Bullish Candlestick Patterns

By Stella Goh – Market Data Analyst | 20 June 2018

Candlestick charts are perhaps the most popular financial chart which assists investors to predict the price movement of their securities. Swing traders have internationally used it to understand how the price of the stock has changed over a specified period. There are dozens of bullish reversal candlestick patterns and this time we will focus on few popular bullish candlestick patterns.

Bullish Abandoned Baby

Bullish Abandoned Baby is a type of candlestick which use by technical analyst to signal a reversal in the current trend. It can also be known as a rare form of morning Doji star. There are three distinct of candlesticks to make up this bullish abandoned baby. The first candle will be the red candle which located in a downtrend, followed by a Doji. There is a gap below the two adjacent candle shadows. The following candle will be a white candle which uses to indicate the strong bullish sentiment.

Bullish Engulfing Candlestick

Bullish Engulfing Candlestick chart formed when there is a large white candlestick fully cover the smaller previous black candlestick without regards to the length of the tails shadow. This type of candlestick will usually happen during a downtrend, found some support or buying volume, and then it will be made a bullish move back up by breaking the previous day’s high. It will be indicating that there is a potential reversal and it is also the signal of the beginning of a bullish trend in the security.

When there is a bullish engulfing candle form at the end of a downtrend, the reversal is much more powerful as this will represent a capitulation bottom. The lows of the candle should be the lows of the downtrend. There shall precede by a minimum of 4 consecutive lower low candles which should close near to the candle highs before the bullish engulfing candle.

Three White Soldiers

Three White Soldiers pattern consist of three consecutive large bullish candles that open within the previous candle’s real body and close that exceeds the last candle’s high. There is no gap between the candles, and do not have very long shadows open within the real body of the other candle.

When this frenzy buying continues third days, three white candles will be formed side by side with higher highs and higher lows. It signifies that the increased in the momentum in the ongoing of bullish phase.

Bullish Hammer

Hammer candlestick is just made up of only one candle and it may occur at the bottom of a downtrend. The candle looks like a hammer with an extended lower wick and short body at the top which is a sign of the sellers are driving the prices lower during the trading session and followed by strong buying pressure to end up market close higher or near to opening price.

Morning Doji Star

A Morning Doji Star is formed when the first candlestick is a long and bearish black candle, followed by a Doji that gapped below it, and then the third candle will be a white candle. If the penetration of the third candle is over 50%, it will be indicating that this pattern has much higher success rate. Morning Doji Star is a strong bullish price reversal candlestick pattern which appears at the end of a downtrend which will turn the current downtrend into the upwards direction.

Conclusion 

While fundamental analysis helps investors to select the potential stocks, the technical analysis allows investors to determine when is the best time to buy and sell. Candlesticks pattern are an excellent way to read the current market sentiment. Combination of both pieces of knowledge will significantly help investors to survive in the volatile market.

Warrants in Stock Market

By Evelyn Yong | 13 June 2018

A warrant is a security that gives holders confers the right, but not the obligation to buy or sell a specific underlying asset at an agreed price (strike price) on the expiry date. The price movement of the warrant is usually much greater than the underlying share. Hence, investors may expose themselves in higher volatility price movement due to leveraging positions in warrants.

There are 2 exercise styles for warrants, American style and European style. An American style warrant can be exercised at any time within the period before the expiration date, while European style warrant can only be exercised on the day of the expiration date. In Malaysia, we only practice the American style of warrants.

There is 2 type of warrant traded in Malaysia, which are company warrant and a structured warrant.

Company warrant

Company warrant also called as a stock warrant. It is issued by the listed company itself to raise money. It gives you the right to purchase a company’s stock at a specific price within the contract period. Once holders choose to exercise the warrants, new shares will be issued by the company for the transaction.

The validity period for company warrant can up to 10 years and determined by the issuance company. Once new shares were issued, the total company shares will increase and earning per share will be reduced. This situation makes existing stockholder owns a smaller or diluted percentage of the company. Issuing warrants can help to lower down the financing cost for the company(as raise capital through issuing instead of borrowing) as well as secure the additional capital if the stock does well.

Company warrant can be found in Bursa market with the stock code followed by –WA or WB or WC. ‘W’ stands for the representative code of company warrant while the ‘A/B/C’ is the series of the warrants issued and it can up to ‘Z’ depends on the company issuance. A company warrant price is usually lower than its mother share price and has listed the conversion ratio for exchanging into 1 share. The said of buying warrant can be volatile mostly due to the gearing ratio. When the gearing ratio is high, it will reflect higher changes on the warrant when the price of mother share is increasing or decreasing. When investors expect there is appreciation on company future value, they will purchase the company warrant which is lower cost at the same time minimises the loss if the share price drop.

Structured warrant

The structured warrant also named as an exchange-traded option or stock option and issued by financial institutions. The structured warrant settlement is in cash and does not involve any mother share. In Malaysia, there are 6 licensed issuers which are AmBank Berhad, CIMB Bank Berhad, Kenanga Investment Bank Berhad, Maybank Investment Bank Berhad, Macquarie Capital Securities (Malaysia) Sdn Bhd and RHB Investment Bank. The objective of having a structured warrant is to create the capital liquidity in the market as the price of the warrant is just a fraction of its underlying share. The issuer aims to make a profit on the risk management of the warrants sold, in doing so they also take on risk. When issuers sell warrants, they will buy shares or other derivatives to hedge their positions and attempt to capture a margin spread regardless the share price goes up or down.

Structured warrant separated into call warrant and put warrant. A call warrant gives the right but not obligation to buy the underlying asset at the fixed exercise price within the limited period of time. It will increase in value when the price of the underlying asset goes up due to the gearing ratio effect. If the settlement price of the underlying is above the strike price at expiry, the call warrant is deemed to be “in-the-money” (profit) and the holder will receive a cash payment. Otherwise, the warrant will expire worthless.

Put warrant gives the right but not obligation to sell the underlying asset at the fixed exercise price within a limited period. The value of put warrant will increase when the price of the underlying asset goes down. Put warrant price will inversely differ from the movement of the underlying asset. When the settlement price of the underlying is below the strike price at expiry, the put warrant is deemed to be “in-the-money” and the holder will receive a cash payment. Otherwise, the warrant will expire worthless too.

So the value of the structured warrant will be much valuable when in longer maturity date compare to shorter validity, which deemed to have a higher risk. Below illustrated the different company warrant and a structured warrant.

Company Warrant vs Structured Warrant

  Company Warrant Structured Warrant
Issued by Company itself Financial Institution
Maturity date Up to 10years Maximum 2 years
Liquidity Low High
Stock issued Dilution, new stock Not involving underlying stock
Code -WA -PA (Put warrant)
-CA (Call warrant)
Benefits Encourage sale of shares and raise capital without incurring new debt Enabling traders to long and short the stock market or index with minimal entry cost

 

The Common Mistakes Made By Investors

By Stella Goh – Market Data Analyst | 7 May 2018

When you begin investing in stock, it’s important to understand how you might lose money if you not careful enough by making some common mistake. Investors must know how to seek vital information and be sharp minded to reduce the risk of failed investment. Here are the few common mistakes that investors should watch out.

Diversification – Too Much / Too Little

As what Warren Buffet said, investors should not put all eggs in one basket; they should diversify their portfolio to spread out the investment risk. However, investors may over-diversified and under-diversified their shares portfolio. Over-diversification may result in retail investors lose tracks of their investment efficiency by diversifying into such as stock, futures, commodities, bonds and so on. As a result, any profit makes from the specific investment will be quickly written off by other non-performing investment. However, it can multiple investment portfolios can be managed together with a dedicated team of the fund manager.

On the other hand, if the investor was under-diversified, which he may only invest in one or two stock at the same time,  his portfolio will become highly sensitive to the fluctuation the stock pricing due to the short-term market uncertainties.

For another reason, if the investors concentrated only on one investment class such as bonds, he might not enjoy the opportunities arising from other asset classes such as equities when it happens.

Emotional Attachment

Commonly there are two types of emotions that influence most of the retail investors. They are none other than the sense of greed and fear. Investors may quickly catch by fear when the share prices dropped drastically in short period. They will lose their rational and make wrong judgments by disposing good investment on hand at the wrong time. These will cause them suffer a loss on the capital over an extended period.

While the market is bullish, the majority of the retail investors may turn greedy so FOMO (fear of missing out) will kick in, and they will chase to buy particular hot trending stock even though the shares are way overvalued. These will cause their capital easily locked up at peak price for an extended period.

Just as what Warren Buffet said, “When Investors sell on fear; it will drive a stock price down. Likewise, when they buy on greed, it will drive the stock price up in short-term.” Investors should invest based on the reliable information tools, instead driven by emotion.

Lack of Knowledge

Another common mistake made by retail investors is lack of investment knowledge. These group of people wish to earn quick profit from investment but lazy to learn a new skill. They do not know where to set the cut-loss point and also target profit. They more willing follow blindly what the analysts and experts said without doing own analysis. Most of the analyst report was for long-term investment period so it will be irrelevant for retail investors to look at it and try to make a quick bet based on the analysis report.

Therefore, investors should know how to establish an entry and exit strategy which can help them to make better and quicker decision.

Not Doing Research

Analysis research on the stocks is essential as it tells the better story inside the company. As what Warren Buffet said, “Risk comes from not knowing what you are doing”. Investors should study how well the company is operating, where the fund of the company investing and the company’s objective which will give us the insights of the company future and gauge the risk. Investors should always look at the business potential and prospect of the company to make their own investment decision.

Conclusion

In conclusion, investors should always keep all these factors in mind as a lesson so you can make a right investment decision in future. Discipline is the key to success, be patient and look at the long-term gains instead of short-term profit. As what Warren Buffet said, “The stock market is a device for transferring money from the impatient to the patient.” Therefore, investors must invest smarter with patience to grow their money.

中美贸易战之中国手上没王牌?

By Benjamin Lai | 17 April 2018

无可避免?

在特朗普对1300个,涉及高达600亿美元的进口商品后,不甘失落的中国也立即向美国进口商品征税的清单,涉及128个税项产品,根据不同类别商品实行额外征收15%到25%不等的关税,涉及金额高达30亿美元。

中美贸易战和保护主义拉开序幕,并且这紧绷的氛围持续僵持了一个月左右。这诡异的气氛也为全球股市都带来不确定因素,其中富时大马综合指数更是连续滑落两个星期。股友们因为世界最大的两个经济体之间的贸易战而不停的抛售手上的股票。

直到中国国家主席习近平近日在博鳌论坛提出开放市场、降低外国汽车进口关税等措施后,中美贸易战紧张的趋势才有看到缓和的迹象。

国际货币基金组织(IMF)总裁克里斯蒂娜•拉加德周三在香港大学(University of Hong Kong)发表演讲时警告, 针锋相对的关税措施只会衍生全球的保护主义意识和破坏全球贸易的规则。

克里斯蒂娜•拉加德也强调, “多边贸易体系在过去的一代人时间里改变改变了我们的世界。但是,现在这套基于规则和共担责任的体系有被撕裂的危险。这将是不可原谅的集体政策失败。”

众所周知提高进口关税只会提高通货膨胀,只会提高通货膨胀。随着物价逐渐昂贵,人民的消费能力更加有限,影响贸易在提高生产率和推广新技术方面发挥关键作用以及全球复杂的供应链 。比例,亚洲的贸易供给已经形成产业链,中美贸易摩擦存在很多不确定性,可能会引起亚洲经济波动。因此没有人会从贸易战收益。这也就是拉加德呼吁各国“避免一切形式的贸易保护主义”的原因 。

把焦点看回我们马来西亚人的国土,所谓城门失火,殃及池鱼。马来西亚贸易总额比国内生产总值多五倍,也是净出口国。这意味着我国经济高度依赖贸易,因此容易受到全球贸易往来变化的影响,尤其是当牵涉到两大经济体,也就是美国和中国的时候,我国遭受波及更是在所难免。任何给中国带来负面影响的贸易行动都往往会衍生负面的后果。亚细安十个成员国与中国在区域内不只贸易往来频繁,投资流量也不少。这也势必会引发其他美国盟友的贸易报复。

中国手上没王牌?

中国国家主席习近平最近出席博鳌论坛表明,中国将扩大对外开放。除了创造更有吸引力的投资环境,中国也将完善保护知识产权制度。此外中国也承诺降低汽车和其他产品进口关税,主动扩大进口市场。中国重申将致力于推动经济全球化朝更开放和包容的方向发展,以及放宽外资进入中国金融市场的限制,为贸易和投资自由化, 便利化,维护多边贸易体制做出贡献。外界指中国国家主席习近平在博鳌亚洲论坛上,宣布的一系列市场开放措施是为了缓解两国近期的贸易摩擦以及受到美国贸易制裁的施压而释放的善意。

在笔者看来,习近平并非害怕美国,而是为了实现中共19大对外开放政策的承诺:坚持对外开放的基本国策,打开国门搞建设,推动形成全面开放新格局。中国开放的大门不会关闭,只会越开越大。秉持着共赢,共存的理念,来体现未来经济强国的风范,以及拒绝任何单边贸易的来往。

但却有中共媒体以及一些学者认为在中美贸易战中,中共只能打美债、石油人民币、黄金储备的牌。前美国大唐集团中国区首席经济学家谢作诗表示,其实中共手上没有什么”王牌”好跟美国较量所以才乖乖就范。

然而实际上, 中美贸易战中, “大豆”是中国最具杀伤力武器之一。因为中国是美国大豆的最大买家,一旦中国提高大豆关税,这将会减少美国大豆对外出口,也将会打击美国多州的农户。值得一提美国中期选举的将在今年11月举行,而他们(农户)都是美国总统特朗普的支持者。

美中贸易全国委员会副会长彭捷宁 说,“他们认识到,美国的大豆种植者多在特朗普总统部分核心政治选区,这不仅会影响中国从美国进口的最大进口品的整体贸易逆差,也可能对未来政府产生政治影响。” 如果中国真的以大豆来施行反制措施, 不止会影响特朗普选民的支持率,影响政权,甚至无法连任下届总统。特朗普是个成功的生意人,一般相信特朗普不会跟中国打这一牌,因为政治的现实会让他意识到最大的输家会是他本人。

在笔者看来, 美国并非想打贸易战,无非想避免对巨额的贸易逆差和侵犯知识产权的问题恶化下去。特朗普此举是为了确保自己有筹码好让中国能回到谈判桌, 终止几十年来一直采取不公平、非法的贸易手段,多次违反世界贸易组织的规定。

特朗普将是这数十年以来,第一位美国总统在这每个国际社会都知道的问题上都能勇敢地和骨气地表态。 有趣的是中美贸易之间的摩擦,不会让他们变成敌人,互相指责彼此的他们始终都会依旧保持友好,因为经济要成长,两个世界最大的经济体系必然会合作,这就是政治。

Target price for DRBHCOM (1619.MY)

The target price for DRBHCOM (1619.MY) is RM 2.13 and overweight rating are assigned.

This target price and rating are assigned by Analysts over the whole market and taking the mean price and mean rating.

The target price will be more reliable when a particular stock has more analysts to cover. In this case, there are 5 analysts are covering this counter.

According to the past 2 years of analysts’ performance, we can conclude that DRBHCOM share price performance used to hit the analysts’ target price.

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The target price for DRBHCOM (1619.MY) is RM 2.13 and overweight rating are assigned.This target price and rating are…

Posted by ShareInvestor Malaysia on Sunday, 19 November 2017

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