5/2016 - The art of stock trading

Why do I call it an art? In my opinion, art is a subject hard to be understood by amateur. It is a subject no common crowd will understand what’s the abstract message the artist was trying to deliver and why does the art piece cost so much. If I put that perspective into stock trading, both matters seem to be quite similar. When trading, an amateur does not know when is the best time to buy-in and when is the best time to sell. Of course, this decision-making skill will develop based on experience over the time.

In this article, I would like to share something about my trading history. As I have mentioned in my previous posts (4/2016), I have observed Solution Engineering Holding (0093) for some time but I did not take any action until recently. I had missed the boat, I made wrong decisions in trading it, and I traded it at a wrong timing. Let’s take a look at the chart.

As you can see from the chart, the stock price has been moving side-way and its value had been lingering around RM0.40 for the past week. The RM0.40 resistant was strong and it closed at RM0.40 last Friday. But when the market opened yesterday(18-Jan-16), it opened at RM0.39 and broke through the resistance. The lowest price of the day was RM0.375 but it managed to raise back up and closed at RM0.39. Today was the same, it dipped for several cents before climbed back up to form a new resistance at RM0.39.

I bought-in last week at a slightly higher price. Well, the difference was not that big (yet) but I lost the satisfaction in making good judgement and lost the best deal. So, in this case, experience calls and good judgement is needed as well as being patience. In stock trading, no one knows for sure how the market works in a short time frame. That is why I call it an art.

There is still some space for improvement to polish my patience, my decision-making skill and knowing how to speculate market sentiment correctly. I will put more time and effort into trading activities to make sure there will be some improvement.

4/2016 - Assessment on Solution Engineering Holding

I have been checking on this counter for several months and I must say Solution Engineering Holding (0093) have had quite a good record on its financial status. I may not be a pro in investing yet but looking at some indicators, the performance is quite promising.

1. Debt and equity ratio (D/E) is 0.03. This indicates that Solution has RM0.03 debt for every RM1 of equity it owns. 
2. The current ratio (CR) is 4.03. It means the ability of Solution to repay its debt is 4 times of its current debt. 
3. It reported positive EPS of RM0.074 last quarter. In fact, its result for the past several quarters are good. 

Based on what I have learned recently, I learned to look for stock which has higher earning compared to the previous quarter (or at least reasonable amount), D/E lower than 0.5, CR higher than 1.5 and acceptable price over earning ratio (P/E). Out of 4 indicators, Solution meets two of them. As for the EPS part, Solution's 2015Q3 EPS was not as good as 2015Q2 but it is acceptable. And, last for but least, it's P/E is acceptable, too. I have not compared its P/E with other company of similar industry yet, but I still think it has the potentials.

Let's keep an eye on this counter and see how it performed on last quarter of 2015 and upcoming 2016.

PS: Please do your homework before making any trading decision.

3.1/2016 - Follow-up on the chart pattern of Tek Seng Holding Berhad

I talked about a chart pattern called "Three Inside Down" yesterday and this post is a follow-up of what remained unknown until the market closed today.

Three Inside Down is a candlestick formation that is found at the top of an uptrend. It means that the uptrend is possibly over and that a new downtrend may have started. Picking up what was left behind yesterday. We had candlestick #1 and #2. After the market closed today then we have our candlestick #3. As you can see from the chart, it was another black candlestick and the Tek Seng's closed at the same price as yesterday, at RM1.21.

Is this a sign of an upcoming downtrend for this counter?

According to the criterion, in order to fulfill the requirements of Three Inside Down, candlestick #3 should be "The third candle needs to close below the first candle's low to confirm that sellers have overpowered the strength of the uptrend". The price was under pressure but it able to hold on its ground. It managed to close its today's battle with the same result as yesterday. So, strictly speaking, the criterion are not met because candlestick #3 did not close below candlestick #1. To support my claim, I checked MACD as well. The MACD's blue line seems to be converging with the red line soon. When the blue line crosses with the red line, it indicates a downtrend.

The bottom line. 

I believe this is just a temporary situation and the price will rebound soon. Tek Seng currently is focusing business on renewable energy and I personally think this is a good counter to keep for long term.

PS: Please do your homework before making any trading decision.

3/2016 - Follow-up on Tek Seng Holding Berhad

I am writing this because an incident happened earlier this morning and I think it is worth writing down for my future reference.

On past Saturday, 9-Jan-2016, I posted an article about my thoughts on Tek Seng Holding Berhad (7200) and here is a follow-up of on same topic.

Earlier this morning, my sister/mentor texted me out of sudden and advised me to sell Tek Seng because she thought the recent activities of this counter has been abnormal and speculated a downtrend may be coming. After reading the message, I sold the counter without a second thought and then just continued with my work. Several hours later, just as what was speculated, the counter price dropped several cents and it closed at RM1.21, a 3.2% dropped in total. I must say I am thankful for having a good mentor and I followed my gut.

Now, let's view the incident in a technical point of view.

The chart above refers to Tek Seng's stock price and I have marked the bar with a star which I first talked about it on 9-Jan-16, last Saturday. Today, as you can see from the chart, there is a black candle stick at the end of the line. This sudden change of pattern reminds me of a chart pattern that I studied few years back and I would like to share it here to validate if the information I found before correct. Here's an explanation on "Three Inside Down".

Three Inside Down candlestick formation is found at the top of an uptrend. It means that the uptrend is possibly over and that a new downtrend has started. A three inside down candle stick formation needs have the following characteristics:

1. The first candle should be found at the top of an uptrend and is characterized by a long bullish candlestick.
2. The second candle should make it up all the way down the midpoint of the first candle.
3. The third candle is an unknown at the moment but the expected pattern should be "The third candle needs to close below the first candle's low to confirm that sellers have overpowered the strength of the uptrend". The result will be reviewed tomorrow.

Now, the chart pattern suggests it is the beginning of a downtrend but the MACD result still indicate it is an uptrend. So, will the price keep dropping like what is expected from the chart pattern? Or the price will rebound and rally tomorrow?

PS: This is just a sharing on thought, not a tip on stock trading. Please do your homework before making any decision.

2/2016 - Tek Seng Holding Berhad

My sister introduced Tek Seng Holding Berhad (7200) to me sometime around September last year. It's stock price was around RM0.50 at that period. However, being "uneducated", I wasn't convinced and hence I didn't take any action that time. I was being lazy to take some extra time to look into this stock. As it's price kept climbing to around RM0.60, it caught my attention again and this new high "pushed" me to study its business background.

One of Tek Seng main businesses is to manufacture solar power panel (Tek Seng's original business is manufacturing PVC products but ever since it added solar panel to its business, the public knew it for its secondary business). To add cream on top of a cake, it has good collaboration with one of the renewable energy giant in Taiwan and it is doing good. The Taiwanese company is doing so well that the light shines on Tek Seng, too. So, having both good cooperate news and good financial record, Tek Seng has given confidence to its investors and the public are pushing its stock price higher as time goes.

When the stock price hit RM0.68, I was tempted to buy in but still I did nothing. I wasn't really convinced that time because I had self-doubt. At that period of time, I need to have an assurance from my sister before any trading but Tek Seng wasn't in her radar that time. So, I gave up.

After giving up on that thought, Tek Seng continued to climb to RM0.80++. I regretted of my earlier decision. But still, I bought some because I do have confidence in this company and its business nature.

Now, entering 2016, Tek Seng stock price has reached a new high and the public speculate it will keep climbing. I am not sure what is my target price yet as I am gathering information to come up with a formula that help me to set my target price. Below is the price/timeline of my experience on Tek Seng.

Chart from ChartNexus

To review my decision made in 2015 on Tek Seng, there are some points I would like to summarize:

1. I must do my homework whenever I need to make a decision.
2. After making a decision, be bold to execute it. Do not self-doubt.
3. Do not linger to bad old memory. True, it is sad to miss a good opportunity. In my case, it is a 173.53% opportunity. But I should not let it drags me down. I need to keep looking forward and find a new 173.53% opportunity.

1/2016 - Happy 2016 and setting new goals

As I am writing this, 9 days have passed since 2016 was wildly celebrated around the world and I do realize my first post in 2016 is 9 days late.

Up to this moment, my 2016 is good.

In this post, I would like to list down my 2016 goals that I have planned so far. I was reluctant to share in it public at first. But, then I thought what good is it if I just keep it to myself or I cannot find energy and dedication to keep my own promises. So, I want to make it public in order to push me to achieve what I want to achieve. I had tried it another way previously - writing my goals in a notebook. Unfortunately, that notebook is nowhere to be found now and I couldn't review my 2015 goals. So, turning my goals into digital print can solve the issue and allow me to review it from time to time.

In my opinion, 2016 is a year with full of new challenges. While Malaysia is encountering different challenges - currency weakens and politicians crack new jokes everyday, life still have to continue. Hoping to have a fruitful year, I have set new resolutions and I am resolved to complete them before the end of 2016.

1. I will output at least 52 posts at my blog by 31-Dec-2016.
2. I will read at least 6 books by 31-Dec-2016.
3. I will earn at least RM1000 from the stock of my choice by 31-Dec-2016.
4. I will have a healthy lifestyle and keep my BMI below 21. I will reduce my body fat to within the 15%-18% range by 31-Dec-2016.
5. I will output my 1-year and 3-years plan by 31-Mar-2016.

Goal-setting is not an easy task. The goal should be as specific as possible. It should be quantifiable (a specific goal that you want to achieve), measurable (a parameter that you can keep track of your progress)  and achievable (a realistic goal). What good does a goal do if it does not motivate but demotivate you. It is always good to have high expectation to yourself. But,at the same time, we need to keep it realistic. As the old-saying, Rome was not built in one day. Having a great goal is exciting, only if it is given enough time to grow and mature.

My listed goals above may not be anything exciting but they do mean a lot to me when I achieve them ( I intended to write "if I achieve..." but it sounds like I am giving myself excuse not to achieve them).

Wish me luck!