Wednesday, September 15, 2021

Dow Jones bearish break down today!


After close to 17 months uptrend, DJI finally breakdown of its long-term uptrend channel and below its 50 days Moving average.

Last traded at 34,577.57

Next targets 33525 and 31100 represent a good 3 and 10 percent downside potential represented by the 2 targets in the short term.

All posts and charts are for educational and illustration purposes only
Monday, August 30, 2021

China Internet Sector - Time For Bottom Fishing ?

China internet vs US internet, tales of 2 market . The KraneShares China Internet ETF (KWEB US) vs the US Internet ETF (FDN US) divergence is the biggest since 2016 exceeding even the last significant divergence in 2018.  Just looking for a rebound in KWEB to its 50-day MA would imply 15% upside and a move back to its 200-day MA would imply 49% upside. JD.com (JD US) and Netease (Ntes) display the clearest evidence of stability, bottoming price action and relative strength amongst the china internet stocks following the decline off the February highs and are presented as preferred buys.

 With such unprecedented divergence some analyst are saying the Chinese internet sector is undervalue but is it time for investors to start ploughing into the market? President Xi Jinping’s

new slogan of “Common Prosperity For All” is throwing into question what new regulation will China add to achieve equal wealth distribution and Xi’s calls for higher taxation

has raised concerned making money  could  be politically sensitive. Internet companies, which have been designated as so-called “key software enterprises” (a category including Alibaba

and Tencent), have enjoyed beneficial corporate tax rates of 10% since 2008. Other companies pay a rate of 25%. There is a strong possibility that China Internet companies honeymoon period of 10% taxation may sooner than later be over. As long as investors fear that the China’s regulators are not finish with new requlations  the China internet will need to wait a little longer before bottoming out. September being a traditionally weak month for emerging markets does not support a reversal of fortune in this sector. I believe the seasonal factor points to a Oct – Nov rebound.





All posts and charts are for educational and illustration purposes only
Tuesday, August 24, 2021

SGX (SGX: S68) Price Weakness Is Likely To Persist In The Short-Term.

 



SGX is trading at day low while most index stocks are up on a positive day.


Fund managers are likely to avoid this stock in view of HKEx (0388.HK) announcement yesterday that MSCI China A 50 Connect Index futures to commence trading in the month of October 2021, which is a competing product to FTSE China A50 contract traded on SGX.


SGX weakness is likely to persist in the short term.


SGX last traded S$10.22.

First Target: S$9.81

Second Target: S$9.34 




All posts and charts are for educational and illustration purposes only
Wednesday, August 18, 2021

Hang Seng Trade Plan (18 August 2021) - Last done 25,867

 No Sign of Strength - Could test 25,000 and 24,000 in the next month.




All posts and charts are for educational and illustration purposes only
Tuesday, August 17, 2021

Frencken Group (SGX: E28) - Strong Stock With A Bearish Price Setup


1. The stock has broken key support level with high volume at S$2.21.

 

2. Contra Phenomenon

Traders chased the stock on 05 August 2021 betting that it would continue to break new ATH were caught as the stock retreated below its support at 2.21. 

The huge volume traded on 05 August has created a supply situation that could dampen the price in the next two to three days due to the contra phenomenon.

First target: 2.09

Second target: 2.00

Third target: 1.93

Stop loss: 2.30

All posts and charts are for educational and illustration purposes only
Friday, August 13, 2021

Sunpower (SGX: 5GD) – Broke its 18-months Uptrend!

 


Could be heading towards the following targets:

First target: 0.60

Second target: 0.55

Third Target: 0.48


All posts and charts are for educational and illustration purposes only

Hong Leong Asia has broken its 9-month Uptrend!

 


Could be heading towards the following targets:

First target: 0.86

Second target: 0.80

Third Target: 0.73


All posts and charts are for educational and illustration purposes only
Thursday, July 29, 2021

One of the Beneficiary of Global Chip Shortage (SMIC: 0981.HK)

 


SMIC (0981.HK) just broke out from its long-term down trend after a one-year consolidation.


Recently, hit a resistance at 27.90 and has pulled back.


A break above 27.90 will see the price move to the next target at 31.40 and move towards the second target at 32.92.

 

The company will be reporting results on the 05 August 2021.


All posts and charts are for educational and illustration purposes only
Tuesday, July 27, 2021

Chinese Big Tech Companies Got Crushed - It is time to bottom fish?

CSOP HSI Tech Index ETF (3033.HK) traded at a low since listing in August 2020

The CSOP HSI Tech Index ETF (3033.HK) listed in Aug 20 (as shown in Figure 1) and has traded below its year low today.

The ETF is mainly comprised of heavy techs like Alibaba, Tencent, Meituan, Jd.com, SMIC etc, China’s ongoing regulatory agenda against the internet sector in China, be it over monopolistic market positioning or control of data has contributed to the dismal performance China’s Tech sector and the divergence between the US Big Tech share has become extreme.

China’s crackdown US listed China tech companies like Didi and private tutoring has significantly unnerved financial markets with a 6% drop in the CSOP HSI Tech Index ETF and a 4% drop the HSI index today (26 July 2021).  

Figure 1: CSOP Hang Seng Tech Index ETF (3033.HK) Broke Its Year Low Since Listing on August 2020


I’ve received many questions whether this is the right time to bargain hunt on these Chinese big Techs, let me share my thoughts.

 

So why is the CCP suddenly acting against all these big techs?

 

China is waking up to fact that data is the new gold, and it needs to institute rules to accumulate, govern and share it. CCP makes decisions based on what they think is in China’s best long-term strategic interests in achieving its economic growth, reduce the gap between the rich and the poor and the control of China consumer data which is deemed crucial to the China’s national security.  

 

If you are a big tech company in China, you must know who’s the Boss and that the Chinese state’s strategic priorities will take precedence over corporate interests to a greater extent than in the past.  The CCP is likened to be like the emperor and its decision is like the emperor’s edicts, obey and you stay alive, and disobedience will almost be the end. The blunt assertion of the state’s interests over private enterprise in China also raises the risk premium of investing in Chinese assets.

 

In order to reduce inequality and promote sustainable economic growth, China needs to ensure competition is sustainable and it means you cannot win by creating a artificial monopoly and if you win it must bring tangible benefit to the Chinese consumers. Alibaba and Tencent is a good example of company that infringed on these rules. The days of free play for the Chinese techs are over, they are likely to grow their business under a strict regulatory guideline which means their future earnings will be hurt and it will ultimately hurt their valuation, and this is precisely the reasons why Cathie Woods has been selling Chinese techs on fear over a “valuation reset”.

 

Is it time to jump in?

In the short term, there’s going to be volatility as the crackdown is clearly showing no sign of abating and it will take time to play out. I believe this clampdown by CCP is long term positive for China Tech because it will enable them to grow at a sustainable pace although I would agree that it is a short-term negative.

 

Am I still bullish on Chinese Tech stocks?

 

Well, I think the potential of these stocks are enormous. If you are a short-term investor, you need time your entry well, however if you are a long-term investor (3-5years horizon) this could be a great opportunity to start dollar cost averaging on these stocks.

 

Many of you who have been following me know I have been very successful with timing the market with my charts, so what does the chart say?

 

Let me just share the Alibaba and Tencent Trade Plans:

1.    Alibaba Trade Plan: First called a Sell on Alibaba (11 November 2020)

On 11th of November last year, I called a short on Alibaba based on my trade plan. It has since hit all the targets on my trade plan (as shown in Figure 2).  

 

Figure 2: Alibaba (9988.HK) 


2.    Alibaba Trade Plan: (27 July 2021)

Alibaba current trading at 191.76 (at the point of this write up).

According to my trade plan, the key support that offers a good entry level is between 172 – 182 levels while 212 – 230 levels post a huge resistance. Turn long term bullish only when the price breaks above 230.



3.    Tencent Trade Plan: (26 July 2021)

Tencent closed at 490.00 on 26 July 2021.

According to my trade plan, the immediate target could be 472 (first target), and if it breaks down further, we could be looking at targets of 425 (second target) and 405 (third target).



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Thursday, June 24, 2021

Xinte Energy (1799.HK) - Breakout of short term downtrend, could head for next target at 16.50.

 


A company that provides of solar energy and wind power solutions, last done 14.82.
Breakout of short term downtrend, could head for next target at 16.50. A convincing break above 16.50 could see the stock heading towards its next target at 20.00.
All posts and charts are for educational and illustration purposes only
Monday, June 14, 2021

Bullish Long Term View on Crude Oil (Stay bullish on Oil stocks like Sembawang Marine, Rex International, PetroChina, Kunlun Energy etc)

 


My bullish view on the oil price and oil stocks , which as previously discussed here is likely to act as a catalyst for an escalation of the inflation scare in coming months, is based on both booming demand and, even more importantly, a growing lack of supply.

 

The One reason demand is running well ahead of supply is not only not just coming from a re-opened American economy, but also the fact that American households continue to be beneficiary of the fiscal stimulus cheques that will expire in Sep 2021.

 

Meanwhile, investment in exploration outside OPEC has been declining since 2013 when the shale boom went bust as US move aims to be carbon neutral by 2050.

 

The downturn in investment was further escalate reluctance by financial institutions to be seen funding such projects that is not climate friendly exacerbating the lack of supply. This is likely to lead to a structural decline in upstream investment.

The US Energy Information Administration’s (EIA) latest Monthly Drilling Productivity Report shows that US shale oil production has been declining month on month.

 

As discussed in my earlier post a week ago, crude oil has turned bullish on a longer term view when it broke out of its long term downtrend channel in Apr, it should be heading for its near term target at USD 75 and 83 in the medium term

 

Stay bullish on oil stocks like Sembawang Marine, Rex International, PetroChina, Kunlun Energy etc.


My bullish view on the oil price and oil stocks , which as previously discussed here is likely to act as a catalyst for an escalation of the inflation scare in coming months, is based on both booming demand and, even more importantly, a growing lack of supply. 


The One reason demand is running well ahead of supply is not only not just coming from a re-opened American economy, but also the fact that American households continue to be beneficiary of the fiscal stimulus cheques that will expire in Sep 2021. 


Meanwhile, investment in exploration outside OPEC has been declining since 2013 when the shale boom went bust as US move aims to be carbon neutral by 2050. 


The downturn in investment was further escalate reluctance by financial institutions to be seen funding such projects that is not climate friendly exacerbating the lack of supply. This is likely to lead to a structural decline in upstream investment. 

The US Energy Information Administration’s (EIA) latest Monthly Drilling Productivity Report shows that US shale oil production has been declining month on month. 


As discussed in my earlier post a week ago, crude oil has turned bullish on a longer term view when it broke out of its long term downtrend channel in Apr, it should be heading for its near term target at USD 75 and 83 in the medium term 


Stay bullish on oil stocks like Sembawang Marine, Rex International, PetroChina, Kunlun Energy etc. 


Sembcorp Marine (SGX: S51): last traded at S$0.205.

Rex International (SGX: 5WH): last traded at S$0.19.

PetroChina (0857.HK): last traded at HKD 3.57.

Kunlun Energy (0.135.HK): last traded at HKD 6.94.


 


All posts and charts are for educational and illustration purposes only

GSS Energy - Broke out from its 6 years downtrend today. Could be heading for the following targets 0.091, 0.104 and 0.122.



All posts and charts are for educational and illustration purposes only
Thursday, May 20, 2021

Distribution Price Action Pattern





I predicted BTC crash three days before it happened, based on this chart pattern.


S&P chart pattern looks similar “Three Peaks and A Rebound”

Could it happen again?



All posts and charts are for educational and illustration purposes only
Tuesday, May 18, 2021

Phases of The Market - Bloomberg Commodity Index

 

Bloomberg Commodity Index

This chart adds to my conviction that we have entered a Commodity Supercycle.
All posts and charts are for educational and illustration purposes only
Friday, May 14, 2021

Straits Times Index - Early Sign Of A Technical Breakdown

 


Straits Times Index - Early Sign Of A Technical Breakdown
This week, we are beginning to see a small crack in the STI uptrend after a stellar March-April price surge, it has spent the last four weeks consolidating in a narrow range between 3,134-3,145 and 3,211- 3,221. This week weakness it broke the support at 3150 and it also broke the support provided by the 200 Days MA . This leaves the market vulnerable to further weakness in the coming session, with the breakdown pointing to a downside target of 3,019.
All posts and charts are for educational and illustration purposes only

Ethereum - The correction have Begun!

 


Ethereum - The correction have Begun ! After a stellar 2 months breathtaking run , it’s taking a rest . First target for the short term is 3382 .

All posts and charts are for educational and illustration purposes only

Bitcoin - The Price Action is setting it up for a steep fall

 


Bitcoin - The Price Action is setting it up for a steep fall . Having consolidated between 4500 to 60,000 since feb 2021 , the price action is suggesting we are in a distribution phase where the big boys could have or are on the process of exiting . The 47224 level is a crucial one , if it breaks we could see prices heading for 39115 which coincides with the 200 days MA.

All posts and charts are for educational and illustration purposes only
Wednesday, April 28, 2021

US 10 Year Treasury - Breaking Out

US 10 year treasury breaking out after a 1 month consolidation. Stock market could correct if it challenges the last high at 1.71.



All posts and charts are for educational and illustration purposes only
Friday, April 23, 2021

Bitcoin - Bearish Price Action

Bitcoin broke its 4 months uptrend channel and is threatening to break below the Ichimoku Cloud.  It could be heading for the next targets 44700 and 39115. 57000 is a key level.  In the short term, do not turn bullish unless price breaks above 57000.



All posts and charts are for educational and illustration purposes only
Monday, March 15, 2021

JD.com (9618.HK) Bearish price action

 


JD.com is exhibiting a short-term bearish price action and is trading below its 100-MA (347) today.

Its current support is at 323, could correct to support levels of 300 and 281 in the short term from its current price of 323.

Stop loss at 358.


All posts and charts are for educational and illustration purposes only
Wednesday, March 10, 2021

DBS (D05.SI) Bearish Price Action Today

 


After a week of bullish uptrend, the stock is exhibiting a short-term bearish price action today.

Resistance is capped at 28.60, could correct to support levels of 27.33 and 26.49 in the short term from its current price of 27.85.


All posts and charts are for educational and illustration purposes only
Monday, March 8, 2021

My chart on UST10 Year Treasury is pointing to a target of 2.5% from the current 1.6% (could potentially spark off a valuation reset in equities)

 


UST10 Year Treasury – The chart is pointing to a target of 2.5% and the uptrend has started and it is resisted currently at 1.6%, it should break above the 1.6% mark to ahead for the 2.00% level.

The key resistance remains at 2.50% and I expect the Fed will not tolerate rates above 2.5%. This could be the level the Fed will act to bring the long term yield down. The impending yield increase will inevitably result in valuation reset in equities especially the Tech stocks.

The IIF recently released its Global Debt Monitor which reported that total global debt had reached US$280 trillion and the worldwide debt-to-GDP ratio is now at 355%. How this will ever be repaid I have no idea. How this will be serviced if interest rates were to rise is another matter to ponder. debt servicing costs would increase by several trillion dollars should average interest rates simply rise to pre-GFC levels …..more money printing to get out of the debt hole?  US personal savings rate has now risen to 20.5% from 13% with the potential to rise even more if biden 1.9 trillion stimulus reaches the US household. The stage will be set for a consumer spending  boom , all these are pointing to higher rates and inflation.


All posts and charts are for educational and illustration purposes only

China Construction Bank (0939.HK) Bullish Price Action, More Potential Upside.

 


China Construction Bank (0939.HK) broke out from its recent year high of 6.55 trading at a high of 6.65 today (08 March 2021) before retracing to 6.59. 

It is heading towards testing my first target at 6.66 and if it breaks out further it could be heading towards my second target at 6.84.

If prices break below 6.30, the trade plan is not valid anymore.


All posts and charts are for educational and illustration purposes only
Friday, March 5, 2021

Nasdaq-100 broke down from its upper trend channel

 

Nasdaq-100 broke down from its upper trend channel

Prices broke down from the uptrend today, it also broke below the 50 days moving average.

Next target 12,080 and if 12,080 is breached if could head to 11,135 and 10,785.
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Monday, March 1, 2021

China BlueChem (3983.HK) – More Potential Upside Ahead.

 


The fundamentals of China BlueChem (3983.HK) looks promising with Crop price at 7-year high, driving fertilizer demand and global tight supply of urea. Domestic urea price rose Renminbi 200/ton MoM to Renminbi 2,100/ton in early-Feb, due to spike in global pricing (up more than 30% since end of 2020).

 

The stock is poised to benefit from the year on year jump in urea given its relatively stable natural gas cost under long-term contracts.

 

Looking at the technicals, the stock has broken out from its long-term downtrend, trading at a day-high of 2.12 (at the point of this write up) today and its bullish chart pattern showing further potential upside.


First Target – 2.30

Second Target – 2.48

Third Target – 2.95

Stop Loss – 1.75

All posts and charts are for educational and illustration purposes only
Thursday, February 18, 2021

Pacific Basin 2343.HK - Provides Dry Bulk Delivery Services , A Commodity Recovery Theme Play

 


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Commodity Super Cycle That Will Last for next 7-10 Years Could Just Have Started



In the past 120 years we have seen four major cycle peaks in the Broad Commodity Index measured by its 10-year rate-of-change indicator, with the most recent peak in 2008. This historical supercycle pattern shows that commodity prices could be sets up for the next secular bull market. Bull market in commodities are volatile, don’t expect a smooth ride.

All posts and charts are for educational and illustration purposes only

Bitcoin Hit Channel Line Chart Point At 52,600, Could Retrace In The Short Term.

 


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Wednesday, February 10, 2021

Inflation on the rise

Inflation is on the rise , question is, does the market really care. Obviously, it hasn’t cared yet. I think it’s the biggest risk. Nobody is really bother because of the belief there will be fiscal stimulus and that it’s going to be highly supportive of economic growth and the stock market.

The House has just given its approval to Biden's 1.9 trillion stimulus plan and when this money gets into the hands of the American people it will unleash another wave of spending spree that will cause prices of goods and services to skyrocket.
The US ISM Manufacturing Price Paid Index was up 5.8% MoM and 54% YoY in January to the highest level since April 2011 . While core inflation in the Eurozone soared to 1.4% YoY in January, way above expectations

On Wednesday (Feb 3, 2021) , the 5-year breakeven inflation rate, a Treasury market metric of inflation expectations, was at 2.30, the highest since April 2013. That means market pros expect inflation to average 2.3% over the next five years. The measure compares the 5-year Treasury yield to the TIPS note of the same duration.

The market has not priced in the ballooning debts but rather the positive outcome of the relieve stimulus package.

If inflation gets too hot, that could turn into a negative for stocks, and it would crimp corporate earnings by pressuring margins

CEIC Data, Eurostat

ISM, CEIC Data


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Thursday, February 4, 2021

Bitcoin Goes On The Main Stream

Central banker indiscriminate easy money policies has flooded the world with fiat money with Federal debts held by pubic equivalent to world war 2 levels . We are in the midst of the largest monetary experiment in human history, with no foreseeable end. Governments worldwide are adopting quantitative easing policies while simultaneously running progressively larger deficits on top of increasingly untenable debt levels. Considering that 25% of all US dollars ever created were made in 2020, bitcoin could also act as an insurance policy against monetary and fiscal irresponsibility from central banks.

Bitcoin's reflexivity
In the past institutions couldn't buy bitcoin . Today bitcoins is a viable investment asset class with liquidity, a regulatory framework, established exchanges and its market cap.
Stanley Druckenmiller and Paul Tudor have both invested in cryptos and they highlighted its potential as a hedge against inflation

An increasing number of reputable firms and respected investors have acknowledged and purchased bitcoin, lowering the career risk for investment managers who want to incorporate the cryptocurrency into their professional portfolios. US market regulators are also opening up to the concept of institutional money flowing into bitcoin. In addition, central bank digital currencies will naturally push people towards further acceptance of digital value accrual.

At the time of writing, Ethereum continue to scale new high on track to my 1800 target and Bitcoin should test 39700 resistance before attempting for its ATH at 42K.






Ethereum



Bitcoin


All posts and charts are for educational and illustration purposes only
Thursday, January 28, 2021

US Major Indices Price Action Trend Cycle Are Maturing, A Major Correction Could follow

The charts of US Major Indices are showing the narrative that their respective Price Action Trend Cycle are maturing at the same time. 

Both the S&P 500 & Nasdaq-100 are currently trading at the upper band of the Bollinger with the S&P 500 trading at 15% premium to its 200-MA while Nasdaq-100 is trading at 20% premium to its 200-MA.

Since 1997, the S&P500 has traded at a 15% premium to its 200-day MA on 14 occasions with a subsequent average drawback of -0.9% from these levels.

As for Nasdaq-100, it currently trades at the upper band of the Bollinger and 20% premium to its 200-day MA. This is the 18th time the Nasdaq 100 has traded under these conditions with subsequent average pull-back of -0.95% after reaching these levels. 

We at the stage of the financial market where the market’s most aggressive energy has gone racing toward “pre-profit” growth companies, long-shot emerging growth and massive SPACs listing and acquisition spree.

Stock like Gamestop or a Plug has been dramatically surging within a one-month period with momentum investors chasing on them.

Such a euphoria bears a resemblance to that of the 90’s dotcom bubble where this sort of thing kept rolling until the Nasdaq doubled in less than a year and a few-hundred IPOs hit the market before an inevitable correction.

Nobody knows when the market is going into a meltdown. However, the ingredients of a significant correction are in place. 

The charting model used has been spot on many occasions and there is reason to believe that a correction is impending. 


Figure 1: S&P 500 Valuation

Figure 2: What type of bubble are we in 


Figure 3: Dow Jones’s Price Action Trend Cycle Is Maturing



Figure 4: S&P 500 ‘s Price Action Trend Cycle is Maturing


Figure 5: Nasdaq-100 ‘s Price Action Trend Cycle is Maturing








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Monday, January 18, 2021

China Railway Construction (CRCC, 1186.HK) Positioning for a rebound?



Like China Mobile, CRCC (1186.HK) finds itself being in the crosshair of the US government.

US funds are barred from investing in CRCC as the company is controlled by the Chinese government.

The stock showed potential signs of bottoming from market capitulation (5 January 2021) trading at low of 4.10 after the stock was being removed from the major index providers such as the S&P, Dow Jones, MSCI and FTSE.

The stock has since rebounded by more than 20% after China enacted new countermeasure rules to shield its companies from “unjustified sanction”.

The stock currently trades at 5.03 (at the point of this write up), the immediate target level could be 5.51. If the stock does breaks 5.51, it could reach target of 5.70 and 6.00 with a long-term target of 6.55.


All posts and charts are for educational and illustration purposes only
Tuesday, January 12, 2021

CSI 300 set to reach its at-time high at 5885.48.

CSI 300 its broke 2015 high (5,380.42) on 6 January 2021 and could set to reach its 2007 ATH at 5,885.48. 




All posts and charts are for educational and illustration purposes only
Friday, January 8, 2021

China Mobile (0941.HK) Signs Of A Potential Bottoming?



With NYSE delisting China Mobile, global fund providers such as MSCI and FTSE are divesting their holdings in the company. The recent sell off by fund managers has led to the stock trading close at its 15-years low.
The price action is suggesting that the stock could be “capitulating” under massive sell volume. The stock could be bottoming out and potentially provide a window of opportunity for long term investors.
The company currently trades at 41.15 (at the point of writing this article), providing investors a decent dividend yield (based on 2019-20 dividend pay-out rate) close to 8%.
Should price level break above the 42.50, we could see the bulls back in control of the stock and potentially head towards first target level at 44.20.
If prices breakout even further above 44.20, the stock could move towards second target price at 50.

First Target – 44.20
Second Target – 50.00
Stop Loss – 39.00
All posts and charts are for educational and illustration purposes only