What to Analyse

Yin-Yang wrote:Thanks Small. One last question.

Do you ever sell at a loss also?

I mean, when the price was going down you buy few chunks, but the price is still keep on going down; would you exit at a loss at some point?

Yes.. I sell at a loss..

Practically, as a trader, nobody can be 100% accurate on buy/sell decisions. That's why there's a "stop loss" strategy. So as a trader, u shud plan your trade and trade your plan.
You can quantify the profit you want from a particular trade.. Buy the no of shares that produces that amount and sell accordingly at your profit margin (10%, 15%, 20%.....)
Say u want 10K profit from a 10 rupee share with 10% increase in share price, then u shud buy 10K shares and sell above 11.

Lets face the truth... Avg up/down strategy only gives u peace of mind. You've already made a mistake but u dont look like a fool if you buy low again.. ur stress released, dats all. If you buy REEF at 11.90 thinking it shud be a good price, seeing it's trading at 11.50 would not make u an idiot. But trading it at 10.50 would most certainly tell you that you've made a mistake..

So there are 3 choices;
1. You can buy at 10.50 - in this instant your stop loss (usually 10%) has already triggered but it's your gut feeling tells you it's not right that REEF goes below 10.50. So u take a chance. But if this goes to 10-10.20 then u gain would look like an idiot.
2. You can wait till it comes up, avg down a little bit (say ard 11) and unload with 10%-20% profit. You will have to wait for this though.
3. You can sell - as your stop loss is triggered, you sell without prejudice.. then call it a failure and look for another trade.

That's a super answer!

Always in the market, we have unlimited number of options available. It's up to us to choose which options would work for us.

Time will tell us if we made the right choice or if we were idiots.

Thanks, dear smallv

With today's trading, ASI reached it's lowest value since July 2016.
RSI of ASI touched nearly the same value of July.

6250 is 50% fib of recent uptrend.If ASI find a support here it form a double bottom, a bullish pattern for a good run.

On the other hand it can fall to 6150 to get a strong support.

There was a renewed interest on high caps today.So tomorrow trading is so crucial to decide the direction.

My fear is today JKH up still market down 20.

With last week's candle it was evident that 6250 has been a good tight support for ASI.
Increased activity among blue chips is a good sign of a turn around at this point.
Still foreign out flow continues and it's a negative factor to consider.

Technicals indicate a possible march towards 6600 in the course of 2 months which is about 5.6% gain for ASI
There are some shares can move more than that of ASI in percentage wise.Including few craps.
Happy trading.

Thanks Path. let's see how the possible Fed rate hike is going to affect CSE

Since many asked thought to update a chart on LION
LION has shown a nice round bottom,
400 was a good entry point for a cautious trader.As shown in the chart 485 is acting as a resistance,Last 3 candles touch and stopped there.If break  with a good volume 550 would be the next station.

Nowadays we see many negative posts about CSE are being circulated.Some newer IDs are appearing in every forum with baseless ASI targets.Smartly demoting certain shares.Some of the people who were supper bullish on some shares have become extreme bears for the same stock.
Why?
Creating panic and collect low from panic sellers.Please don't get caught to them and loose your hard earned money.

What's really happening

Global developments,

There are certain changes happened and happening around the world.What would happen to SL.
Tump's victory and his decisions restored investor confident in USA,that make their stock market boom and appreciate USD.
Cancellation of TPP is a plus factor for our exports as it opens the door to US market.
Strengthening USD is negative  as still SL is not out of BOP crisis.
If we were able to catch US market our export oriented companies would show better performances than earlier.

GSP is another positive thing SL is waiting hope we'll get it within this year.

So keep an eye on our Export companies like TJL,MGT


World commodity prices are on the rise including crude.So companies import raw materials for their production will get a hit.Depreciating SLR is another threat for those companies.
Companies depend on Aluminium,copper may have lower margin than earlier unless they increase prices of end products.

Rubber,Tea and Palm oil prices raising their heads after sometimes,Improved earnings can be expected from those companies with the aid of High USD.
KGAL,NAMU,WATA and ELPL are good selections from the sector along with carsons group.

SL Situation,

Current government looks stable though there are some hiccups.I don't expect current regime change at least for 2 years.

SL economy is recovering but in a slow phase and BOP crisis is not that severe than earlier.
Recent lower rating of SL is a big negative factor for the country.Hope SL will get better rating soon.
Higher interest rates is negative for BFI sector
Budget regulations on vehicle leasing will adversely affect Finance companies.

As a whole Corporate earnings are good,CSE is trading at very low PE compared to it's peers in the region.

A rate cut would be the ideal trigger CSE waiting for.

Technically
6150 was trying hard to give a support but couldn't sustain,
I see a very good support at extreme correction of 5995-6030

Don't sell your good stocks at dirty cheap price and don't buy junks promoted by Smart promoters in various forums.

Activity in market as well as here has dried up due to obvious reasons. Interest rates are up and are a much safer way to park the money for the moment. The brave will be collecting now while the rest will join only when there's a visible up trend.

Political uncertainty is always there now with the planned cabinet reshuffle. There are many things to sort out before securing confidence of investors. That being said, there are many uncontrollable factors happening around the world which cannot be ignored.

Profits have not been bad in December apart from few already expected areas. Profit falling marginally is not a reason for stocks to crash unless the worst is expected in coming years. There are many stocks which price is not at all justified in my opinion. These companies keep on piling their assets and are ripe for a good gain when market turns around. If you are not on margin and don't need your investment for any needs in near future, you have nothing to worry, but I may be wrong.

I also second "brave wil be collecting now..."

I dont think market falls below 6000 again.. Few issues bother people which brings a bit of a trust issues on this Govt such as VAT man is eyeing to screw again ppl with EPF/ETF balances being tax. That is the life savings of a private sector employee and in anyways it is taxed, its gonna be a crucial era ahead.
Anyone with a 50k monthly salary would get 1.2 million in 10 years without interest, so what if its taxed? Say any balances above 0.7-1 million are taxed? they pay 10-11% interest and what if that is lowered? or taxed purely on interest?

Yet company profits are fine.. There were few problems for some companies. We saw TJL making abt 30% drop yet given a 1 rupee divi but GSP+ is a hope... Its dragged down to 37 unnecessarily and again moved up.. So likewise som games are being played.. Wonder by whom or which parties involved in panic selling?

If the sea recedes too far, expect a Tsunami soon.

Yin-Yang wrote:If the sea recedes too far, expect a Tsunami soon.

Dreams what we take forward. .

Sometimes, one person's dream becomes another persons nightmare.

This is every ones sweet dream. Not a nightmare to any one ...

Just thought to do a update on Aluminium related companies as a group rather than taking individual companies one by one.The group consist of ALUM,PARQ,LALU and ALUF

World Aluminium prices bottomed out on Jan 2016 and keep on rising.
It was USD1500 in January 2016 and yesterday hit USD1950 ,Seems it's moving to it's previous high.
Appreciation is nearly 30% for a year.

Now lets take USD/LKR situation
It was 140 in Jan 2016 and now 154
Appreciation is nearly 10%

Aluminium cost alone has gone up by 40% at the arrival to SL compared to Jan 2016

Apart from that Transport including Shipping and Energy cost also has gone up considerably.

All aluminium companies are facing increased cost of sales and pressure on Gross profit.
Unless they increase their product prices coming quarters won't be good for the sector.

On the other hand much talked construction boom never happened in the country and revenue also couldn't make huge growth as anticipated.

I wrote this not to make anybody panic and sell their stock. just be vigilant.

ATM I don't hold any share of the sector and not intended to buy for MT/LT till I satisfy about the industry.
But I can not exclude short term price movement of any of the above share,I may enter for a trade if such happened.

thank you pathfinder

Thanks Path for the timely awareness.

pathfinder wrote:Just thought to do a update on Aluminium related companies as a group rather than taking individual companies one by one.The group consist of ALUM,PARQ,LALU and ALUF

World Aluminium prices bottomed out on Jan 2016 and keep on rising.
It was USD1500 in January 2016 and yesterday hit USD1950 ,Seems it's moving to it's previous high.
Appreciation is nearly 30% for a year.

Now lets take USD/LKR situation
It was 140 in Jan 2016 and now 154
Appreciation is nearly 10%

Aluminium cost alone has gone up by 40% at the arrival to SL compared to Jan 2016

Apart from that Transport including Shipping and Energy cost also has gone up considerably.

All aluminium companies are facing increased cost of sales and pressure on Gross profit.
Unless they increase their product prices coming quarters won't be good for the sector.

On the other hand much talked construction boom never happened in the country and revenue also couldn't make huge growth as anticipated.

I wrote this not to make anybody panic and sell their stock. just be vigilant.

ATM I don't hold any share of the sector and not intended to buy for MT/LT till I satisfy about the industry.
But I can not exclude short term price movement of any of the above share,I may enter for a trade if such happened.

Good one, Thanks...

Path

Its nice to see this analysis and we need these arguments and warnings for the betterment of the forum...

I really like to see all good posters active simultaneously.. SLS, Hunter, Path and I prefer if FG to come up with his quarter report analysis which we are missing now...

Ok Path

What is the best time to buy?

is it when everyone is recommending to buy like LITE at the highest or to buy when no one see the LITE.


Now I was collecting Plantation sector shares when no one talked about plantation shares...

When everyone see only negatives of Plantation sector I did deep analysis of the sector..Now I can be happy.

Regarding Aluminium, Parq I find the same...

When everyone is talking negative it becomes even difficult to talk other wise..

Further if one to dump his stake of Alum related, he should have done earlier before the trends are clear. Same applies for buying...

Path your argument is very valid and hope it will includes more graphs in future with world commodity prices, your TAs etc...

yellow knife wrote:Path

Its nice to see this analysis and we need these arguments and warnings for the betterment of the forum...

.

Thanks YK

yellow knife wrote:

Ok Path

What is the best time to buy?

is it when everyone is recommending to buy like LITE at the highest or to buy when no one see the LITE.

Good question YK

As I think,It's depend on the person's goal.For a trader start of a new trend is the entry point.
For a LT investor buying at dips is good.

yellow knife wrote:


Now I was collecting Plantation sector shares when no one talked about plantation shares...

When everyone see only negatives of Plantation sector I did deep analysis of the sector..Now I can be happy.

.

Well YK we expect rubber prices to pick up by end of 2016.If you remember I post a chart to show relationship between rubber prices and share prices of KGAL and REXP

I choose KGAL as my dark horse for 2017

When I choose CSEC in 2014 many didn't believe it

we can talk about that horse later.

yellow knife wrote:

Path your argument is very valid and hope it will includes more graphs in future with world commodity prices, your TAs etc...

I do TA by myself and post my comments without posting charts to convince others.
I thought not to post charts anymore because many try to find faults and that leads to unnecessary arguments.

Now it looks few things are coming in to the main trend;

+ Talking TA without charts.
+ Buying shares that shoeshine boys talk bad about

That's the way to go mates.

I saw there are many negative comments regarding CSE and SL economy in every corner of investor community.
Some trying to create panic among investors for their own personal reasons.People who promoted certain shares now demoting same share heavily to collect low.Very bad.

Political uncertainty has been hallmark since 2015,So there is nothing new to fancy about.
But there is a talk in the town of cabinet reshuffle once President return back from Russia.

In my view SL economy is coming out of the woods it seems.Some of the measures taken in the past showing benefits now.But fiscal policy has to be straight and steady without waving.

Since we don't have dollar making ventures like Car exports, following measures need to be taken immediately for long term stability.

1.) Money printing has to be stopped.
2.) SOE's should divest as soon as possible.
3.) Fuel formula should introduce


But short term, Interest rate has to be kept high for a while to curb private sector credit growth.

In medium term Foreign reserves will go up with dollar inflows from IMF loans and FDI's once monetary policy stable.

Foreign inflow was witnessed for CSE, amount passing Rs.3Bn YTD,Mostly for blue chips,
That shows foreigners have confident over longterm out look of CSE.
Similar thing happened in 2008 and 2012 as well.


Locals sell foreigners buy.Poor locals will buy when foreigners sell at higher prices.
This is why my gandfather's,father's and my generation learning the same lesson,SRI LANKA IS A DEVELOPING COUNTRY over 60 odd years.

Technical out look of ASI,



ASI shows negative direction in monthly chart passing 50% correction and reaching 61.8% correction at 5800-5850 region.
RSI has reached to 38, at this number ASI has turned up twice in june 2012 and March 2016
So I expect ASI to bounce back at 5800-5850 at least for a short term.

In extreme correction of 78.6% ASI may go below to 5350-5400 which I think won't happen.

In summery SL economy and CSE are not bad as some are trying to show in various forums.
Be careful about Smart Demotions and don't sell your strong shares at a lost.
For MT-LT players this is the time for you to collect good quantities in small chunks.
ST trend players may wait for a while to enter for trades.
Good luck.

Thanks path.  Good and encouraging post. Be brave when others are fearful. .

pathfinder wrote:I saw there are many negative comments regarding CSE and SL economy in every corner of investor community.
In summery SL economy and CSE are not bad as some are trying to show in various forums.
Good luck.

i think so too. some top economist i spoke to recently think the media is responsible for this.  they say things may not be hunky dory but getting better and not catastrophic like reported. MP have to make it out like situation is bad. then any improvement is to their credit. because there performance is poor, they also paint a very negative picture.