NVTC Newsletter070511

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 11 May 2007
THIS WEEK’S CONTENTS:

Page
1. Investment/Trading Related Articles:

Each Trade’s Risk to Reward …… 2
by Bennett McDowell
Weekend Food For Thoughts …… 4

by YH Wong, BH Global Advisers Sdn. Bhd.
2. Market Commentaries
i) Bursa Malaysia Kuala Lumpur Composite Index (KLCI) …….. 5
Additional KLCI Analysis by Nazri Khan, CFTe, MSTA …….. 6
ii) Singapore Straits Times Index (STI) …….. 8

Additional STI Analysis by Benny Lee …….. 9
iii) Thailand SET Index (SETI) …….. 10
Additional Thailand Analysis by Don Schellenberg …….. 11
iv) Hong Kong Hang Seng Index (HSI) …….. 14
Additional HSI Analysis by Benny Lee …….. 15
3. Regional Market Forecast Group …….. 16
4. Regional Traders Education Events …….. 17
Disclaimer and Copyright …….. 19
© 2006 - 2007 NextView Investors Education Group. All rights reserved. 1

1. Trading Article:
Each Trade’s Risk to Reward
By Bennett McDowell, TradersCoach.com
The explanation of the concept of “Risk to Reward” in trading goes something like this:
Before you take a trade, the reward must be a certain percentage better than the risk.
This percentage is usually represented as a ratio. I am going to make a case for why this
type of analysis is flawed, and the traders who use it are kidding themselves.
So that I can show you how absurd this concept of risk to reward is, let’s start with an analogy. Let’s
say that if, before you get out of bed each morning, you ask yourself, “What is my risk of reward or
chances of success today if I get out of bed?” If your answer is “Poor”, you stay in bed; if it’s “Good”,
you get out of bed and start your day.
Now compare this to trading. Let’s say, before you decide on a trade, you say to yourself, “What is
my risk of reward today or chances of this trade being successful?” If the answer is “Poor”, you do
not take the trade; if, on the other hand, it is “Good”, you take the trade.
The problem with this thinking is that you may never get out of bed (or, in our trading example,
take a trade)! Because the analysis is dependent on how you see the world and how you perform
your analysis (which, in both examples, is subjective), it is flawed from the start!
We really do not know which day or trade will be good, so traders who use this risk-to-reward
approach are fooling themselves because we really cannot predict future price movement. In fact,
you will find that most traders who calculate the risk to reward for each trade are right about 50
percent of the time, which is the same as a coin toss.
But, traders use this concept of risk to reward because it makes them feel in control of the risk
inherent in trading. And, most traders need to feel they control the risk in trading. But, I will let you
in on a secret: No one controls the risk inherent in trading!
What I want you to think about is trading the realities of the market, flowing with markets and
accepting the inherent risk in trading, so you can profit. Basing trade entries and exits on the
realities of the market and then applying strict risk control methods that determine your “Trade
Size” for each trade is the way to embrace the risk in trading instead of denying it as so many
trading approaches seem to do.
Any time you try to predict future price movement based on your judgment and interpretation of
market dynamics, you are really just guessing!
Compare this with trading the realities of the market and basing trade decisions on market realities
so that you are trading with the market and not forming opinions about market direction or having
to interpret market news or mathematical logarithms.
We have to get out of bed each day and face the realities of the world we live in. Think about how
absurd it would be to base your decision of whether to get out of bed each day on a concept that

asks you to guess whether the day will be good or not. Is that any way to live your live your life?
NO!!!
The reality is that we just don’t know what each day will bring, but we do know that, to get what we
want from life, we need to get out of bed and try our best based on the realities of the day. We can
take risks based on known parameters and not on unknown or “un-grounded” assessments of what
may happen today.
So, if you are using the concept “risk to reward” in your trading, think about all the profitable trades
you missed because market dynamics did not go according to your guess. You may want to rethink
this very popular concept that lures many traders into the illusion of security.

Weekend Food For Thought
By YH Wong, BH Global Advisers Sdn Bhd
On the surface, the local economic figures look pretty decent but wage gains are evaporating as
inflation accelerates rapidly, helping explain why confidence in the local economy isn't soaring along
with growth. Rising inflation is bad news for local investors who keep a large portion of their wealth
in cash - crazy, I know.
The good news is that they are learning gradually about alternative asset classes. There are positive
signs more local investors may be breaking their hedge funds taboo, born of the belief that George
Soros and other hedge fund managers were responsible for the Asian financial crisis back in 1997.
Enough of Malaysia but I'm also getting tired of hearing about the China story. So today, I did what
I always do when I get tired of hearing about an investment or market. No, I don't go play golf and
forget about it. I go back to the raw analysis. I want to forget the hype, and see what's really
happening. China is not some special economy, but simply a classic fast-growth developing country
with a naturally violent economic cycle.
In the bigger picture, assume that we are all optimists and China's overheating economy and stock
market will end more like a fizzle something like a hiss of a leaking tire that could take decades.
This is because central bank act to ease the pain but it drags the pain out. However, I believe that
China will eventually end with a bang although timing is always an issue given the powerful liquidity
story.
Confidence is vital to the success of nearly any human endeavor. When it comes to investing,
however, the meaning of "confidence" needs to be defined with care. Emotional confidence may
help a sprinter win a gold medal in the 100-meter dash, but it can also be the undoing of the
investor who puts all his bets into the stock market because "I have a good feeling about this one."
Overconfidence in a particular investment or market can land you in trouble if you don't have a
good strategy plan.
Some chartists are all over me like a cheap suit, letting me know that Chinese equities are going to
rally further. In the short-term, I see no solid reason for any blow-ups in any equity markets.
However, that doesn't mean easy money will be made. We remain fully invested in stock markets
but have increased our hedged positions accordingly. Beyond the short-term, we still see the global
equity markets dipping significantly which could be bad news for a lot more Chinese IPOs over the
next few months.
A reminder here is that If China drops sharply, other markets would be impacted through the
psychology and I expect it would scare a lot of investors. A mini version of this happened in late
February of this year.
YH Wong is the Head of Strategy with BH Global Advisers Sdn. Bhd., a licensed
investment advisory firm. You may reach him or his team at (603) 2166 8896.

2. Market Commentaries
i) Bursa Malaysia Kuala Lumpur Composite Index (KLCI)
Technical Analysis as of 11/5/2007
Basic Price information

Close: 1,351.45
Trend Analysis
MACD (23.7086)
MACD is indicating that the current short term price trend is bearish. The momentum of the trend is Strong.
Moving Averages 10-day(1,344.7040), 30-day(1,308.8190), 60-day(1,260.8220), 100-day(1,211.3760).

SHORT-Term Trend: Very bullish
LONG-Term Trend: Very bullish

Support and Resistance Analysis
Immediate Support: 1,291.6400
Longer term Support: 1,090.3900
Immediate Resistance: 1,368.8700
Longer term Resistance: 1,368.8700
100 day SMA Support: 1,211.3760

Stochastic(78.9805) is currently slightly overbought 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 : Stochastic crossed below its %D 2 days ago.
Volatility Analysis
Short term volatility: The 3-period ATR (14.4229) 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: 68,000 shares, 30-day average volume: 85,233 shares.
Volume strength is moderate. The On Balance Volume is declining, indicating distribution of shares in the
market.
________________________________________________________
Additional KLCI Analysis by Nazri Khan
EXPECT MARKET TO HIT 1400 AFTER HEALTHY CONSOLIDATION

By Nazri Khan, MSTA, CFTe, Certified Trainer / Consultant NextVIEW Investors Education
With last weeks slight losses, the Malaysian markets took a rest within their strong uptrend. Specifically, the KLCI
and the Syariah Index consolidated after carving out all-time highs, while the Mesdaq and the Second Board eased
off within a six month triangle congestion pattern. At Friday's close, the KLCI held just 18 points from an all-time
closing high. After edging above the 1350 mark last week, the KLCI drifted lower for five daily sessions. On Friday,
KLCI bottomed precisely at 1336 before rising to close at 1351. From current levels, strong support still holds in the
1332 and 1350 area. Meanwhile, the Syariah Index is also consolidating within a steady eight week uptrend. The
Syariah Index first support now holds right around 196 and next support pegged at 190. The Syariah Index
bottomed Friday at 196 before rising to close 2 points higher at 198. The weakest index is Mesdaq, not surprisingly
given the weak technology sector and absence of retail traders. The Mesdaq is still holding its six month sideways
consolidation. It rallied sharply from 115 support last March, and despite a shaky session during April, it has been
trading sideways. Note the index has notched five straight weekly closes around 134-144 band area. It closed
Friday at 135 after slipping five points.

As the chart illustrates, majority of Malaysian indices have taken a rest after staging a steep two-month rally.
Specifically, from the March low of 1090 to last week high of 1368, the KLCI has run 278 points or 25 % and
Syariah Index 45 points, or 28 %. After clearing the February high on April 25, the Malaysian bellwether index has
sustained its breakout for six weeks. Technically speaking, the most notable aspect of the recent run from the past
ten years is that it has coincided with a sustained break to all time highs. That means the Malaysian markets have
staged a technically valid break to multiyear highs. This has not been just one or two benchmarks briefly flirting with
record territory. Still, the recent run has created a tension between the near-term and longer-term time horizons.
Namely, the Malaysian markets are considerably overbought near-term, and due to pull in, while the longer-term
view is distinctly bullish. To highlight the tension, consider that KLCI has staged eleven consecutive positive months
without correction and note that virtually a third of the KLCI return since 1998 has occurred over the past six
months. That means despite strong two-month runs, on the truly longer-term view, the Malaysian markets are
unusually overbought. And that is likely contributed due to the KLCI rising on 39 of the past 46 weekly sessions. So
for the time being, last week shallow correction confirms the primary uptrend, and on a longer-term basis, the path
of least resistance remains higher. While the markets are on a strong uptrend, a shallow pullback - or at least a
sideways cooling off period - will be healthy to the market. Though this isn't the time to trade counter to the primary
trend, traders are advised to accumulate on correction and be cautious on any sharp pullback that may occur in the
near future.

ii) Singapore Straits Times Index (STI)

Close: 3,446.92
Trend Analysis
MACD (43.7357)
MACD has just crossed below its trigger line today, indicating a bearish reversal in the short term. MACD is
indicating that the current short term price trend is bearish. The momentum of the trend is Strong.
Moving Averages 10-day(3,439.9800), 30-day(3,382.5764), 60-day(3,272.6731), 100-day(3,186.7820).




Stochastic(65.7783) is currently in neutral zone and is getting lower.
Price Reversals
Candesticks
Bar Chart Patterns

Stochastic
Stochastic Bearish Price Reversal : No bearish reversal in the last 2 days.
Volatility Analysis
Longer Term volatility: The Bollinger Bands are expanding therefore price action is more volatile
Volume Analysis
Volume: 238,000 shares, 30-day average volume: 180,100 shares.
Volume strength is moderate. The On Balance Volume is increasing, indicating accumulation of shares in the
market.
________________________________________________________
Additional STI Analysis by Benny Lee
Minor correction took place and the STI went into uncertainty after climbing 100 points the previous
week. On a weekly basis, the STI remains sideways. The STI still maintains above the 3350 bullish
support level and therefore the projection of 3800 is still valid. Short term trend remains strong.
However, the reversal on the MACD indicates that the momentum of the up trend is weakening.
Increasing ATR indicates daily price ranges are widening as uncertainty looms. With increasing
volatility, it is better to stay out of the market until the market stabilizes. However, if you are
looking for intraday trading opportunities, this is a good time.

iii) Thailand SET Index

Close: 706.90
Trend Analysis
MACD (6.7415)
MACD is indicating that the current short term price trend is very bullish. The momentum of the trend is
however, weak.
Moving Averages 10-day(705.0130), 30-day(692.1293), 60-day(686.7565), 100-day(678.8452).


Immediate Support: 685.1600

Longer term Support: 665.0400
Immediate Resistance: 717.9300
Longer term Resistance: 717.9300
100 day SMA Support: 678.8452

200 day SMA Support: 694.0565
Price Reversals
Candesticks
Bearish Candlestick pattern: Long Upper Shadow was detected yesterday
Bar Chart Patterns

Stochastic
Stochastic Bearish Price Reversal : No bearish reversal in the last 2 days.
Volatility Analysis
Short term volatility: The ATR has declined therefore price action is less volatile
Longer Term volatility: The Bollinger Bands are expanding therefore price action is more volatile
Volume Analysis
Volume: 222,454,000 shares, 30-day average volume: 170,996,240 shares.
market.
________________________________________________________
Additional STI Analysis by Don Schellenberg
SETI.TH Commentary
There have been a few down days in Thailand’s Stock Index during the past week. As I wrote in my
commentary a week ago – “…It will not even be a surprise if the market turns down soon to test the
previous high of 701.85 before it rises higher”.
In fact, even a drop down to test the high of two weeks ago, at 693. would not damage the newly
born up-trend as long as value does not drop below that area.
The Index has briefly stopped it’s upward climb precisely at an area of fairly minor resistance that
also includes a down-sloping trend line, as shown on the chart. It is my view that this should not
prevent the Index from soon breaking the trend-line and resuming it’s upward climb to test the
larger resistance area at 750.

The December 19th downward gap in the Index opened at a value of 730.55. That gap will most
likely be closed in the fairly near future.
TECHNICALS:
The Index has moved in a down-sloping channel for several months already and appears ready to
break above the channel soon.
Li’s Preferred Ichimoku – I have placed an advanced type of Indicator, adapted and improved by my
NextView colleague, Mr. Li. It is my observation that the Index has upward momentum and support
as it moves to test the trend-line at 720.
R1 and R2 – nearby areas of resistance.

S1 – 695. Here is near term key support for the next upward move.
BIGC.TH : LESSON ON INVESTING/TRADING
Today I’m offering you a little lesson in how experienced traders and investors might look at stock
charts to make decisions whether to buy, sell or hold. We’ll use BIGC.TH as an example.
BIGC.th has been in a steady, strong uptrend for about four years. In fact, it hasn’t experienced a
significant correction for a very long time. By most long-term measures, BIGC.th is Overbought and
within the next few months will be due for a correction.

NOTE: The chart I’m showing you today is a long term chart showing monthly data. The indicator
I’ve put on the chart is called a Bollinger Band. Price has constantly been above it’s center band for
three years, and it’s been hugging the upper band for most of that time. This is a very strong
uptrend.
However, a strong uptrend does not mean we should just immediately buy. It would be much safer
and probably much more profitable to wait for a correction to the trend, if we plan to invest for a
long period of time. The correction might bring price down to the center band or even the lower
band.
For a shorter term investment, or trade, one should look at shorter term charts, like daily and hourly,
for example. And then use some of the same concepts on the shorter term charts that I’ve
demonstrated on the monthly chart.
I’ve also drawn in a couple of horizontal lines that show potential support and resistance (at the R
and the S). All of these things are useful in helping to make investment decisions.
Of course, there’s more to know than just this, but this might at least be a start for you to become a
smarter more profitable investor.

iv) Hong Kong Hang Seng Index (HSI)

Close: 20,468.21
Trend Analysis
MACD (160.2238)
MACD is indicating that the current short term price trend is bearish. The momentum of the trend is Strong.
Moving Averages 10-day(20,641.8887), 30-day(20,412.1934), 60-day(20,068.8320), 100-

day(20,032.7715).



Price Reversals
Candesticks
Bar Chart Patterns

Stochastic
Stochastic Bearish Price Reversal : Stochastic crossed below its %D 2 days ago.
Volatility Analysis
Longer Term volatility: The Bollinger Bands are contracting therefore price action is less volatile
Volume Analysis
Volume: 1,440,579,968 shares, 30-day average volume: 1,357,238,272 shares.
market.
________________________________________________________
Additional HSI Analysis by Benny Lee
The HSI tried to break above the 21000 resistance level and managed to achieve it intraday on
Monday. However, it failed to close above it and close near the low. It formed a Japanese
Candlestick reversal pattern, the Inverted Hammer. The HSI failed to follow up to challenge the
resistance again in the following days of the week. On Friday the HSI gapped down more 250 points,
reacting to the bearish move on the Dow. There was no clear direction after the gap down.
On Friday evening Asian time, the Dow regained its bullishness again. The HSI is expected to
rebound technically and may challenge the 21000 resistance level again this week.

3. Regional Market Forecast Group
Note:
Forecast Direction
S = Sideway
U = Up
D = Down
Sideway market is considered if the index falls between 0.4% of the index close on Friday
Sideway Range Calculation Close Sideway Range
KLCI 1351.5 1346.0 to 1356.9
STI 3446.9 3433.1 to 3460.7
HSI 20468.2 20386.3 to 20550.1
SETI 706.9 704.1 to 709.7
Direction is based on next Fridays close. If next Friday's close is above the sideway range, direction is considered up and vice versa for price below
sideway range

4. Regional Traders Education Events this week
MALAYSIA

SINGAPORE

________________________________________________________________________________________
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;
Head Office Malaysia: B-9-12, Block B, Level 9 Megan Avenue II, 12 Jalan Yap Kwan Seng, 50450 Kuala Lumpur, Malaysia. Singapore: 5 Shenton Way,
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10330, Thailand. Hong Kong: Room B, 16/F, Crawford Tower, 99 Jervois Street, Sheung Wan, Hong Kong. China: 59 Yunnan North Road , Liu He
Building Unit 20-03 Postal Code 200001, Shanghai , China.

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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 11 May 2007

THIS WEEK’S CONTENTS:

1. Investment/Trading Related Articles:

Weekend Food For Thoughts …… 4

ii) Singapore Straits Times Index (STI) …….. 8

3. Regional Market Forecast Group …….. 16

4. Regional Traders Education Events …….. 17

Disclaimer and Copyright …….. 19

© 2006 - 2007 NextView Investors Education Group. All rights reserved. 1

© 2006 - 2007 NextView Investors Education Group. All rights reserved. 2

© 2006 - 2007 NextView Investors Education Group. All rights reserved. 3

© 2006 - 2007 NextView Investors Education Group. All rights reserved. 4

Basic Price information

Moving Averages 10-day(1,344.7040), 30-day(1,308.8190), 60-day(1,260.8220), 100-day(1,211.3760).

© 2006 - 2007 NextView Investors Education Group. All rights reserved. 5

100 day SMA Support: 1,211.3760

Stochastic(78.9805) is currently slightly overbought and is getting lower.

Bar Chart Patterns

Additional KLCI Analysis by Nazri Khan

EXPECT MARKET TO HIT 1400 AFTER HEALTHY CONSOLIDATION

© 2006 - 2007 NextView Investors Education Group. All rights reserved. 6

© 2006 - 2007 NextView Investors Education Group. All rights reserved. 7

Basic Price information

Moving Averages 10-day(3,439.9800), 30-day(3,382.5764), 60-day(3,272.6731), 100-day(3,186.7820).

Support and Resistance Analysis

© 2006 - 2007 NextView Investors Education Group. All rights reserved. 8

100 day SMA Support: 3,186.7820

Stochastic(65.7783) is currently in neutral zone and is getting lower.

Bar Chart Patterns

© 2006 - 2007 NextView Investors Education Group. All rights reserved. 9

Basic Price information

Moving Averages 10-day(705.0130), 30-day(692.1293), 60-day(686.7565), 100-day(678.8452).

Support and Resistance Analysis

© 2006 - 2007 NextView Investors Education Group. All rights reserved. 10

100 day SMA Support: 678.8452

Stochastic(66.0157) is currently in neutral zone and is getting lower.

Bar Chart Patterns

© 2006 - 2007 NextView Investors Education Group. All rights reserved. 11

R1 and R2 – nearby areas of resistance.

BIGC.TH : LESSON ON INVESTING/TRADING

© 2006 - 2007 NextView Investors Education Group. All rights reserved. 12

© 2006 - 2007 NextView Investors Education Group. All rights reserved. 13

Basic Price information

Moving Averages 10-day(20,641.8887), 30-day(20,412.1934), 60-day(20,068.8320), 100-

Support and Resistance Analysis

© 2006 - 2007 NextView Investors Education Group. All rights reserved. 14

100 day SMA Support: 20,032.7715

Stochastic(59.1756) is currently in neutral zone and is getting lower.

Bar Chart Patterns

Additional HSI Analysis by Benny Lee

© 2006 - 2007 NextView Investors Education Group. All rights reserved. 15

© 2006 - 2007 NextView Investors Education Group. All rights reserved. 16

© 2006 - 2007 NextView Investors Education Group. All rights reserved. 17

© 2006 - 2007 NextView Investors Education Group. All rights reserved. 18

© 2006 - 2007 NextView Investors Education Group. All rights reserved. 19

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