THE JANUARY EFFECT IS IN KL, lah!

Well, well, well.....The elusive 2008 January Effect, which has avoided the U.S. markets this year, thus far, has finally been located! And surprise, surprise, it's all good 'ol Kuala Lumpur! Hard to believe, but that's the scenario now. For while the US stockmarkets have been swooning, Bursa Malaysia has been going gangbusters (perhaps they forgot it's not 1999, eh?). Plantation stocks seem to be in vogue, with the charge being led by the "4 Horsemen" (I couldn't help but mimick what they've been saying about the NASDAQ leaders) of Sime Darby, KLK, IOI, and Kulim. This is not surprising, since Palm Oil is Malaysia's main agricultural income earner. With Crude Palm oil hovering around all time highs of RM3100, we look forward to more good times for the seemingly defensive and laggard Malaysian economy. The Malaysian market is notorious for giving "false hopes" to retailers, so we'll hope for the best in 2008 and welcome the Chinese Year of the Rat. Bottoms Up!

Chief Shook

DUDE, WHO TOOK MY JANUARY EFFECT?

100 years....last week (the first week of Jan) was the worst week
for the DOW in 100 years. Are we going to have our January Effect or
is it going to the pattern of 2007, where hopes easily get busted?
The vicious first week of 2008 also brought the Weekly DIA charts at
the border of a Head and Shoulders formation, if violated, could bring
the DOW down by over 1,000 points (Note: It has been violated!).
The bogeyman called Volatility is very much alive and kicking in 2008.
We'll wait and see what happens.

If we go up, the Carry trade will rebound, if we go down, we'll start
buying Yen and shorting the high yielders. Either way, we'll probably have
a clear trend next week (instead of being frustrated and flabbergasted!).
On Tuesday (8th January), the downdraft continued, with the DOW succumbing
238 points despite being up earlier in the session on hopes of a rate cut.
It seems that such hope is instrumental in preventing us to fall further into the
abyss. This morning, futures are up, but who knows what will happen in the
actual session? Makes good trading for USDJPY though.

Chief Shook

OUTRAGEOUS PREDICTIONS FOR 2008 (and a dose of Feng Shui)

It's that time of the Year again when all the Experts line up and offer a gaze through their Crystal Ball of 2008. I don't bother to look at everything, and prefer instead to study proven predictions by people such as Bernie Schaeffer, Kathy Lien (DailyFX), and Peter Grandich. But two people who caught my eye last year, were Saxobank and Hong Kong Feng Shui Master Raymond Lo. I was impressed that they pretty much gave an accurate blueprint of what was to materialise later in 2007. So here are their predictions for 2008:

Saxobank (outrageous again.....) Click to access
I like their forecast on Grain Price doubling (it's not the Government's fault that we have high inflation, dammit! Go read Jim Roger's Hot Commodities). This should be a bumper year again for Commodities, and fertiliser and biotech foodstocks such as Monsanto and Mosaic.

Raymond Lo.....Click to access
I like his prediction that 2008 will be less volatile than 2007 due to the element of Water. Hey, dude, we all need a break from that thing called the VIX!

Enjoy the read.

Chief Shook

Dude, where's the rally?

So, while 2007 started with a "Bang", it's ended on a whimper. The Dow ended the last day of trading down 101 points at 13,264. Considering the Volatility we got in 2007, this was a rather commendable performance. We look forward to 2008, hopeful but ever more cautious. Whatever lies in front of us, the Volatility is back. This means traders in the future have to be experts at hedging. Options, ProShares, or Portfolio strategies come to mind. Trading without protection is just not worth it! The Chart below shows the Weekly chart of the DIA:

There's obviously a Head-n-Shoulders pattern developing, and coupled with a bearish crossing of the 10 and 18 EMA could spell trouble. MACD looks to be looking lower, having been bullish this year (What do you think it would be like if we were bearish?). Money is still flowing into the markets, though, which is good. On another thought, the end of they year selling could possibly give rise to a January Effect, as duds were thrown out the window! (and in a volatile year, there were many of that, which makes sense for tax purposes. After Pakistan, who could blame them?). This could fuel January 2008, especially with expectations on earnings lower, after the rout in November. Wishful thinking or Psychology?

Do we chicken out? NO. It's hard to pick bottoms, and by the time the panic comes, we'll probably be too panicky ourselves to trade. Rather, it's better to have a hedging strategy. This is why I'll be in Singapore on January 12th, to attend a Seminar by John Summa. I've had invitations to go to Indonesia, but we'll see. There's too much work back home, with FXOptions course going into full gear soon.

Happy Trading for 2008!

Chief Shook