KNM surged on last friday after the company released better than expected result. Its share price had been consolidating since mid of May, building a strong base to challenge RM 1.

Technical reading:

MACD was forming bullish golden cross
RSI regained momentum
DMI showed bullish direction

Resistance: RM 0.895 , RM 1 (should i hold firmly at the resistance turn support point at RM 0.895), RM 1.26

Fundamental:

Some reports from Brokers: KNM Broker reports

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Bank Negara Malaysia to decide on OPR.

While many were expecting a cut previously, BNM had maintained the OPR, leaving room for manoeuvre, shall the gloomy economic condition remains gloomy.

Stop cutting interest rate indicates the view on economic condition is turning, at least for now.

I believe BNM will keep OPR unchange for now, which would be another catalyst to send the KLCI benchmark higher.

In my yesterday post http://todayfinancialworld.blogspot.com/2009/05/catalyst-for-uptrend.html, i have mentioned catalysts that are positive to the market.

Please support my blog thru various available means if you find the information shared is invaluable. Thanks

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1. Hedge funds / Hot monies flow in again. RM has strengthen against major currencies.

2. Malaysia-Singapore economic ties in Iskandar.

3. Political stability. Sad to say, Perak tussle is gonna end in BN favor.

4. Price to book mean reversal.

5. Strengthen RM & weak dollar spur asset inflation. - CPO?

6. Better than expected economic data.

7. Terrenganu setup state investment fund - 5B government guaranteed Islamic bond and 6B receivable back bond on oil royalties.

What to buy?

Plantation, Banking, Construction, Property.

Wouuld appreciate if you all can SUPPORT my blog by available ways if you think the information is valuable to your trade. Thank you.

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A paper written by Dorab E Mistry on CPO price outlook in Tokyo POTS conference on 18 May.

Dorab believes that situation in soya is more bullish than in palm and soft oils will soon take price leadership.

Price conscious markets like India will chase palm and therefore I expect BMD CPO futures to exceed 3000 Ringgits very quickly.

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KUALA LUMPUR (Dow Jones)--Brazil''s plans to increase blending of local biodiesel with diesel to 4% from 3% in July, will sharply reduce its exports of soyoil, London-based vegetable oils analyst Dorab Mistry said Monday.

He said price prospects for the soy complex are more bullish than palm oil.

"If the new (biodiesel) mandate is confirmed and implemented, it will rule out any further exports of soyoil from Brazil during the second half of 2009," Mistry told a conference on vegetable oils organized by the Malaysian Palm Oil Council in Tokyo.

Brazil has already been exporting soybeans and soyoil aggressively during the last few months due to a slowdown in exports from Argentina, he said.

According to feedback from experts, exports of soy products from Argentina may fall sharply from October, he said.

"The soybean crop is small and this will preclude export of beans beyond August," Mistry said.

Electricity cuts are also likely to affect processing and exports of soymeal and soyoil, he said.(DJ Newswires)

Download the full copy here : http://www.mediafire.com/?4zonmvwzi43

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It had been a tough week with DJIA sending out bad economy data and AH1N1 hit Malaysia. In US, higher unemployment, GM bankruptcy and dealers cut as well as worse than expected consumer spending has dampened the investors sentiment.

Stocks tumbled from its high most led by lower liners which we could see volume shrunk from 3.85b to 2b.

KLCI is still trading above it downward trend line, should it fail to hold above 1010, it will retrace further to 980.

What stocks to buy in this pull back ?

MRCB - KL Sentral
WCT - Expecting for projects
Banks - Commerz
Plantations
O&G - Projects
Technology - The future

I believe they are switching back to big caps, to lead the charge to 1040 above.

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I believe the market will consolidate at this level, attempting to breakout 1040 to next level 1082 and subsequent 1100. At 1100, market has rebounded for 33%, which level off 2002 record of 33% in 6 months but crashed due to SARS. This time around there is no SARS but swine flu that yet to become serious.

During consolidation period, penny stocks will be the king as you have seen the momentum is gaining. IDR theme has kicked in again where UEMLAND, TEBRAU, EKOVEST, MULPHA and i also believe steel counters will advance too - LIONIND , ANNJOO, KINSTEEL.

US is on its way to 9000 which implies a 18x forward PE and even lower if they revise their earnings. By hitting 9000, US DJIA is also standing above 200MA. Shall they hold it well, they would advance further.

Same goes to Nikkei 225.

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By Andy Xie, guest economist to Caijing and board member of Rosetta Stone Advisors

Stock markets have roared back since their early March lows: by April 17,the S&P 500 was up 23.7 percent, FTSE 100 16.5 percent, HSI 37.5 percent,Shanghai A 20.8 percent and Nikkei 26.3 percent. Even American banks, the epicenter of the financial crisis, are reporting good earnings. The U.S. president is talking about silver linings. Fed Chairman Bernanke is seeing "green shoots." Japan just announced another fiscal stimulus package. The market is expecting a second Chinese stimulus. Suddenly, it feels like you must get in now or it will be too late.

But this is a bear market bounce that will end in tears. What will bring
it down will be the likely torrent of new issues. Banks that report good
earnings and speak about recovery will probably try to raise massive
amounts of capital, taking advantage of the market rally, to weather the
long winter ahead. IPOs will swamp emerging markets. Money flowing from
bullish investors will become the winter clothing for distressed banks and
companies.

Indeed, the placement torrent may have already begun, and this bear rally
may end within a month or two. There could be another bear rally in the
fall due to the encouraging economic news. That rally will end when (1)
the economic recovery proves unsustainable and economic indicators dip a
second time, and (2) inflationary pressures tick up, forcing central banks
to tighten despite weak economic conditions. Asset prices will hit their
final bottom, probably in the second half of 2010, when fiscal stimulus
funds are exhausted and central banks are unable to print more money.

In the beginning of 2009, I predicted a bear market rally in the second and
third quarters. Revising that prediction, I now see two bear rallies in
2009. We are in the middle of the first. Private placements and IPOs will
bring it down. Improved indicative economic news in the third quarter may
spark another rally. In my previous article, I expanded my economic outlook
to predict the second dip in 2010.

Fear has dominated financial markets since the sub-prime crisis began in
the summer of 2007. Rallies were brief, mere backdrops to deeper market
plunges. The latest rally, in the past five weeks, has been the longest.
As it went on, it pulled in more and more skeptics. But I sense
desperation among the bulls. The other day a CNBC host in the U.S. nearly
kicked out a bearish guest who expected "waves of financial crises to
come." When I told an acquaintance that Hong Kong property prices will
drop substantially, he furrowed his eyebrows and said emphatically that
Hong Kong people had holding power. Faith rather than evidence is what's
keeping the bulls going.

But the big test for the market will come when companies begin to issue
stocks for cash. It began with Goldman Sach's US$5 billion offer of common
stocks right after its 'good' earnings announcement. The odds are that
other global financial institutions would do the same, all in the good name
of repaying the government. (But if they are in good shape, why would they
need to raise money to repay the government?) In emerging markets too,
IPOs will begin soon, ending nearly two years of drought. IPOs are what
emerging markets are all about, as their underlying economies are hungry
for capital.

When the IPOs hit the markets, investors should think about why businesses
want to raise money. The global economy is unlikely to be strong in the
foreseeable future. Businesses shouldn't need capital to expand. The
likely answer is that they are preparing for lean times ahead. I suspect
businesses making optimistic noises in public are, in fact, still bearish
about the future. As long as the market remains buoyant, they will take
advantage of the opportunity to raise money. The supply of stocks will
eventually overwhelm the market.

The bull case is built on three assumptions: (1) the market decline is
already deep enough; (2) the global economy is either recovering or about
to; and (3) more government stimulus money is coming, should there be more
trouble. The bear case rests on: (1) this is a debt crisis, the debt
levels are still too high, and the global economy can't resume growth until
debt levels recede to normal; (2) the world economy is still shrinking,
though at a slower pace; and (3) government stimulus can't start another
growth cycle as the global economy must restructure itself first.

I am in the bear camp. The bull case is really based on comparing the
current recession with other recessions in the past half-century. However,
this is a once-a-century recession. The only comparable one was the 1930s
Great Depression. For a new growth cycle to begin, two conditions must be
met: (1) debt levels, relative to income, in consuming economies (U.S.,
U.K., Australia, Ireland, Spain, etc.) must return to levels prevailing two
decades ago, and (2) the manufacturing export economies (China, Germany,
and Japan, etc.) must become significantly less production-oriented.

The debt crisis is far from over. Just look at the U.S. financial sector
debt ? the source of all problems in this crisis. It has not come down,
despite all the talk about deleveraging. It stood at $17.2 trillion at the
end of 2008, higher than $15.8 trillion in September 2007, when the crisis
began. Even though it can't borrow from the market like before, it is
borrowing from the Fed and the government. How could we say that the
crisis is over when the U.S. financial sector's leverage hasn't declined?

The economic fallout of the debt bubble bursting is just beginning. By the
end of 2008, households' net wealth in the U.S. had declined by $13
trillion or 20 percent from its peak in 2007. U.S. property prices are
still declining. The odds are that the value of all residential properties
in the U.S. would decline by another $5 trillion or more before
stabilizing. On the other hand, U.S. household debt has not fallen. It
stood at $13.8 trillion at the end of 2008. For the first time since the
1930s, aggregate household debt would exceed the value of the property that
households own in the U.S. Obviously, borrowing against property to fund
consumption is no longer possible.

Income prospects look very poor. Unemployment is rising rapidly in the
U.S., Europe and Japan. As the credit-funded portion of global demand
vanishes, the labor force behind it loses their jobs. As the unemployed
curtail their consumption, the multiplier effect pushes unemployment even
higher. This vicious cycle is yet to reach its natural peak. The impact of
rising unemployment on demand may last through 2010.

Many who argue for a bull case are actually hoping for another bubble. The
thinking is that if enough people believe in the bull case, their money
keeps it going, rising asset prices support demand growth, corporate
earnings improve, and the bull case is validated. The hope for another
bubble is widespread in the world today. Even policymakers are secretly
hoping for another bubble. They all remember how good life was during the
bubble. The crisis has weighed down on everyone's spirits. It seems that
"doing the right thing" is just too hard.

Bear rallies emanate from psychological leftovers of bubbles. When a
bubble stays around too long, most begin to view it as the norm. When the
bubble bursts and the pain becomes unbearable, most pine for the "good old
days." Their collective action causes a rally that creates the illusion
that the bubble has returned. But a bubble, after bursting, can never be
brought back. If you blow air into a balloon with a hole, it can puff up
if you blow hard enough but as soon as you stop blowing, it deflates again,
to nothing.

Governments and central banks are trying hard to stop asset prices from
falling. The hope now rests on government bailouts. Interest rates are
near zero and budget deficits are at scary levels. When inflation rises, it
will close the door on more government bailouts. When the last hope is
gone, asset prices will truly bottom. I think this will happen in 2010.

Some argue, why can't we revive the old bubble or start a new one? The
problem is that after a bubble has lasted several years, its bust leaves so
much rubbish around that a new bubble cannot take root. For example, high
levels of existing debt make further debt growth difficult. Without debt,
a new bubble would have no legs. The economy needs time to recover before
it can support another bubble. If you are waiting for another bubble to
bail you out, I am afraid it's going to be a long wait.

Human psychology is surprisingly susceptible to a collective change in
mood. Herd mentality is a well recognized but unproven psychological
phenomenon. A person is more likely to believe in something if people he
or she knows already do. The safety-in-numbers behavior is often observed
in the animal kingdom. While crossing the African savanna, migrating
wilder beasts cross crocodile infested rivers together. The idea is that
the crocodiles can eat only one wilder beast at a time. When many cross at
the same time, only one will be eaten, and the rest can cross safely. It
seems that many succumb to the herd mentality to handle risk in the
financial world. Bubbles appear repeatedly in human history, despite the
setbacks they cause, because the herd instinct remains deeply rooted in our
brains and takes control when the environment permits.

When wilder beasts cross a river together, the advantage is real. If they
cross separately, they give more time to crocodiles to eat them. For this
advantage to be realized, a herd of wilder beasts needs a leader, someone
who begins the rush. The first one to go has a higher probability to be
eaten. Hence, in this case, irrational behavior, though not advantageous
for individuals, is good for the group. The evolutionary advantage of such
irrational behavior for the collective well being is the reason it is so
prevalent in the animal, as well as human, world.

Similarly, some bubbles are actually advantageous for economic development.
For example, the IT bubble created and perfected technology that is still
benefiting the world today, even though those who invested in it lost their
money. Those who thought IT would make them rich are like the head of the
wilder beast herd, unknowingly sacrificing themselves for the common good.
Most technology-driven bubbles are like that: good for the world but bad
for investors. Joseph Schumpeter's theory of creative destruction is about
such bubbles. Because so many bubbles are not harmful, governments and
central banks have taken a cavalier attitude towards it.

From time to time, a huge bubble of productive assets builds up. In most
cases its consequences are devastating. The global property bubble falls
into this category. Derivative products ? another class of unproductive
assets ? hid leverage behind the property boom and made it bigger than any
other in history. The debt accumulated for building unproductive assets
caused widespread bankruptcies (e.g. the U.S. in the 1930s), hyperinflation
(e.g. Germany in the 1920s), or massive government debt (e.g. Japan in the
1990s). It takes a long time, and a productive debt bubble, to heal the
wound.

The pain so far is acute but not depression-like. The reason is government
stimulus measures are helping businesses and households stay afloat despite
their insolvency. As governments exhaust their fiscal and monetary
firepower, they are trying to verbally improve investor confidence, hoping
that asset markets will improve and economies will follow. Such verbal
stimulus is indeed having an impact.

For example, the U.S. government is conducting a stress test on the banks.
The test is a scenario analysis, i.e. whether banks can survive the
downturn under different possible scenarios. I am sure most banks would
'pass' the test with flying colors, but this is self-deception. The U.S.
financial system is technically bankrupt. The strength of a banking system
reflects the strength of the economy it serves. Just look at the balance
sheet of the U.S. household sector. How could U.S. banks survive when so
many of their customers have negative equity?

Such confidence tricks are significantly impacting sentiment and financial
markets, but they can't reverse the trend. Property prices are falling and
unemployment rates are rising across the world. Temporary euphoria in
financial markets cannot reverse that. Reality will eventually extinguish
the irrational euphoria. Once inflation rises, it will close the final door
of hope ? the government bailout. Interest rates can and will rise despite
badly performing economies. Only then will asset prices truly bottom out.

The false hope today may feel good but it only delays necessary reforms. It
actually makes things worse. As governments spend money to revive the past,
they won't be left with money required to ease the pain caused by
structural reforms in the future. The world is behaving like a bankrupt
drug addict, spending welfare checks to feed an addiction. Once the checks
are all spent, the addict has to go cold turkey to kick the habit.

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Banks Q1 Earning schedule: (source: CIMB, Bursa)

Hong Leong Bank – by 10 May - Foreign shareholding at 6.91%

Affin Holdings – by 11 May 09
AMMB – 2nd week of May 09 (11-15 May 09)
Maybank – 2nd week of May 09 (11-15 May 09)

Bumiputra Commerce – by 15 May 09
RHB Capital – 3rd week of May 09 (18-22 May 09)
Alliance Financial Group – last week of May 09 (25-29 May 09)

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1. Gap Inc. , US , Gap

2. Inditex SA , Spain , Zara

3. Hennes & Mauritz AB , Sweden , H&M



This is how apparel retailers make money, dont you think so?

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source: OSK188

27/4 Peak 995.75 ?
28/4 967.5 = -2.84%

909.8 = -8.6%
868.5 = -12.78%
847.5 = -14.88%

New Gap (29/4 - 30/4) 967.46 - 973.43
Gap 1 (23/4 – 24/4) 978.64 - 982.09 (Closed)
Gap 2 (21/4 – 22/4) 966.6 – 971.4 (Closed)
Gap 3 (9/4 – 10/4) 917.89 – 925.86
Gap 4 (3rd/4 – 4/4) 907.01 – 912.79 (Closed)
Gap 5 (1st/4 – 2nd/4) 875.96 – 890.07
Gap 6 (31/3 – 1st/4) 872.55 – 875.96

Support 964, 956, 914, 907

Shall it break 956, it would go back to 920-930 and strong base around 909.

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