NVTC Newsletter080118

NextVIEW Traders Club Weekly Newsletter
Published by NextView Sdn. Bhd. (574271-D) Ph +6 03 27139388 Fax +6 03 27139366

Add B-9-12, Block B, Level 9, Megan Avenue II, 12 Jalan Yap Kwan Seng, 50450 Kuala Lumpur, Malaysia
Newsletter for the week ending 18 January 2008
THIS WEEK’S CONTENTS:

Page
1. Investment/Trading Related Articles:

Execution Strategy and First Class Seats …… 2
by Fernando Gonzalez, of Online Trading Academy
2. Market Commentaries
i) Bursa Malaysia Kuala Lumpur Composite Index (KLCI) …….. 5
Additional KLCI analysis by Benny Lee …….. 6
ii) Singapore Straits Times Index (STI) …….. 7
Additional STI analysis by Benny Lee …….. 8
iii) Thailand SET Index (SETI) …….. 9
Additional SETI analysis by Benny Lee …….. 10
iv) Hong Kong Hang Seng Index (HSI) …….. 11
Additional HSI analysis by Benny Lee …….. 12
v) Dow Jones Industrial Average (DJI) …….. 13
Additional DJI analysis by Benny Lee …….. 14
3. Regional Market Forecast Group (N/A this week) …….. 15
4. Regional Traders Education Events …….. 16
Disclaimer and Copyright …….. 18
© 2006 - 2008 NextView Investors Education Group. All rights reserved. 1

1. Trading/Investment Related Articles:
Execution Strategy and First Class Seats
By Fernando Gonzalez, one of the original founding members of Online Trading Academy
The defining moment in the execution of a trade comes right at the bottom of the decision-making funnel,
right at that moment where just about all aspects of the trade have been strategized and all risks have
been properly calculated.
This is the moment when you have already properly determined that the trade will fit your overall risk
strategy. In the case of opening the trade, you have targeted the direction, entry and exit areas. In the
case of a trade-exit, you’ve already decided when to get out, and the only thing left to do is execute.
Trade execution as a defining moment, then, doesn’t particularly apply to those traders (or, perhaps, I
should say “investors”) whose trades carry over longer time frames. For long-term traders, execution
becomes more of a trivial matter; whereas, it's a whole different ballgame for short-term traders. For us,
the efficiency of execution (or lack thereof) adds up to values we cannot ignore in one year of active
trading.
My discussion of execution strategies is, therefore, addressed to traders who trade with a high rate of
frequency; that is, intraday and very short-term swing traders (those exposed for only a few days at a
time).
For a brief time in the stock market, sometime in the late 1990s and early 2000s, the routing strategy in
execution played a very critical role. Direct access was so new that there were many "markets within
markets" to route our orders to. There were SOES, SelectNET, SuperDOT and a multitude of ECN
markets.
Execution strategy was crucial particularly because spreads were displayed at a minimum teenie, or
1/16th sizes -- that's more than 6 cents in today's view. This may not sound like much, but compounded
over hundreds of round trips, it really added up to something.
Well, the market has since evolved greatly and very fast. The many "markets within markets" have
merged. And, perhaps, the most influential change was the switch to decimalization. Veteran traders will
tell you that decimalization and the merging of markets (which itself has resulted in narrower spreads)
have altered the landscape of execution strategy, making it a much simpler, streamlined and efficient
method beneficial to us all.
Now, the landscape may have changed, and spreads may have narrowed down to pennies, but some
execution strategies have remained; we find that these come into play in the compounding effect of
dozens of trades (or even hundreds, and rarer, thousands).
Sitting right at the heart of these execution strategies is liquidity and the recognition of momentum.
First things First: Don't Penny-Pinch. Before we get into momentum, we must first acknowledge two
things:

1. Execution is at the bottom of the decision-making funnel. On a per-trade basis, determining
direction and the entry / exit area is far more important than efficiency of execution -- efficient
execution, then, is only an "added bonus" of good trading.
2. The markets have evolved to such a point that the narrow spreads today are a common condition.
Occasionally, the execution of a trade (either entry or exit) calls for a high degree of urgency. In those
cases, if you absolutely must execute, don't worry about efficiency. Penny-pinching is common to rookie
traders who are still learning many things all at once.
If you absolutely must get in or out, the least of your worries should be whether you got hit on the bid or
offer side with a limit order. Being a miser for pennies has cost traders more dimes, quarters and even
dollars than a thousand slot machines in Vegas.
When you have made the decision to execute an urgent trade, load the market order and FIRE! After all,
if you are trading for more than dimes in a liquid market, you can rest assured that spreads are narrower
today than they ever have been in history. Send the market order and be done with it. This gives your
mind the room to focus on what you should really be focusing on: The larger trends at play.
Execute at Maximum Momentum. At the heart of efficient order execution are momentum and the
recognition of momentum. Many traders get so caught up in the perpetual brawling that occurs at the
inside market on the Level II screen, that they fail to recognize the valuable opportunities accompanying
momentum and velocity.
Remember that momentum and velocity are only temporary conditions; the market constantly alternates
between waves of buying and selling. You want to execute at maximum momentum. Sell when the
momentum is up, and buy when the momentum is down.
Rather than being one to chase the market all the time, let the market come to you, both in and out, at
every opportunity. What you are doing is bucking the maximum momentum of a smaller trend in favor of
a larger trend later.
Recognize Momentum. Many traders have trouble recognizing the momentum off the Level II screen. In
that case, use the 1-minute charts, which are the best view of minutia momentum. If you are Long when
the market is rising, don't use a market order to sell, but, instead, let the market come to you and chase
up to your limit order. After all, they want what you are holding.
You will find that, for scalp trades in particular, the best time to execute is when the 1-minute charts are
hitting maximum, parabolic momentum. For regular day (non-scalp) traders, the 3- and 5-minute charts
will be more adequate. For swing traders (up to 5 trading days’ duration), the 5- and 15-minute charts are
an appropriate measure of momentum, and this would include the "invisible" bars we commonly refer to
as gaps!
(To a swing trader, executing out of a trade right into a gap is critical and strategy. After all, a gap is a
form of maximum momentum.)

When Playing the Spreads, Pay Attention to When You Get Hit. Some traders like to play the
spreads on higher-priced stocks, which tend to have greater distance within the inside market. Some
might even make the critical mistake of wanting to play a spread in a stock that is illiquid and, thus,
exhibiting the symptoms of wider spreads. Well, this is a tricky game, but, once again, momentum lies
right at the heart of it.
There’s a reason why you get hit "at the Bid" or "at the Ask." When the momentum is down, you get hit at
the Bid. It’s vice versa with upside momentum -- you get hit at the Ask. You will find that, in rising stocks,
it is much easier to get hit at the Ask (selling) than it is to get hit at the Bid (buying).
When I am day trading on the Long side, I will often send "probe" orders at the Ask (to Sell) just to see
how "hungry" the market is for the stock at any one particular time. I will take some of my shares and
sacrifice them to measure how quickly the market will take them at the moment.
If they get taken very quickly, the market is hungry, and I have a good chance to sell the remaining
shares at a few levels higher. If it takes too long, I am ready to send the market order to dump all my
shares.
So, if you are thinking about playing the spreads, remember that there is a reason why you are getting hit
at the Bid or the Ask -- and that it is when the momentum is in the opposite direction of your
order…something to think about when playing the spread game.
Remember That Confirmation Costs Money. Perhaps the most important element in execution
strategy is the battle between seeking "confirmation" and actually executing. Confirmation costs money. I
am sure all of you who have actively traded have experienced the euphoria of being in a good trade that
is moving very nicely in your favor.
You are enjoying the moment, everything that you have worked for is now paying off. You are Long, and
you are watching the market rise to the stratosphere. (Or, perhaps, you are Short, and you are watching
the market crumble to the core of the earth as your account balance is rising to the stratosphere.)
And, then, slowly the market loses some of its steam. This might not affect you because you are deeply
in the money, you are seated among the few seats in the First Class cabin, and everything will be fine.
The price pauses. The pause continues. And, continues. And, then, slowly, the market begins to creep in
the opposite direction.
You remind yourself that this is normal and continue to sip on the special tea they serve only the First
Class passengers. Meantime, the pressure picks up steam, and the market is now violently going in the
opposite direction…and, suddenly, it is only NOW that you realize that it's time to exit the Space Shuttle.
You desperately send the order to get out of your position and realize that, in the course of enjoying and
maximizing your greatest moment, you lost half your profits.
Confirmation costs money. Dump your trade and take your profits at maximum momentum. You will find
that, when you execute at maximum momentum, in most cases, you will not regret your decision.
After you have executed, then and only then is the time to sip on the First Class tea. As the rest of your
opponents scramble to get out, seeking "confirmation", you are well on your way to strategizing your
passage aboard the next blast-off of the Space Shuttle…in First Class, of course.

2. Market Commentaries
i) Bursa Malaysia Kuala Lumpur Composite Index (KLCI)
Technical Analysis as of 18/01/2008
Basic Price information

Close: 1,439.49
Trend Analysis
MACD (16.3975)
MACD is indicating that the current short term price trend is bearish. The momentum of the trend is strong.
Moving Averages 10-day(1,480.1670), 30-day(1,441.0900), 60-day(1,412.2446), 100-day(1,375.7106).

SHORT-Term Trend: Sideway
LONG-Term Trend: Very bullish
Support and Resistance Analysis

Immediate Support: 1,423.8300

Longer term Support: 1,338.1400
Immediate Resistance: 1,524.6899
Longer term Resistance: 1,524.6899
100 day SMA Support: 1,375.7106

Stochastic(28.4242) is currently slightly oversold and is getting lower.
Price Reversals
Candesticks
Bullish Candlestick pattern: No bullish candlestick pattern detected in the last 3 days.
Bearish Candlestick pattern: No bearish candlestick pattern detected in the last 3 days.
Bar Chart Patterns

Bar Chart Bullish Price Reversal Pattern: No bar chart bullish price reversal detected for the last 3 days
Bar Chart Bearish Price Reversal Pattern : No bar chart bearish price reversal detected for the last 3 days
Stochastic
Stochastic Bullish Price Reversal : No bullish reversal in the last 2 days.
Stochastic Bearish Price Reversal : No bearish reversal in the last 2 days.
Volatility Analysis
Short term volatility: The 3-period ATR (35.3055) has increased therefore price action is more volatile
Longer Term volatility: The Bollinger Bands are contracting therefore price action is less volatile
Volume Analysis
Volume: 237,000 shares, 30-day average volume: 220,100 shares.
Volume strength is moderate. The On Balance Volume is declining, indicating distribution of shares in the
market.
________________________________________________________
Additional KLCI analysis by Benny Lee, Chief Market Strategist, NextView
KLCI facing correction
Markets have been very volatile in the past 2 weeks and the KLCI emerges as the “hero” by breaking
new highs while other regional markets were seen struggling with bearish sentiments. This is mainly
due to the rising Crude Palm Oil prices. Few top heavy weights in the KLCI component are plantation
stocks. However, the KLCI took a heavy beating last week after creating a historical high of 1,524.69
points on the Monday but closed at 1,439.49 on Friday.
The KLCI is still in an up trend and is currently facing a correction. Support level is around 1,400
points and the KLCI is expected to test this support level this week. If it breaks further downwards,
the KLCI may find support 1,350 points. Immediate resistance is at 1,450 while the historical high os
1,525 is the major resistance which the KLCI needs to overcome to continue its up trend.

ii) FT Singapore Straits Times Index (FTSTI)

Close: 3,104.25
Trend Analysis
MACD (-87.6168)
MACD is indicating that the current short term price trend is very bearish. The momentum of the trend is
however, weak.
Moving Averages 10-day(3,234.7300), 30-day(3,391.4114), 60-day(3,476.8347), 100-day(3,534.8198).

SHORT-Term Trend: Very bearish
LONG-Term Trend: Very bearish


100 day SMA Resistance: 3,534.8198

Stochastic(19.2446) is currently oversold and is getting higher.
Price Reversals
Candesticks
Bar Chart Patterns

Stochastic
Stochastic Bullish Price Reversal : Stochastic crossed above its %D yesterday.
Volatility Analysis
Longer Term volatility: The Bollinger Bands are expanding therefore price action is more volatile
________________________________________________________
Additional STI analysis by Benny Lee, Chief Market Strategist, NextView
STI may find support at 2,950
US-dependent Singapore market was bearish because of the slowing economy in the US. The stock
market was not spared as it continued to move in to a bear trend channel. Mild upward rebounds
were seen in the last 2 weeks but were easily overcame by the bears. The down trend channel has a
support level at 2,950 points, which is also the crucial support level tested 2 times before in the
span of one year. The STI may find support at this level.
Resistance from the down trend channel is at 3,300 points and this is the level where the STI needs
to overcome to break itself from the bear trend.

iii) Thailand SET Index

Close: 789.6700
Trend Analysis
MACD (-12.8601)
however, weak.
Moving Averages 10-day(796.2780), 30-day(819.7203), 60-day(840.6732), 100-day(837.4475).


Immediate Support: 757.6500
Longer term Support: 757.6500
Immediate Resistance: 860.6900

Longer term Resistance: 893.6900
100 day SMA Resistance: 837.4475

200 day SMA Resistance: 799.2545
Stochastic(26.4525) is currently slightly oversold and is getting higher.
Price Reversals
Candesticks
Bar Chart Patterns

Bar Chart Bullish Price Reversal Pattern: Island Reversal UP was detected 2 days ago
Stochastic
Volatility Analysis
Short term volatility: The ATR has declined therefore price action is less volatile
Volume Analysis
Volume: 200,324,992 shares, 30-day average volume: 178,372,352 shares.
Volume strength is moderate. The On Balance Volume is declining, indicating distribution of shares in the
market.
________________________________________________________
Additional Thailand Stock Market analysis by Benny Lee, Chief Market Strategist,
NextView
The SETI is expected to continue its bullish mode
Despite being in a down trend, the SETI made an impressive rebound since Wednesday last week
while other regional markets are still struggling. The impending handover of military rule in Thailand
to a democratic government has boost market sentiments a little, which investors see has long been
ignored under the junta rule. The SETI rebounded from 760 points on Wednesday to close at 789.67
on Friday. Therefore 760 points is seen as a immediate support level for the STI.
The SETI is expected to continue its bullish mode this week with cautious because of the weak
performances in the regional markets. It may find resistance at 835 points, which is the resistance
line of the down trend channel.

iv) Hong Kong Hang Seng Index (HSI)

Close: 25,201.87
Trend Analysis
MACD (-649.2110)
however, weak.
Moving Averages 10-day(26,307.9727), 30-day(27,350.2949), 60-day(28,075.7090), 100-

day(27,279.8418).
LONG-Term Trend: Bearish



Stochastic(21.4336) is currently slightly oversold and is getting higher.
Price Reversals
Candesticks
Bar Chart Patterns

Bar Chart Bullish Price Reversal Pattern: Key Reversal UP was detected yesterday
Stochastic
Volatility Analysis
Short term volatility: The 3-period ATR (1,191.9919) has increased therefore price action is more volatile
Volume Analysis
Volume: 2,147,483,904 shares, 30-day average volume: 2,280,094,464 shares.
Volume strength is moderate. The On Balance Volume is increasing, indicating accumulation of shares in the
market.
________________________________________________________________________________________
Additional HSI analysis by Benny Lee, Chief Market Strategist, NextView
Bears taking control
The HSI correction in the past month has ended with a bearish mode. The triangle formation support
line was broken last Tuesday which means that the bears are taking control. The triangle pattern
breakout has a long term downside target of 20,000 points, which is also a crucial support level. The
HSI has found some support at the 24,000 points level and is expected to test the triangle support
line again at 26,500 points this week. Failing to go above this level may result in HSI continuing its
down trend to its long term target.

v) Dow Jones Industrial Average (DJI)

Close: 12,099.30
Trend Analysis
MACD (-258.7896)
strong.
Moving Averages 10-day(12,561.5195), 30-day(13,088.2529), 60-day(13,210.2598), 100-

day(13,397.6797).



Stochastic(4.8176) is currently oversold and is getting higher.
Price Reversals
Candesticks
Bar Chart Patterns

Stochastic
Stochastic Bullish Price Reversal : No bullish reversal in the last 2 days.
Volatility Analysis
Volume Analysis
Volume: 483,300,000 shares, 30-day average volume: 265,951,968 shares.
Volume strength is strong. The On Balance Volume is declining, indicating distribution of shares in the
market.
________________________________________________________________________________________
Additional DJI analysis by Benny Lee, Chief Market Strategist, NextView
12,700 points support level may not be able to hold
As, expected the 12,700 points support level was not able to hold the bears from taking the DJI
lower. The DJI closed at 12099.30 last Friday, very close to the crucial 11,900 support level. The
bearish move in the past 2 weeks have confirmed the head and shoulder pattern which is normally
found at the end of an uptrend. The DJI is currently in a down trend with defined channel. The DJI
has to break above 12,800 level to hold the bears from pulling it lower. Therefore the 12,800 points
plays a crucial resistance level. If the DJI continues to be decline and falls below the 11,900 support
level, then the down trend shall continue to at 11,100 because that is where the target for the head
and shoulder pattern is.

3. Regional Market Forecast Group
Not Available this week

4. Regional Traders Education Events this week
MALAYSIA

HONG KONG

________________________________________________________________________________________
DISCLAIMER AND COPYRIGHT NextView Sdn. Bhd. (574271-D) and NextView Traders Club (NVTC) are NOT a licensed
investment advisors. This publication, which is generally available to members of NVTC, falls under Media Advice provisions. These
analysis notes are based on our experience of applying technical analysis to the market and are designed to be used as a tutorial showing
how technical analysis can be applied to a chart example based on recent trading data. This newsletter is a tool to assist you in your
personal judgment. It is not designed to replace your Licensed Financial Consultant, your Stockbroker. It has been prepared without
regard to any particular person's investment objectives, financial situation and particular needs because readers come from diverse
backgrounds, with diverse objectives and financial situations. This information is of a general nature only so you should seek advice from
your broker or other investment advisors as appropriate before taking any action. The decision to trade and the method of trading is for
the reader alone to decide. The author, contributors and publisher expressly disclaim all and any liability to any person, whether the
purchase of this publication or not, in respect of anything and of the consequences of any thing done or omitted to be done by any such
person in reliance, whether whole or partial, upon the whole or any part of the contents of this publication. Neither NextView Sdn Bhd
(including offices in other countries) nor its officers, employees and agents, will be liable for any loss or damage incurred by any person
directly or indirectly as a result of reliance on the information contained in this publication. The information contained in this newsletter is
copyright and for the sole use of NVTC Members. It cannot be circulated to other readers without the permission of the publisher. This is
not a newsletter of stock tips. Case study trades are notional and analyzed in real time on a weekly basis. NextView Sdn Bhd does not
receive any commission or benefit from the trading activities undertaken by readers, or any benefit or fee from any of the stocks reviewed
in the newsletter. NextView Sdn Bhd is an independent financial education organization and research is supported by NVTC annual
membership fees.
OFFICES;
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NextVIEW Traders Club Weekly Newsletter

Published by NextView Sdn. Bhd. (574271-D) Ph +6 03 27139388 Fax +6 03 27139366

Newsletter for the week ending 18 January 2008

THIS WEEK’S CONTENTS:

1. Investment/Trading Related Articles:

3. Regional Market Forecast Group (N/A this week) …….. 15

4. Regional Traders Education Events …….. 16

Disclaimer and Copyright …….. 18

© 2006 - 2008 NextView Investors Education Group. All rights reserved. 1

© 2006 - 2008 NextView Investors Education Group. All rights reserved. 2

© 2006 - 2008 NextView Investors Education Group. All rights reserved. 3

© 2006 - 2008 NextView Investors Education Group. All rights reserved. 4

Basic Price information

Moving Averages 10-day(1,480.1670), 30-day(1,441.0900), 60-day(1,412.2446), 100-day(1,375.7106).

Support and Resistance Analysis

© 2006 - 2008 NextView Investors Education Group. All rights reserved. 5

100 day SMA Support: 1,375.7106

Stochastic(28.4242) is currently slightly oversold and is getting lower.

Bar Chart Patterns

Additional KLCI analysis by Benny Lee, Chief Market Strategist, NextView

KLCI facing correction

© 2006 - 2008 NextView Investors Education Group. All rights reserved. 6

Basic Price information

Moving Averages 10-day(3,234.7300), 30-day(3,391.4114), 60-day(3,476.8347), 100-day(3,534.8198).

Support and Resistance Analysis

© 2006 - 2008 NextView Investors Education Group. All rights reserved. 7

100 day SMA Resistance: 3,534.8198

Stochastic(19.2446) is currently oversold and is getting higher.

Bar Chart Patterns

Additional STI analysis by Benny Lee, Chief Market Strategist, NextView

STI may find support at 2,950

© 2006 - 2008 NextView Investors Education Group. All rights reserved. 8

Basic Price information

Moving Averages 10-day(796.2780), 30-day(819.7203), 60-day(840.6732), 100-day(837.4475).

Support and Resistance Analysis

© 2006 - 2008 NextView Investors Education Group. All rights reserved. 9

100 day SMA Resistance: 837.4475

Stochastic(26.4525) is currently slightly oversold and is getting higher.

Bar Chart Patterns

The SETI is expected to continue its bullish mode

© 2006 - 2008 NextView Investors Education Group. All rights reserved. 10

Basic Price information

Moving Averages 10-day(26,307.9727), 30-day(27,350.2949), 60-day(28,075.7090), 100-

Support and Resistance Analysis

© 2006 - 2008 NextView Investors Education Group. All rights reserved. 11

100 day SMA Resistance: 27,279.8418

Stochastic(21.4336) is currently slightly oversold and is getting higher.

Bar Chart Patterns

Additional HSI analysis by Benny Lee, Chief Market Strategist, NextView

Bears taking control

© 2006 - 2008 NextView Investors Education Group. All rights reserved. 12

Basic Price information

Moving Averages 10-day(12,561.5195), 30-day(13,088.2529), 60-day(13,210.2598), 100-

Support and Resistance Analysis

© 2006 - 2008 NextView Investors Education Group. All rights reserved. 13

100 day SMA Resistance: 13,397.6797

Stochastic(4.8176) is currently oversold and is getting higher.

Bar Chart Patterns

Additional DJI analysis by Benny Lee, Chief Market Strategist, NextView

12,700 points support level may not be able to hold

© 2006 - 2008 NextView Investors Education Group. All rights reserved. 14

Not Available this week