melville Park and Tropica who were sitting on paper losses of 300k to half a million (before including interest paid to the bank!). My losses paled in comparion!

As in stocks, property market also moved in Cycles. My view in April last year was that the Singapore property market will be swinging up in the following 3 years, i.e. from 2005-2008. With that cycle in mind, I purchased a freehold property at City Square in April last year. While some dont like the proximity of Little India, i thought the location was actually not that bad. Near MRT, shopping centers, city, SMU. The high floor unit cost me S$632 psf and my intention is to sell it if the propery cycle swings up or rent it out at 3.2k if it doesnt. And guess what, I am currently renting a condo near Savannah for 1.6k and i certainly hope i wont lose money again this time round. :)

Starfish Funds

2006-01-31T01:24:00.000+08:00

For a start, I will be managing 3 funds

1. Starfish Swing Fund
2. Starfish Futures Fund
3. Starfish CPF Fund.

I will talk more about them tomorrow. Need to think about the different risk objectives and time frame for each of the fund.

Good night,
Starfish

Starfish Trading School

2006-01-28T16:51:00.000+08:00

Welcome to my Starfish Trading School.

The purpose of the trading school is to share the knowledge of trading Singapore stocks and futures. The school will be run by Starfish (Patrick?) on a part time basis who will try to share his knowledge on trading with you via emails, charts and live trading.

If you are interested to enrol in the school, drop an email to

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Starfish Trading School

M&A

Major Revamp

Starfish Swing Fund Update

Hong Guo Versus China Hong Xing

Shanghai Turbo

Starfish Swing Fund

China Sky

Charts Request (FATA)

Starfish Swing Fund

New Kid on the Blog

News on the Go ~ 12 April 2006

Starfish Live!

Beauty China

Toilet Paper Ruins the Day

Beauty China

Full Apex

A Publisher's Nightmare.

Starfish Swing Fund

Star Pharma

IPO ~ Sun East

Starfish Swing Fund

Starfish Swing Fund

Starfish Trading School - Opening Soon?

Starfish Swing Fund Update

Singtel

China Stocks Rule the Day

Tat Hong

放长线， 钓大鱼

Global Voice (dedicated to Gilaone)

Volume as an Indicator (plus UTAC)

Starfish Hedge Fund

Your first loss is usually the best loss

Straits Time Index

Starfish Swing Fund Update - SPC

Smelly Onion and the Starfish who lost his Midas touch :P

Starfish Swing Fund Update

Starfish Swing Fund Update

Starfish Swing Fund Update

I want my $2 back

Questions to ask yourself before you pull your trigger

Starfish Swing Fund

Starfish Trader Junior

Trades done on 16 Feb 2006

Interesting Stocks

A Star is Born

Rating Systems and Ang Mo Houses

How to trade using Research Reports

Starfish Swing Fund

Starfish Swing Fund

Starfish CANSLIM Fund

China Essence

Straits Time Index

Starfish Swing Fund

Trade Updates 2 Feb 2006

Starfish Swing Fund

Starfish Swing Fund and Starfish Futures Fund

Singapore Propery Outlook?

Starfish Funds

Starfish Trading School

放长线，钓大鱼