NVTC Newsletter071214

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 14 December 2007
THIS WEEK’S CONTENTS:

Page
1. Investment/Trading Related Articles:

Misunderstanding probability can seriously capital
affect your trading …… 2
by Stuart McPhee, , private trader, author and trading coach
2. Market Commentaries
i) Bursa Malaysia Kuala Lumpur Composite Index (KLCI) …….. 4
Additional KLCI analysis by Benny Lee …….. 5
ii) Singapore Straits Times Index (STI) …….. 6
Additional STI analysis by Benny Lee …….. 7
iii) Thailand SET Index (SETI) …….. 8
Additional SETI analysis by Don Schellenberg …….. 9
iv) Hong Kong Hang Seng Index (HSI) …….. 12
Additional HSI analysis by Benny Lee …….. 13
v) Dow Jones Industrial Average (DJI) …….. 14
Additional DJI analysis by Benny Lee …….. 15
3. Regional Market Forecast Group Misunderstanding probability

can seriously affect your trading capital ……..
16
4. Regional Traders Education Events …….. 17
Disclaimer and Copyright …….. 18
© 2006 - 2007 NextView Investors Education Group. All rights reserved. 1

1. Trading/Investment Related Articles:
Misunderstanding probability can seriously affect your trading capital
By Stuart McPhee, private trader, author and trading coach
One of the main things I look for when entering trades is to have a high probability of having a profitable
trade. In other words, because all of my conditions have been met, I enter the trade with confidence
knowing there is a fair chance of the trade resulting in a profit. As we know, there are never any
certainties.
Probability has its place in money management too, specifically position sizing.
Let’s set the scene. Perhaps we have a trading method that results in half of our trades being profits and
the other half being losses or close to breakeven. We start with $10000 and after a few losses, our
trading capital has lessened to $9400. (3 x $200 losses in successive trades).
Now, we begin to think that we are behind and need to make up the deficit so we can move forward and
begin to make money. As each losing trade passes however, the money we need to make to get back to
breakeven (back to the initial $10000) increases and we have less and less capital to do it with, which
places pressure on us to perform.
The trap we can fall into is to increase our trade size on the back of successive losses. In the back of our
mind are desperation, and the thought that we need to have a massive winner trade soon to get back on
track.
Here is where probability enters the scene. As each losing trade passes, we can easily think that the
chance of the next trade being a profit increases significantly. It is too easy to think this and with this in
the back of our mind, we can be tempted to increase our trade size to get back to break even quickly
because the chance of the next trade being another loss is not great.
Let’s explain this scenario with some numbers. The probability of an event is generally represented as a
real number between 0 and 1, inclusive. An impossible event has a probability of exactly 0, and a certain
event has a probability of 1.
As we have a proven method that is profitable in half of the trades, the probability of having a profitable
trade is 0.5. The most common analogy used with a probability of 0.5 is that of tossing a coin. When we
toss a coin, the probability that it will land heads up on any given coin toss is 0.5 or 50%, and the same of
landing tails. So if we toss the coin 10 times, we would expect that the result will be 5 heads and 5 tails.
There is however, no guarantee that this will occur. It is possible for example, to result in 10 heads in a
row. The key here however, is that each coin toss is independent. In other words, the outcome of the
next toss is unaffected by previous coin tosses, as the coin has no memory retention.
Let's assume I am now tossing a coin. We toss the coin once and it result in heads. For the second coin
toss, the probability that heads will come up again remains at 0.5. The second toss now results in
another head – that’s two heads in a row. For the third toss, the probability that heads will come up again
still remains at 0.5. Guess what? The third toss was also a head – that’s three in a row. Do you know

what the probability of the fourth coin toss being a head is? It remains the same probability as a tail
coming up.
This scenario is applicable in trading.
If you have had 3 losses in a row, the probability that you are going to have a profitable trade doesn’t
automatically shift in your favour. Nor does it continue to shift as each losing trade passes. We like to
think it does, but it doesn’t. Perhaps we think, “The next trade HAS to be a winner!” Like the coin, the
market has no memory retention and doesn’t keep track of your previous trades, in order to influence the
outcome of future trades.
The key message here is that don’t increase your trade size according to these unfounded thoughts. This
is a sure recipe for disaster. After a few losses, your trade size should be decreased slightly to reflect
your diminished trading capital, even though you don't want to.
About the Author:
Stuart McPhee is a private trader, author and trading coach. He has written numerous articles and texts
including Trading in a Nutshell, 2nd Edition. He also conducts trading courses throughout South East
Asia and has presented at trading expos in Singapore, Kuala Lumpur, Ho Chi Minh City, and Shenzhen.
Visit Stuart’s ‘Develop your Trading Plan’ website (www.trading-plan.com) for detailed information on
how to develop a trading plan that is right for you and that you will implement with confidence. Also
available is a regular ezine full of useful trading tips and ideas.

2. Market Commentaries
i) Bursa Malaysia Kuala Lumpur Composite Index (KLCI)
Technical Analysis as of 14/12/2007
Basic Price information

Close: 1,403.41
Trend Analysis
MACD (29.6424)
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(1,391.8120), 30-day(1,351.4960), 60-day(1,266.1794), 100-day(1,134.6093).

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

Immediate Support: 1,270.7200
Longer term Support: 1,090.3900
Immediate Resistance: 1,449.7000
Longer term Resistance: 1,449.7000
100 day SMA Support: 1,134.6093

200 day SMA (*ERROR*: Function did not return a value): (*ERROR*: Function did not return a value)
Stochastic(83.3870) is currently overbought and is getting higher.
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 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: 380,000 shares, 30-day average volume: 337,167 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
Room for downside
The KLCI pulled back last week as expected to a low of 1396.45 on Friday and closed at 1403.41.
The low was exactly on the 30-day average. This shows that the 1,400 points support level is being
tested. While the KLCI trend is still up, there is still room for KLCI to have a little more correction
downwards because there are no signs of weakening downward momentum in the short term. The
KLCI is expected to test the 1400 points level again and is it does not hold, it is expected to test the
next up trend support level at 1,370 points. This is the support level where investors may want to
find short term trading setups. Resistance level remains at 1,450.

ii) Singapore Straits Times Index (STI)

Close: 3,466.38
Trend Analysis
MACD (-12.3658)
MACD is indicating that the current short term price trend is bullish. The momentum of the trend is however,
weak.
Moving Averages 10-day(3,535.7031), 30-day(3,504.1584), 60-day(3,631.8152), 100-day(3,542.0483).

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


100 day SMA Resistance: 3,542.0483

Stochastic(58.6314) is currently in neutral zone and is getting lower.
Price Reversals
Candesticks
Bearish Candlestick pattern: Engulfing Bear was detected yesterday
Bar Chart Patterns

Bar Chart Bearish Price Reversal Pattern : Key Reversal DOWN was detected yesterday
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: 160,000 shares, 30-day average volume: 227,033 shares.
market.
________________________________________________________
Additional STI analysis by Benny Lee, Chief Market Strategist, NextView
Support at 3,300
The mid to long term 60 and 90 day moving averages are staying firm sideways while the short term
trend is down. This shows that the STI is currently in a long term correction. The up trend may
resume once the short term down trend is over and the support level of 3,300 points plays a crucial
role. If the STI is supported at this level, we may see the STI rebound upwards and change the
down trend. The STI needs to break above 3,650 points to get out of the long term correction. The
STI closed at 3466.38 after a low of 3424.34 on Friday. With no indications of weakening
momentum in the down trend, the STI is expected to correct further downwards and find some
support at 3,300 points level. Resistance level is at 3,650 points.

iii) Thailand SET Index

Close: 836.40
Trend Analysis
MACD (-5.6050)
MACD is indicating that the current short term price trend is bullish. The momentum of the trend is strong.
Moving Averages 10-day(837.6300), 30-day(847.4970), 60-day(856.6637), 100-day(838.7220).

LONG-Term Trend: Bearish

Immediate Support: 796.9400
Longer term Support: 796.9400
Immediate Resistance: 855.5800
Longer term Resistance: 924.7000

100 day SMA Resistance: 838.7220
200 day SMA Support: 784.2078
Price Reversals
Candesticks
Bar Chart Patterns

Stochastic
Stochastic Bearish Price Reversal : Stochastic crossed below its %D 2 days ago.
Volatility Analysis
Volume Analysis
Volume: 165,312,000 shares, 30-day average volume: 179,773,232 shares.
market.
________________________________________________________
Additional Thailand Stock Market analysis by Don Schellenberg, Senior Market
Strategist, NextView
SETI Commentary
Thailand’s Stock Index has not made any significant new highs or lows during the past week.
Although the main direction for the last three weeks has been up, value hasn’t moved very far or
very convincingly. In fact the price pattern on the chart can only be considered weak at this time.
However, as long as 800 is not exceeded to the downside, there is hope that the Index still has the
opportunity to move higher.
A move above 860, and especially above 880, will convince investors and traders that the bull
market is back.

TECHNICAL INDICATORS
Moving Averages – based on the 2 moving averages on the chart, we can say that the short term
trend is up and the longer term direction is still down.
Rising Trend Line – a break below this line, and especially below 800. will be bearish. A rally above
880 will be bullish.
R1 - nearby zone of resistance.
S1 – nearby area of support.
TISCO Commentary
The price chart for Tisco.th is quite similar to that of SCC.th, in that the period of correction (the
bear market), is probably just about over.
Some people may think the downslide is already over, because the stock has moved up a little
during the last few days – and it has been reacting upwards from the rising trendline you can see on
the chart.
However, it looks to me like genuine support is just a little lower – between 23.50 and 25.00. That
is a high probability location for the market to launch a serious rise with 32.50 as the first upside
target.

TECHNICAL INDICATORS
Trend Line – this is giving temporary support to the stock at the moment. A slightly lower move to a
stronger support area should not damage the bullish opportunity.
MACD – rising, but still in negative territory.
R1 and S1 – areas of resistance and support marked on the chart.

iv) Hong Kong Hang Seng Index (HSI)

Close: 27,563.64
Trend Analysis
MACD (-6.4525)
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 very bearish. The momentum of the trend is strong.
Moving Averages 10-day(28,684.1934), 30-day(28,240.1836), 60-day(28,427.6816), 100-

day(26,248.7129).
LONG-Term Trend: Very bullish



Price Reversals
Candesticks
Bar Chart Patterns

Stochastic
Volatility Analysis
Longer Term volatility: The Bollinger Bands are expanding therefore price action is more volatile
Volume Analysis
Volume: 2,426,896,896 shares, 30-day average volume: 2,459,606,272 shares.
market.
________________________________________________________________________________________
Additional HSI analysis by Benny Lee, Chief Market Strategist, NextView
HSI set to test 25860 support level
The short term down trend was confirmed last week and the HSI fell about 1,300 points in one week
to close at 27,563.64 points last Friday. The HSI is all set to test the next support level and even has
a high chance of going lower than this support level, which is currently at 25,860 points. The short
term momentum is now supporting the short term down trend. The correction downwards is only the
a short term correction. If the support level cannot hold, a bigger and longer term correction is
expected and I will only talk about it when the time comes. In the mean time, expect a little more
room on the downside for this week as the HSI is set to test the 25860 points support level.

v) Dow Jones Industrial Average (DJI)

Close: 13,339.8496
Change: -178.1104
Volume: 245,592,992 shares
Trend Analysis
MACD (28.9507)
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(13,474.5244), 30-day(13,279.6504), 60-day(13,580.3818), 100-

day(13,472.1543).
LONG-Term Trend: Very bearish


Price Reversals
Candesticks
Bar Chart Patterns

Stochastic
Volatility Analysis
Volume Analysis
Volume: 245,592,992 shares, 30-day average volume: 265,603,216 shares.
Volume strength is moderate. The On Balance Volume is increasing, indicating accumulation of shares in the
market.
________________________________________________________________________________________
Additional DJI analysis by Benny Lee, Chief Market Strategist, NextView
Weak sentiments
An expected pullback happened last week and the DJI was unable to change the short term 30 day
moving average down trend. The average is again declining as the DJI fell about 300 points on a
week to week basis last week to close at 13,339.85 points. The long term trend still remains in a
correction as the longer term moving averages are firm sideways. Weak market sentiments and
holiday mood relaxes activities at Wall Street and the situation is expected to continue till the end of
the year. With a weak momentum, the DJI is expected to find support at 13,000 points level.

3. Regional Market Forecast Group
AVERAGE FORECAST SUMMARY as at 14 December 2007
KLCI STI HSI SETI
TODAY'S CLOSE 1,403.41 3,466.38 27,563.64 836.40
A Forecast (Direction) S D S D
Forecasted Weekly Trading Range
B Support (Low) 1378.3 3300.0 26033.3 800.0
C Resistance (High) 1426.7 3541.7 28900.0 853.3
A FORECAST DIRECTION
Benny Don Richard Li Xin Jing Steve AVG
1 KLCI D S S S
2 STI D D S D
3 HSI D S S S
4 SETI D S D D
B FORECAST RANGE (SUPPORT / WEEK LOW)

1 KLCI 1370.0 1375.0 1390.0 1378.3
2 STI 3300.0 3300.0 3300.0 3300.0
3 HSI 25800.0 26500.0 25800.0 26033.3
4 SETI 810.0 800.0 790.0 800.0
C FORECAST RANGE (RESISTANCE / WEEK HIGH)

1 KLCI 1410.0 1450.0 1420.0 1426.7
2 STI 3430.0 3575.0 3620.0 3541.7
3 HSI 27300.0 31000.0 28400.0 28900.0
4 SETI 840.0 865.0 855.0 853.3
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 1403.4 1397.8 to 1409.0
STI 3466.4 3452.5 to 3480.2
HSI 27563.6 27453.4 to 27673.9
SETI 836.4 833.1 to 839.7
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
NONE

________________________________________________________________________________________
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,
#02-03/05 UIC Building, Singapore 068808. Thailand: The Millennia Tower, 18th Floor, Unit 1806, 62 Langsuan Road, Lumphini, Pathumwan Bangkok,
10330, Thailand. Hong Kong: Room B, 16/F, Crawford Tower, 99 Jervois Street, Sheung Wan, Hong Kong. China: 98 Liuhe Road, 16A GangLu
HuangPu Center Building, Shanghai 200001

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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 14 December 2007

THIS WEEK’S CONTENTS:

1. Investment/Trading Related Articles:

3. Regional Market Forecast Group Misunderstanding probability

4. Regional Traders Education Events …….. 17

Disclaimer and Copyright …….. 18

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

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

This scenario is applicable in trading.

About the Author:

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

Basic Price information

Moving Averages 10-day(1,391.8120), 30-day(1,351.4960), 60-day(1,266.1794), 100-day(1,134.6093).

Support and Resistance Analysis

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

100 day SMA Support: 1,134.6093

Stochastic(83.3870) is currently overbought and is getting higher.

Bar Chart Patterns

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

Room for downside

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

Basic Price information

Moving Averages 10-day(3,535.7031), 30-day(3,504.1584), 60-day(3,631.8152), 100-day(3,542.0483).

Support and Resistance Analysis

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

100 day SMA Resistance: 3,542.0483

Stochastic(58.6314) is currently in neutral zone and is getting lower.

Bar Chart Patterns

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

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

Basic Price information

Moving Averages 10-day(837.6300), 30-day(847.4970), 60-day(856.6637), 100-day(838.7220).

Support and Resistance Analysis

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

Stochastic(61.8323) is currently in neutral zone and is getting lower.

Bar Chart Patterns

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

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

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

Basic Price information

Moving Averages 10-day(28,684.1934), 30-day(28,240.1836), 60-day(28,427.6816), 100-

Support and Resistance Analysis

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

100 day SMA Support: 26,248.7129

Stochastic(41.2149) is currently in neutral zone and is getting lower.

Bar Chart Patterns

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

HSI set to test 25860 support level

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

Basic Price information

Moving Averages 10-day(13,474.5244), 30-day(13,279.6504), 60-day(13,580.3818), 100-

Support and Resistance Analysis

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

100 day SMA Resistance: 13,472.1543

Stochastic(67.9535) is currently in neutral zone and is getting lower.

Bar Chart Patterns

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

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

B FORECAST RANGE (SUPPORT / WEEK LOW)

C FORECAST RANGE (RESISTANCE / WEEK HIGH)