Has S&P500 Found Its Bottom?

In a previous article (Read more here), we examined whether KLCI has found its bottom using Gann Fan.  75% of the responses said not yet while 25% said no idea.  It seems like readers are expecting KLCI to go down further.

Today, let’s look at S&P500, please cast your vote at the end of the article.

From crisis to crisis, how much did the S&P500 drop, according to Gann Fan?

1987 Black Monday  – 2001 DotCom Bubble

Drop to 3/1 support line

2001 DotCom Bubble - 2008 Lehman Brothers

Crash below 8/1

  

2008 Lehman Brothers – 2020 Corona Crisis

Drop to ?

What do you think?

I think S&P500 will drop to

2/1

3/1

4/1

8/1

below 8/1

Dunno

 

pollcode.com free polls

Malaysia Covid-19 Forecast using Generalized Logistic Function (Updated 19-Apr-2020)

Added daily new cases graph, and range of plateau (worst and best case prediction) for cumulative cases.  No big changes to the model for now.  Still target 6200 by mid-June, worst case 6700 while best case 5800.  By end of Phase 3 MCO, daily new cases shall be lower than 50.

These numbers are derived purely using quantitative approach.  The model does not factor in traffic movement (reopen flights), new vaccine development, new target test cluster (such as mass testing of migrants), and other qualitative measures.

Will update the model from time to time if any big changes occur.

Please Stay @ Home.

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Malaysia Covid-19 Forecast using Generalized Logistic Function (Updated 14-Apr-2020)

In a previous article (Read more here), a Simple Logistic Function (SLF) was chosen to model the Covid-19 growth trend in Malaysia at the end of 1^st phase Movement Control Order (MCO).  During that time, the SLF model appeared to be adequate as the goodness-of-fit of the curve was reasonable.  However, at the end of the 2^nd phase of MCO (14-Apr-2020), the SLF model is no longer adequate to explain the development of Covid-19 in Malaysia.

A more robust model, Generalised Logistic Function (GLF) is now needed (Read more here), as suggested by some international research papers (Read more here).  There are few reasons why the SLF model is inadequate to predict the growth of the Covid-19.  Firstly, the Covid-19 development is not happened in a closed-system.  SLF is commonly used in studying the growth of bacteria in laboratory.  In the Covid-19 case, although MCO is implemented, it is not a true closed-system, there are leakages that will impact the growth pattern such as test capacity, asymptomatic patients, previous undisclosed linked clusters, and MCO violations.  Secondly, the previous model might appear good due to insufficient data points.  As time passed, more data are now available to show the actual trend of the development.

The GLF, in mathematical form, is

The constants A, K, C, Q, B and v are determined by minimizing the sum of square of the 21-Days rate of change between the actual cumulative cases and the GLF.  Graph 1 is the cumulative positive cases while Graph 2 is the 21-Days rate of change.  From the graphs, GLF (orange curve) fitted very well to actual data (blue curve).  Meanwhile, SLF (grey curve) is poorly fitted as at 14-Apr-2020.

Based on the fitted GLF, the predicted total cases are around 6200 at the middle of June 2020.  This number is derived purely using quantitative approach.  It does not factor in traffic movement, new vaccine development and other qualitative measures.  Nevertheless, the number could be further reduced if we abided to the MCO, and practice good social distancing.  Stay@Home! 

Has KLCI Found Its Bottom?

Let’s look at some interesting charts, from crisis to crisis, how much did the KLCI drop, according to Gann fan?

1986 Commodities Shock – 1997 Asian Financial Crisis

Drop to 8/1 support line

1997 Asian Financial Crisis – 2001 DotCom Bubble

Drop to 4/1 support line

2001 DotCom Bubble - 2008 Lehman Brothers

Drop to 4/1 support line

2008 Lehman Brothers – 2020 Corona Crisis

Drop to ?

What do you think?

I think will bottom at

3/1

4/1

8/1

Dunno

 

pollcode.com free polls

Malaysia Covid-19 Forecast using Generalised Logistic Function (Updated 14-Apr-2020)

In a previous article (Read more here), a Simple Logistic Function (SLF) was chosen to model the Covid-19 growth trend in Malaysia at the end of 1^st phase Movement Control Order (MCO).  During that time, the SLF model appeared to be adequate as the goodness-of-fit of the curve was reasonable.  However, at the end of the 2^nd phase of MCO (14-Apr-2020), the SLF model is no longer adequate to explain the development of Covid-19 in Malaysia.

A more robust model, Generalised Logistic Function (GLF) is now needed (Read more here), as suggested by some international research papers (Read more here).  There are few reasons why the SLF model is inadequate to predict the growth of the Covid-19.  Firstly, the Covid-19 development is not happened in a closed-system.  SLF is commonly used in studying the growth of bacteria in laboratory.  In the Covid-19 case, although MCO is implemented, it is not a true closed-system, there are leakages that will impact the growth pattern such as test capacity, asymptomatic patients, previous undisclosed linked clusters, and MCO violations.  Secondly, the previous model might appear good due to insufficient data points.  As time passed, more data are now available to show the actual trend of the development.

The GLF, in mathematical form, is

The constants A, K, C, Q, B and v are determined by minimizing the sum of square of the 21-Days rate of change between the actual cumulative cases and the GLF.  Graph 1 is the cumulative positive cases while Graph 2 is the 21-Days rate of change.  From the graphs, GLF (orange curve) fitted very well to actual data (blue curve).  Meanwhile, SLF (grey curve) is poorly fitted as at 14-Apr-2020.

Based on the fitted GLF, the predicted total cases are around 6200 at the middle of June 2020.  This number is derived purely using quantitative approach.  It does not factor in traffic movement, new vaccine development and other qualitative measures.  Nevertheless, the number could be further reduced if we abided to the MCO, and practice good social distancing.  Stay@Home! 

Bursa MidS (Reblog)

The FTSE Bursa Malaysia MidS Cap Index comprises constituents from the FTSE Bursa Malaysia EMAS Index with market capitalisation between MYR 200 million and less than MYR 2 billion.  In 2019, the index rose 34.6%, one of the best performing indices on the Bursa Malaysia.

Source:  FTSE Russell (data as at 31 Dec 2019)

As at 31 Dec 2019, there were 136 stocks included in the index.   Total net market cap is RM43,288 million with average of RM318 million.  The top ten constituents contribute about 25% of the index market cap.

In the past, mid and small cap stocks are often not covered by research houses.  In order to boost the awareness of this category of stocks, Bursa Malaysia created a dedicated site for investors. The link is

http://www.bursamarketplace.com/mkt/themarket/bursamids

The site has research reports, charts, financial information, and the most interesting feature is the screening tool.  Investors can go to the screening page using the following link.

http://www.bursamarketplace.com/mkt/tools/screener

On the screener page, investors need to turn on the BURSA MidS (arrow 1).  Then choose the selection criteria (arrow 2).  In this example, P/E of “Below 10” and “5-Yr EPS Growth Up more than 0%” were chosen.  Once the screening criteria were selected, the system will automatically search for MidS cap stocks that met the criteria.  There were 10 stocks meeting the criteria.

By clicking the Show Result arrow, the stocks listed below appeared on the page.  Investors could further process the result by sorting them according to various criteria such as average rating, analysts’ recommendation, dividend yield and etc.  Investors are advised to further study the fundamentals of the stocks before making any investment decision. 

For 2020 market forecast, investors can refer to the following podcast and video by various analysts and investment managers.

This article is only meant for education purposes and not act as a recommendation for any particular stock investment. As such we accept no liability real (or otherwise) for any investment made by an investor.

Reblog notice:  This article was first published in MY MPCA blogspot (Read more here), where engineering2finance is the main author of that article.

KLCI quietly heading north, are you too late to catch the train?

In a previous article (Read more here), the MACD indicators of KLCI suggested that a reversal pattern might be just around the corner.  Since then, the KLCI rose 38 points to 1609 on 8 Nov 2019.  The MACD divergence pattern is confirmed and the first target of this trend is 1650.

So, which stocks are driving up the KLCI on the past few weeks?  The table below shows the performance of the KLCI component stocks from 18 Oct 2019 till 8 Nov 2019.  The top 5 gainers are Genting, CIMB, GenM, HLFG, and KLK.  All these stocks gained more than 4% in 3 weeks!

In stock market, market leaders will remain as market leaders until the trend ends.  As such, those top performers are likely to continue to outperform if the market continues to improve in the coming months.

Disclaimer:  The above analysis does not imply any buy or sell recommendation.  The author disclaims all liabilities arising from any use of the information contained in this article.

Disclosure: The author may have interest in the stocks of the companies in this article.

KLCI – The worst is over? - from Technical Analysis Perspective

Since April 2018, after the KLCI hit 1896 points, it has been on the downtrend for almost 1.5 years.  The KLCI closed at 1571 on 18-Oct-2019, lost 325 points, or negative 17% to-date.  Internal and external factors such as political power transition, uncertainty of government revenue, and US-China trade tension are weighing on the stock market performance.

According to IMF recent report (Read more here), 2019 global growth is forecast at 3.0%, its lowest level since 2008–09 and a 0.3 percentage point downgrade from the April 2019.  Growth is projected to pick up to 3.4 percent in 2020 but it is still a 0.2 percentage point downward revision compared with April’s report. 

While the flip-flopping geopolitical dramas have no end in sight, what could investors do to gauge the performance of the stock market?

The following chart shows the weekly KLCI performance for the past two years.  A clear MACD divergence (Read more here) has formed since Jan 2019.  Moreover, it has formed a double -divergence pattern which indicates that the reversal of downtrend might be a strong one.  If the MACD divergence is confirmed, the first price target will be 1650, which again coincides with the projected GMMA cross-over region.  Thus, from technical analysis perspective, year-end Bull Run might be possible. 

Be prepared, don’t get caught off guard if the market suddenly turns bullish!

Disclaimer:  The above analysis does not imply any buy or sell recommendation.  The author disclaims all liabilities arising from any use of the information contained in this article.