28 August 2021
Dear Fellow Investor,
Breakout from Accumulation
Last week the EWM was up 72.1 points or 4.75% to close at 1590.16. Foreign funds came in to push prices through several layers of supply catching the short sellers who are now sitting on large losses and margin calls. The pessimists now have to decide at what levels to buy as the trend has turned higher at least in the short term.
The psychology of these short term players is why should I buy now when I could have bought earlier at a lower price ? If prices move higher, they will have missed the opportunity to buy low because the mentality of most retailers is to buy cheap. This is the purpose of professional operators who use the pattern of pushing through supply to wash out the short sellers and move prices strongly higher to lock out value buyers. They win on both sides of the market. This is the classic pattern from Richard Wycoff, the pioneer price and volume trader who earned a huge fortune trading over 100 years ago. His methods are still used today by most professional traders.
Google Richard Wycoff to see what resources/ books are available. My business partner Martin Wong offers courses on the Richard Wycoff method and software to identify patterns such as pushing through supply. His website is www.ivsachart.com.
As reported in the latest Edge there are some fundamentals that support economic recovery: They include growth in exports of RM 97.32 which is up 5 % in July which is the 11th month of year on year expansion. Malaysia runs a trade surplus. Inflation comes in at 2.2% which dipped to a 5 month low compared to 3.4 % from June 2020. The RM has also strengthened vs the USD, the lowest in a month to 4.19 showing foreign fund inflow. Top Glove has announced that they will go ahead with their Hong Kong IPO as it has been delayed for the last few months. Demand trends are positive for rubber gloves with the emergence of new viruses . Top Glove, the world’s largest glove producer is using funds from their IPO to fund new production. Rubber Glove counters including Top Glove are trading at attractive valuations as insiders continue to accumulate.
The construction index is also showing strength anticipating mega projects such as MRT3, Pan Borneo Highway, the KL to JB high speed rail and Klang Valley double tracking phase 2 to be launched. There are 52 high impact projects under budget 2021 to pump prime economic recovery. This was reported in the Edge by Sufri Mhd Zin in his outlook for construction.
The plantation sector is coming back to life. Our plantation counters which we hold for you include Kim Loong and United Plantation are steady and we continue to collect handsome dividends while we wait. As the pandemic problems recede and more people get vaccinated supply chains will open up, labor shortages will subside and plantation counters will move higher. Valuations are cheap and insiders are accumulating.
Keep Safe
Bill
A bright spot in the on going disaster in Kabul:
Fresh hope for ex-marine’s efforts to rescue 200 cats and dogs from Kabul.
UK defence secretary says Paul Farthing, his team and animals can leave on chartered plane
A bright spot in the chaos and mismanagement of the Afghan crises. Private charities are filling the void left by incompetent self serving politicians such as Joe Biden. He was able to charter an air bus to the UK with private donations to aid in the saving of his animals and staff from a Kabul animal shelter. The UK government gave approval. From the Guardian News.
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