NVTC Newsletter080502

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 2 May 2008
THIS WEEK’S CONTENTS:

Page
1. Investment/Trading Related Articles:

Execution Strategy and First Class Seats …… 2
by Fernando Gonzalez, one 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
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 Traders Education Events …….. 15
Disclaimer and Copyright …….. 21
© 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 02/05/2008
Basic Price information

Close: 1,271.48
Trend Analysis
MACD (7.0719)
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(1,282.6570), 30-day(1,251.5637), 60-day(1,290.7573), 100-day(1,346.1534).

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

Immediate Support: 1,230.6200
Longer term Support: 1,157.4700
Immediate Resistance: 1,305.0900
Longer term Resistance: 1,415.1100
100 day SMA Resistance: 1,346.1534

Stochastic(64.9463) is currently in neutral zone and is getting lower.
Price Reversals
Candesticks
Bullish Candlestick pattern: No bullish candlestick pattern detected in the last 3 days.
Bearish Candlestick pattern: Engulfing Bear was detected 2 days ago
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 : Key Reversal DOWN was detected 2 days ago
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 (15.3701) 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: 188,000 shares, 30-day average volume: 190,467 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
Kuala Lumpur Composite Index (KLCI): Still expected to be range bound
The KLCI was in a slight bullish mode last month but still remains in the sideway range of between
1,150 and 1,300 points. The KLCI closed at 1271.48 points on the 2nd of May after testing the
resistance level with a high of 1,305.09 points last month. The KLCI actually pulled-back from the
resistance level to the support level of the short term up trend on Friday.
The short term trend is up, but the underlying trend is still down and for the KLCI to change its
underlying trend, it has to break and stay above the 1,300 points resistance level. The momentum is
still currently holding up, with the RSI indicator showing a bullish convergence on the daily chart.
However, the resistance may be strong as there are no catalysts in the local scene to boost the
market further. Therefore, the KLCI is expected to continue to be range bound between the support
and resistance levels of 1,150 and 1,300 points respectively. If the KLCI breaks and stay above the
resistance level, the next resistance level is at 1,340 points.

ii) FT Singapore Straits Times Index (FTSTI)

Close: 3,236.10
Trend Analysis
MACD (43.7180)
MACD has just crossed above its trigger line today, indicating a bullish reversal in the short term trend.
strong.
Moving Averages 10-day(3,180.1660), 30-day(3,100.5786), 60-day(3,029.6045), 100-day(3,130.6543).

LONG-Term Trend: Bullish


100 day SMA Support: 3,130.6543

Stochastic(75.1619) is currently slightly overbought and is getting higher.
Price Reversals
Candesticks
Bearish Candlestick pattern: No bearish candlestick pattern detected in the last 3 days.
Bar Chart Patterns

Bar Chart Bearish Price Reversal Pattern : No bar chart bearish price reversal detected for the last 3 days
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: 279,000 shares, 30-day average volume: 240,767 shares.
Volume strength is moderate. The On Balance Volume is increasing, indicating accumulation of shares in the
market.
________________________________________________________
Additional STI analysis by Benny Lee, Chief Market Strategist, NextView
Singapore FTSE Straits Times Index (FTSTI): Need to be cautious
The FTSTI ended slight on a bullish mode last week. Technically, it was expected to test the 3,300
points resistance level but manages to reach a high of 3236.10, which was the close on the 2nd of
May. Although we are currently seeing an upward rally on the FTSTI in the short term, the
underlying trend is still down and there is only a change of it reversing its trend if it breaks the
resistance level.
However, the momentum of the up trend, which was strong in the past few weeks have started to
show a sign of weakness. The Relative Strength Index (RSI) indicator is showing a bearish
divergence on the daily chart. The same indication is happening on the MACD indicator. Therefore,
we need to be cautious as the FTSTI may now be in a resistance zone with 3,300 points as the
resistance level and a downward correction is expected to the next support level. The immediate
support level is at 3,100 points.

iii) Thailand SET Index

Close: 843.15
Trend Analysis
MACD (4.3030)
MACD is indicating that the current short term price trend is bearish. The momentum of the trend is however,
weak.
Moving Averages 10-day(838.7210), 30-day(826.6476), 60-day(824.5302), 100-day(816.5824).

LONG-Term Trend: Very bullish

Immediate Support: 820.9800
Longer term Support: 796.2300
Immediate Resistance: 853.5000

Longer term Resistance: 853.5000
100 day SMA Support: 816.5824

200 day SMA Support: 828.2300
Stochastic(47.4478) is currently in neutral zone and is getting higher.
Price Reversals
Candesticks
Bar Chart Patterns

Stochastic
Volatility Analysis
Longer Term volatility: The Bollinger Bands are contracting therefore price action is less volatile
Volume Analysis
Volume: 424,040,000 shares, 30-day average volume: 428,405,792 shares.
Volume strength is moderate. The On Balance Volume is declining, indicating distribution of shares in the
market.
________________________________________________________

iv) Hong Kong Hang Seng Index (HSI)

Close: 26,241.02
Trend Analysis
MACD (641.1491)
strong.
Moving Averages 10-day(25,392.2207), 30-day(24,033.9043), 60-day(23,742.1719), 100-

day(24,877.0195).



Stochastic(92.5557) is currently overbought and is getting higher.
Price Reversals
Candesticks
Bar Chart Patterns

Bar Chart Bearish Price Reversal Pattern : Key Reversal DOWN was detected yesterday
Stochastic
Volatility Analysis
Volume Analysis
Volume: 2,749,028,096 shares, 30-day average volume: 2,501,174,016 shares.
market.
________________________________________________________________________________________
Additional HSI analysis by Benny Lee, Chief Market Strategist, NextView
Hong Kong Hang Seng Index (HSI): Expected to test next resistance
The HSI got out of its sideway consolidation period when it broke the 25,000 points resistance level
a few weeks ago and stays above it. The HSI is now at 26,241.02 (as at 2 May 2008). The HSI has
retraced 50% from the downward correction that started in November 2007 to the low in mid-March
2008. We are now seeing a reversal in the down trend. Can the reversal turn into an up trend rally?
The short term momentum is still strong and this is indicated on the RSI indicator which shows a
bullish convergence. With the current momentum, the HSI is expected to test the next resistance
level of 27,500 points and if it is able to go above this resistance level and stay above it, we may see
an up trend developing in the long term. The 27,500 points level is the maximum level for the down
trend correction. Support is now at 25,000 points.

v) Dow Jones Industrial Average (DJI)

Close: 13,057.80
Trend Analysis
MACD (140.9630)
strong.
Moving Averages 10-day(12,864.0898), 30-day(12,610.5371), 60-day(12,438.2529), 100-

day(12,630.4570).



Stochastic(87.8308) is currently overbought and is getting higher.
Price Reversals
Candesticks
Bearish Candlestick pattern: Inverted Hammer was detected 2 days ago
Bar Chart Patterns

Stochastic
Stochastic Bearish Price Reversal : Stochastic crossed below its %D 2 days ago.
Volatility Analysis
Short term volatility: The ATR has declined therefore price action is less volatile
Volume Analysis
Volume: 199,959,008 shares, 30-day average volume: 244,868,976 shares.
market.
________________________________________________________________________________________
Additional DJI analysis by Benny Lee, Chief Market Strategist, NextView
US Dow Jones Industrial Average (DJI): Expected to test next resistance level at 13,200
points.
Sentiments have improved since the Bear Sterns episode and the intervention of the central bank
and this sent the DJI to break above the resistance level at 12,800 points a few weeks ago and stay
above it. The DJI closed at 13,057.80 points on the 2nd of May. It is now facing a maximum
resistance level that defines the underlying down trend at 13,200 points and the DJI is out of the
down trend if it breaks and stays above this level.
The momentum of the current short term up trend is strong and therefore the DJI is likely going to
test the 13,200 points resistance level. Furthermore, the confirmed inverted head and shoulder
pattern formed on the DJI chart since earlier this year has a price target of 13,600 points. Support
level is now at the previous resistance level, which is 12,800 points.

3. Regional Traders Education Events this week
MALAYSIA

HONG KONG

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 anything 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
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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: 98 Liuhe Road, 16A GangLu
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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 2 May 2008

THIS WEEK’S CONTENTS:

1. Investment/Trading Related Articles:

3. Regional Traders Education Events …….. 15

Disclaimer and Copyright …….. 21

© 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(1,282.6570), 30-day(1,251.5637), 60-day(1,290.7573), 100-day(1,346.1534).

Support and Resistance Analysis

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

100 day SMA Resistance: 1,346.1534

Stochastic(64.9463) is currently in neutral zone and is getting lower.

Bar Chart Patterns

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

Kuala Lumpur Composite Index (KLCI): Still expected to be range bound

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

Basic Price information

Moving Averages 10-day(3,180.1660), 30-day(3,100.5786), 60-day(3,029.6045), 100-day(3,130.6543).

Support and Resistance Analysis

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

100 day SMA Support: 3,130.6543

Stochastic(75.1619) is currently slightly overbought and is getting higher.

Bar Chart Patterns

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

Singapore FTSE Straits Times Index (FTSTI): Need to be cautious

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

Basic Price information

Moving Averages 10-day(838.7210), 30-day(826.6476), 60-day(824.5302), 100-day(816.5824).

Support and Resistance Analysis

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

100 day SMA Support: 816.5824

Stochastic(47.4478) is currently in neutral zone and is getting higher.

Bar Chart Patterns

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

Basic Price information

Moving Averages 10-day(25,392.2207), 30-day(24,033.9043), 60-day(23,742.1719), 100-

Support and Resistance Analysis

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

100 day SMA Support: 24,877.0195

Stochastic(92.5557) is currently overbought and is getting higher.

Bar Chart Patterns

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

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

Basic Price information

Moving Averages 10-day(12,864.0898), 30-day(12,610.5371), 60-day(12,438.2529), 100-

Support and Resistance Analysis

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

100 day SMA Support: 12,630.4570

Stochastic(87.8308) is currently overbought and is getting higher.

Bar Chart Patterns

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

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

© 2006 - 2008 NextView Investors Education Group. All rights reserved. 15

© 2006 - 2008 NextView Investors Education Group. All rights reserved. 18

© 2006 - 2008 NextView Investors Education Group. All rights reserved. 19

© 2006 - 2008 NextView Investors Education Group. All rights reserved. 21

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