I be back next Monday

Good morning,

It’s New Year’s Eve and counting down to the New Year. For all my friends and readers, I wish you a Happy New Year and a blessed year ahead with good health and good profits trading the stock markets. I am still enjoying my holiday and will be back next Monday with the new KUTE stock selection.

See you then. Have a great celebration for the cross-over tonight! Cheers!

Francies Cheng
BBus MAppliedFinance

Nice holiday

Good morning,

I am writing this blog today in a very nice hotel room overseeing the ocean, enjoying my holidays. It has been years since I take a nice break away from work and without turning on my trading machine for the whole night. I do have internet access in my hotel but I have decided that I will not trade and spend my night with my lovely wife. However the addiction of writing this blog and the urge to know how the markets performed last night makes me turn on my mini-notebook now when she is taking her shower.

A brief headline splash across my screen from a website I subscribed to headlined that Mr Krugman believing that there will be a double dip recession in 2010. It's an interesting read, and I will analyze his statements when I am back fully at work. Somehow my feel is that it will not happen because Asia is beginning to be significant and it will drive the world economy further. I live in Asia and we are all witnessing the potentials of China and India to spur future growth.

As expected, the markets were volatile because of the thin volume. DJIA was down 1.67 points last night even though consumer confidence did not disappoint. Of the stocks KUTE selected, only PTI and DOX advanced last night. PTI gained 2.19% to close at $20.54 and DOX closed at $28.98, up 0.69%. NOV was down 0.91% to close at $44.83, NE down 0.7% at $41.20 and PDE down 1.17% at $32.86.

My positions are in the money and no new trades were done. There will not be any because I am just going to spend the next few days enjoying myself with more food and wine with my wife.

Have a great day!

Francies Cheng

BBus MAppliedFinance

Good start for my seminar attendees

Good morning,

I am happy today. Not because I made money from the positions I have. I am happy because one of mine student has recouped his investment for attending my seminar. He made 20% last week! Much more because my intention for the seminar is to share my experience and system so that potential traders can have a consistent methods to choose good companies to trade, and not to make money and profit from the seminar fees. His success has further reinforced my belief and I have decided to continue teaching into the near future. I am truly encouraged and excited that more can learn the KUTE system and hopefully lesser new traders will lose money.

It’s now only a few days left for 2009, and we will soon be facing new challenges in 2010. Much as anyone can predict how the market will perform in 2010, we can only forecast to our best knowledge and hopefully 2010 will be a good year for all traders. With the expected steep yield curve, I am expecting the stock markets to be bullish, amidst the fact that we will probably have some correction in the first half of the next year. So before the new trading adventure ahead, I am going to take a good break and enjoy some private time with my stewardess wife. I will be taking leave for the whole week to reward myself for the hard work in 2009 and hopefully will be fully recharged after the cross-over into 2010. I trust my positions are good since they are all good companies and even if the limits are not achieved, it should be alright to hold these stocks into the New Year. I just want to soak in the nice festive atmosphere and enjoy the last few days of the year with the one I love. Please allow me to excuse myself and I will be back charging the market next Monday with all the new KUTE stock selections.

Well, festive seasons do bring good news. As expected, DJIA rose 26.98, or 0.3 percent, to 10,547.08, its highest close since Oct. 1, 2008, S&P 500 rose 1.30, or 0.1 percent, to 1,127.78, and the Nasdaq composite index advanced 5.39, or 0.2 percent, to 2,291.08 last night. The volume was thin as many including me are enjoying the holidays with bottles of fine wine. As for the KUTE’s selected stocks, NOV gained 0.64% to close last night’s session at $45.26, DOX was down 0.35% to close at $28.78, NE was up 0.44% at $41.49, PTI gained 0.65% to close at $20.10 and PDE was up 0.36% to close at $33.25. It makes my day better as Citigroup managed to close 1.19% higher to reduce on my only losses for the stock that was never selected by KUTE.

Have a great day.

Francies Cheng
BBUs MAppliedFinance

Stock Selection for the New Year Week

Good morning,

2009 will be over soon and we will soon usher in 2010. It has been a spectacular year to witness the unprecedented uniformed efforts of nations to save the economies from another depression. Many have predicted the W recovery but it did not happen. So it was a V recovery for most markets and a resounding victory for the policy makers. Will 2010 bring in more cheers for the stock markets? I believe it will be. With the positive economic indicators reported so far, the market should continue its’ recovery into 2010. However, the flight will be bumpy and the market may have a slight correction when Fed increases its interest rates. I foresee this in between 1st and 2nd quarter next year.

This coming week will see the markets trading at low volume with many traders enjoying their long holidays. Though the trading week is short, there are however a few reports that I will follow; i.e. the Consumer Confidence on 29th, Chicago PMI and Crude Inventories on 30th. With the recovery in sight, I am expecting the Consumer Confidence report to bring cheers to the market. With the PMI and Crude Inventories and the short trading week, we should be expecting the market to be volatile but with the normal year end bulls, the markets should close the year on higher ground. With the weekly Cycle Trend indicating a potential downside decline and the weekly candlestick signals a marubozu, I will look for early buying opportunities and sell before the close for the week if these purchases are in the money.

The stocks recommended by KUTE for the week are: DOX, NOV, NE, PDE and PTI. Since PDE is the only new stock recommended, I will only look into the financials of this company.

Pride International, Inc. (PDE) is an offshore drilling contractor operating, as of February 02, 2009, a fleet of 44 rigs, consisting of two deepwater drill ships, 12 semisubmersible rigs, 27 jack ups and three managed deepwater drilling rigs. The Company has four ultra-deepwater drill ships under construction. Its customers include integrated oil and natural gas companies, state-owned national oil companies and independent oil and natural gas companies. Pride’s operations are conducted in oil and natural gas basins, including South America, the Gulf of Mexico, West Africa, the Mediterranean Sea, the Middle East and Asia Pacific. It provides contract drilling services to oil and natural gas exploration and production companies through the use of mobile offshore drilling rigs in United States and international waters. Analysts are covering this company and have upgraded this stock to buy. The company’s operating income and cash flows are positive except for year 2008 where it registered a negative free cash flow. However with the purchase of fixed assets, the company is primed to grow along with the economy recovery and the long term contracts it secured for the next 5 years. For the technical, Cycle Trend is indicating a possible upside move for the week but the weekly candlestick is a hanging man and there is a possibility for the stock to reverse its current price advances. Since both signals are contradicting, I will not place any order for the opening but instead will wait for the intra-week candle confirmation to decide if I want to trade this stock.

NOV’s weekly and daily candlesticks are both white spinning top indicating indecision for the bulls and the bears. However, its weekly Cycle Trend is indicating an upside potential. Since I am holding a position in this stock, I will continue holding and move my limit price higher.

NE’s weekly Cycle Trend is an upside movement but its weekly candlestick formation is the black spinning top, so I will not buy this stock at market open. As for DOX, the weekly and daily Cycle Trend are indicating a potential downside price decline, however both its weekly and daily candlestick are the white marubozu. Since both signals do not confirm each other, I will stay sidelined for this stock.

The other stock I am holding, PTI weekly candlestick has a bearish doji harami cross but its Cycle Trend is signaling that the price may advance this week. I will hold on to this share and adjust my limits lower so that my position can be squared before the holidays.

Have a great week ahead!

Francies Cheng
BBus MApopliedFinance

IFA mess

Good morning,

Merry Christmas!

It’s Friday and I am looking forward to a great holiday and weekend getaway. I had a good time drinking a few bottles of Argentina wine with a good friend and one of the top investment advisers in a rival firm last night at my bar. A topic we talked about was the mess the IFA industry is currently in Singapore which was splashed across the front page of the country’s main newspaper.

It reported the illegal moneylenders' ties with the IFA firms where the victims’ investments accounts were churned to generate more commission to pay off their loan interests and signatures were forged without clients’ knowledge in these transactions. We wished that the authorities will get them and put them in jail for such dishonest acts. The rotten weeds must be removed so that the real financial advisers can survive. The report also suggested that the authority should reduce the upfront sales charge to 1% or totally remove the sales charge. I don’t think it will benefit clients because many of the good FA will leave the industry to seek better compensation elsewhere. It’s not easy getting a client to listen to how financial planning can help them, so without the motivation of a good compensation scheme, I am sure my friend will be the first to leave the industry. Perhaps the authority can impose commission sharing limits for the FA firms so that these illegal moneylenders and unscrupulous FA managers will find the compensation unattractive for the scheme to work. I just cannot believe a FA company with such a high compliance and running costs can pay their FA 90% of the gross commission earnings if churnings are disapproved at the firm’s level.

Anyway, it’s Christmas so I will not continue to lament. Let’s be jolly and enjoy the profits we made from the US market this week. Here is the performance evaluation for the stocks KUTE selected:

DJIA Friday’s close 10328.89; this week’s close 10520.10
NOV Friday’s close $43.28; this week’s close $44.77
DOX Friday’s close $27.44; this week’s close $28.88
NE Friday’s close $41.09; this week’s close $41.31
MGLN Friday’s close $38.48; this week close $41.43
PTI Friday’s close $20.29; this week close $19.97

My position for DOX was squared last night when the limit order was done, much in the money. I am still holding on to my NOV and PTI. NOV is in the money and PTI has only a fractional loss, which I believe I should be in the money next week. I will be back only next Monday morning Singapore time for the new KUTE selection and see you then.

Have a great day.

Francies Cheng
BBus MAppliedFinance

Merry Christmas!

Good morning,

It’s Christmas Eve and soon the year will be over. It has been more than 3 months since I started this blog to share my thoughts, strategies and trading decisions. It is not easy to consistently write every day, much more if it’s the subject for finance. It is tiring but yet fulfilling. It’s tiring because I have to wake up early every morning (Singapore time) to write, and fulfilling because I am seeing more hits and readers. I hope that I have achieved my aim when I started, i.e. to share and hope that those who are trading the US markets can have a systematic method to select the good companies and increase their chances of having consistent returns from trading these companies’ stocks. It will surely make my day if any of my readers can share their trading experience if they have applied KUTE’s method .A note of appreciation to keep me going is much welcomed, especially so if you have made money.

US markets opened higher last night but surrendered its early gain after new home sales report. It was a choppy ride throughout the session and ended in positive territory, with DJIA up only 0.01% and the broader S&P 500 up 0.23%. For the selected stocks, NOV gained 2.14% to close at $44.77, DOX up 1.29% to close at $28.33, NE up 1.45% to close at $41.26, PTI gained 0.33% to close at $19.86 and MGLN continues its impressive gain to close 1.28% higher at $41.83. My positions for NOV and DOX are in-the-money, and I am still holding to the stocks since both have yet hit my limit orders. It nice to see PTI gaining some grounds but I am still a little in the red for this share.

Merry Christmas and have a great time partying tonight!

Francies Cheng
BBus MAppliedFinance

Economist's prediction

Good morning,

There's this article in the newspaper money and business section today that caught my attention. The headline reads “Year’s well that ends well – Economists predicted financial Armageddon, but quick recovery points to better 2010”. What interest me is the comment that economists and experts failed to see the financial crisis coming and when it came, these cried out loud that financial Armageddon was at hand. Well, we all now know that it did not happen. In fact the economies and markets recovered amazingly, and now most of these experts are predicting 2010 to be a better year. It’s easy to make predictions, isn’t it? I remembered we have one of the top economists in my previous employment that is very much respected in the region that briefed us every Monday morning with his views and forecast, and many of those in the briefing would whisper among themselves to buy whenever he is pessimistic and sell when he is bullish, and most of the time they were right. It is not my intention to criticize these experts, but I would like to be reminded that no one knows for sure what the future will be and every predictions and forecasts are statistical probabilities. It applies to my KUTE system too. The system is not designed to predict with 100% accuracy for the stock price movement. KUTE only helps me to screen find good fundamentally sound companies with good business growth potential and understand current market behaviors for buying and selling decisions. There are times when decisions were wrong and good stocks’ price advances are missed, and times when the prices moved too little to have significant profits. Like all forecasts, the only sure thing is these stocks will surely appreciate in long term, whatever the future date is, since they are all good companies. Having said so, I believed you are as impressed with the last 3 years’ back-testing results as I do, (ref: yesterday’s blog) and I should be contented with the returns I had for most of the stocks selected.

It’s only one more night to Christmas Eve and I am staying out of the markets this week. I am going to enjoy myself and catch up with old friends. This is the season to be merry and enjoy wines and liqueurs, and reasons for me to drink a little more than usual. As mentioned, my trading plan this week is to exit all positions if possible and not make any trades once the early trades bought are squared. I will be placing limits to my positions and hopefully the stocks are making money while I am enjoying myself.

NOV was up at $44.39 during the morning session but closed down 0.2% at $43.83. I have one position sold after it hit the limit in the morning. DOX gained 0.87% to close at $27.97. I am still holding to the position. PTI was down 0.48% to close at $19.80 and I am still in the red for this counter. NE was down 2.12% to close at $40.67. I did not buy this counter because there was no signal to place a buy order at 0.3% above last week’s close. MGLN gained another impressive 3.95% to close at $41.30. It’s the stock I missed and how I wish the KUTE system can give me 100% accuracy. Again I need to remember: “Godly contentment is gain”, especially so when we are celebrating His birth and love for all mankind.

Have a great day.

Francies Cheng
BBus MAppliedFinance

Nearer to Christmas

Good morning,

Its two days to Christmas Eve. Yet there will be another old friends gathering. This time it will be my old army mates’ dinner gathering for seafood and I am looking forward to it. Christmas is a time to be jolly and celebrate with close friends and loved ones. It’s also a time to reflect and count the blessings we have, and it was truly a blessing for me to have found KUTE stock selection system this year. I was losing money trading the stock market buying all the wrong stocks and getting in and out without any plan. I was speculating, and saw my money depreciated to 40% from punting the markets. Without KUTE, I would probably be losing more. One of my esteemed lecturers wrote me an email saying I am bragging in the blog. I took no offence because it was in his class that I learned the foundations to the key inputs to KUTE, and I thank God for him.

I did something interesting last night. Questions have been asked if KUTE performance was good during last year's financial crisis. There were comments that KUTE is good now because the market is good overall. I did a 3 years back testing with the assumption that selected stocks were rebalanced weekly and no technical decision were made. It's just pure selection and trading based on the KUTE's fundamental slection. The performance for the past 3 years to date is presented as follows, with the red line represents KUTE's selection against the blue line of S&P 500:

US markets closed higher last night. The markets opened strong with broad-based gains among stocks, but action quickly steadied so that the broader market spent the session moving sideways in a narrow range. At market close, advances outweigh the declines in all the markets despite a strong bounce by the U.S. dollar. For the stocks selected, NOV gained 1.48% to close at $43.92, NE gained 1.12% at $41.55, DOX up 1.06% to close at $27.73 and PTI declined 1.97% to close at $19.89. MGLN gained an impressive 3.25% to close at $39.73. I am still long with 2 positions on NOV and 1 position on DOX. My buy order was filled for PTI at $20.00 and I am relieved that Citigroup share price has stopped declining and added a slight gain last night to reduce my losses. My Christmas wish is for this counter to be back to where it was before the financial crisis so that I can brag again to the whole world that my choice was right. (smile…. Ref: http://profitablestocktrading.blogspot.com/2009/12/my-prediction-is-so-correct-nov-nov.html)

Have a great day.

Francies Cheng

BBus MAppliedFinance

Christmas Week KUTE selections

Dear Friends,

It’s the beginning of another new week again, and I have barely enjoyed myself that I have to think of what the market will be for the next 4 days and which stocks to trade and hopefully make enough returns to enjoy the Christmas parties. Its Christmas week and the market will be closed on Friday for Christmas and Thursday’s market will also be closed 3 hours earlier. The week before Christmas is typically quiet and with many traders already enjoying their yearly returns, it will get quieter as the week wears on. Historically the week between Christmas and New Year’s Eve will be slow and quieter and with that in mind, I will be looking at closing all my 50% of the 30-20-50 trading positions as well as buying in early if the “buy” signals warrant and sell before the Wednesday. I will also be taking a longer rest and will not be trading actively during this period. There will be some important events to watch the next few days and since KUTE has been recommending energy and oil related stocks, it will be wise to watch the OPEC meeting on Tuesday and the current Iran-Iraq current conflict. We will also have a clearer picture if the economy is recovering well with the 3rd revision to GDP and the existing home sales report, both on Tuesday. Together with personal income and spending, new home sales and initial jobless claims and a likely thin volume market, I am expecting the prices to trade within a broad range. The weekly market technical are bearish. Cycle Trend is indicating that the market is ranging and a decline for DJIA is expected. This is confirmed by the weekly candlestick formation of a bearish engulfing pattern. Interestingly the daily Cycle Trend is still indicating an potential upside advance and the candlestick is an “buy-if” formation of a white spinning top and bullish harami. Thus my decision will be to buy early and sell once it hit the stocks’ price returns targets and stay out of the markets once the deals are squared.

The stocks selected for this coming week are DOX, NOV, NE, PTI and MGLN. The only inclusion in the list not previously mentioned is PTI, so I will look into the fundamentals of this company, and only analyze the technical for the rest of the selected stocks.

Patni Computer Systems Limited (PTI) is primarily engaged in the business of information technology consulting and software development. Most of the business of PTI is subcontracted from its subsidiary companies in the United States, United Kingdom and Germany. The Company provides multiple service offerings to its clients across various industries comprising financial services, manufacturing companies’ communication, media and entertainment, product engineering services, and others. This stock is highly rated by analysts and I like its operating and free cash flows. The company’s operating income has declined over the last 3 years though its gross profits have increased. Though the expenses have increased over the same period, I am still comfortable with its financials. For the technical, Cycle Trend is not indicative as the patterns generated do not conform to the price performance over the last few periods. The weekly candle formation is a white opening marubozu and the daily candle is a hold, so my decision is to wait for the stock to decline to 0.5% of last Friday’s close of $20.29 to buy.

As for NOV, the weekly Cycle Trend is still bullish, however the weekly candlestick is a black candle with the indication to hold, and the daily candle is also a hold. I will not enter new trades because of the bearish black weekly candle even though it calls for a hold/wait. I will wait to square off my current 2 positions. NE’s Cycle trend is indicating the continuation of the upside potential, however its weekly candlestick formation is a high wave, i.e. the market is very indecisive. With the daily candle indicating a “sell-if” formation, I believe it will be prudent to monitor the daily and intra-week candle confirmation before making any decisions. DOX cycle trend is indicating a slight decline for the week and the weekly candlestick is a “buy-if” white spinning top bullish harami which is not a strong bullish sign and requires next period confirmation. The daily candle is however a white opening marubozu which is also not a strong bullish sign and requires next period confirmation. I will not add more position to my DOX holding and hopefully the daily candlestick formation is confirmed for me to sell the stock. As for MGLN, the Cycle trend is very bearish and with both the weekly and daily candle indicating hold, I will stay out of this stock for this short and potentially quiet trading week.

Have a great week.

Francies Cheng
BBus MAppliedFinance

Evaluation day

Good morning,

It’s Saturday again and it’s the day again for me to evaluate the performance of the stocks KUTE has selected. The KUTE system has predicted that the markets will be trading broad range and will close the week flat with the possibility of downside decline. Last Friday’s close was 10.471.50, and DJIA closed at 10,328.89 and the week’s range was 10.237.75 to 10,566.68. For the individual stocks, the recommendation was to buy at dip and sell at target. These are the performance of the selected stocks;

Stocks Last Friday’s close Yesterday’s close Week’s range
NOV $43.94 $43.28 $42.99 to $45.78
DOX $27.14 $27.44 $26.92 to $27.59
TDW $44.18 $46.65 $44.48 to $47.14
NE $40.40 $41.09 $40.69 to $42.60
FCN $46.20 $45.79 $45.20 to $47.18

For the read on the above selection, please go to this blog;

http://profitablestocktrading.blogspot.com/2009/12/new-kute-selection-for-week-beginning.html

FCN was not included in the final shortlist so I have avoided the losses. As for NOV, money was made when the stock was bought at KUTE’s entering level and sold at target. For the entering decisions, please read this blog; http://profitablestocktrading.blogspot.com/2009/12/entering-decisions.html

I have 2 new positions for NOV bought at $44.23 and $43.29 when it hit my buy order last night when I was enjoying my drinks last night and both positions are out-of-the-money, and I am still holding to my sole position in DOX. As for Citigroup, I am glad that it did not get worst and hopefully it will start to appreciate back to my buying price.

Have a great week and I look forward to next Monday for the new KUTE selection for next week.

Francies Cheng
BBus MAppliedFinance

Meeting old school mates

Good morning,

It was a great night meeting old school mates over drinks and reminiscing our good old school days. Its’ been more than 22 years since I last met most of them. It was a very happy occasion and we just drink and chat, remembering our bonds in the past and forgetting the clock in the present. So I missed the trading session because of the occasion and well, from having too much wine, again. The only thing I could remember was taking a taxi and when I opened my eyes it was my laptop beside my bed (not my wife…she’s flying….”smile”) with my trading platform turned on and the screen showing the sea of reds.

I switched to Yahoo finance investment market overview page and this is the first few sentences that read; “4:30 pm: Stiff selling on heavy volume came as the greenback spiked against foreign currencies and financials faltered. Stocks now head into Friday with a week-to-date loss of nearly 1%.” Should I be happy that my forecast for the week is correct? No, I really wish I was wrong because I do hope that the market can continue its bull run. I am glad KUTE has predicted the markets to be trading within a broad range and closing flat with the downside possibility, and the recommendation was to buy stocks at dip and sell at targets. Since most of the stocks were purchased according to the tactical strategy mentioned in the last few blogs and sold off at the targets, I have no trading position last night except DOX and did no trade for the entire session. I am still holding to my Citigroup’s position though and losing more than I have expected. I will continue to wait for the stock to appreciate since the stock is in my 30% of my 30-20-50 rules. The only comfort I have from holding this stock is reading from the papers that GIC lost 4% from their Citigroup's holding and in terms of absolute dollars, mine losses are peanuts.

NOV closed 0.91% down at $44.45, DOX lost 0.84% to close at $27.23, NE down 2.59% at $40.99, TDW down 0.77% at $46.34 and FCN closed at $45.83, down 2.03%. On the weekly basis, NOV was $43.94 at last Friday’s close ($44.61 at Monday’s open), TDW was $44.18 (Monday’s opening $44.52), NE was $40.40 (Monday’s opening price $40.69), FCN was $46.20 (Monday’s price $46.12). So far so good for the stocks selected by KUTE for the potential weekly gains and I hope that it can fulfill the forecasts after the session closes tonight.

I will have another party tonight so I will not be sitting in front of my trading desk. However I noticed that NOV’s weekly cycle trend has not change, and the weekly intra-week and daily candle forming a doji, I may place a buy order at 0.5% below last night’s closing price to buy.

Have a great day.

Francies Cheng
BBus MAppliedFinance

Citigroup? Disgusting!

Good morning,

I am disgusted with my stock holdings Citigroup. They are selling their shares at huge discount so that they can raise money to pay their executives higher compensations. Though I fully agree that any organization must pay the “enough” to attract the talents so that the firm can grow in the future, I am disgusted that the group is diluting its equity and shareholders’ wealth so that their executives can benefit from the freedom of compensation decisions. Do they really believe they can increase shareholder wealth or are they just plain greedy? Somehow it reminds me of what I learned in school, the topic of “manager entrenchment”. All these strengthen my belief in selecting stocks that are fundamentally sound and while operating incomes and balance sheets are important, it is more important to select companies with positive free cash flows.

It was an interesting read from the FOMC that the economy seems to be heading stronger towards full recovery and that the conditions allow for not having to increase interest rates sooner. Most investors are relieved that their expectations for earlier interest rates increment will not happen. However, despite of what the Fed said, with the economy full recovery in sight and the massive budget deficits of the US balance sheet, I am still holding on to my belief that the rates will increase in the second quarter next year.

I sincerely hope that my students have read my blog yesterday explaining the entering decisions. If they had, they would probably be making money and I am very sure that there would have recovered the seminar fees of $388. I was quite encouraged by their feedbacks and perhaps I may consider continuing the seminar while preparing to meet some potential to manage their money. I really want those who are planning to trade the US markets to understand the important areas to consider before plunging into the markets, and that’s the reason why I am charging so little for the seminar.

NOV gained 0.29% to close at $44.86 last night. It opened at $45.04 and the day’s high was $45.78. If the decision was made to buy at 0.3% above the previous night closing price and place limits at 10%, the trade should have made money. TDW gained 2.84% to close at $46.70 (the same decision for NOV should apply for this stock), DOX was up 0.88% to close at $27.46, NE gained 1.45% to close at $42.08 and FTI was up 1.54% to end the session at $46.78.

Have a great day today!

Francies Cheng
BBus MAppliedFinance

Entering decisions

Good morning,

A friend of mine asked me yesterday regarding my entering decisions for some of the stocks KUTE system selected. He asked if these stocks gapped up on opening and that the candlestick formation is on Friday’s close, how should we be planning when and which price to enter to buy. Do note that KUTE only select stocks that are good fundamentally, weekly cycle trends are bullish and weekly candle stick formations with "buy" or "wait/hold" signals.

First let me clarify that I do not trade every night after I placed my trades for the selected stocks when market opens on Monday, unless 2 situations happen; either my position is squared (i.e. closed at profit) or the price dips below Friday’s close, and in this instance I will buy (dollar cost averaging) even if I am still holding on to my positions. Since the stocks selected are fundamentally good companies, I will hold till it is in-the-money and I will only close the position if it achieved my target.

If the weekly cycle trend and candle formation are positive on Friday close and if the daily candle indicates wait or hold for next confirmation, the decision should be to buy the next day when market opens if the next period candle confirms the formation or to place a buy order at 0.3% of the previous close once the market is open for trading. It's quite arbitraging because for a stock that normally appreciates 1 to 1.5% a day on the average, 30% of the percentage increase is my price to enter. DO REMEMBER THAT I DO IT ONLY IF WEEKLY CYCLE IS BULLISH AND WEEKLY CANDLE ARE EITHER BULLISH OR WAIT/HOLD SIGNAL, AND DAILY IS A WAIT OR HOLD. I may not get hit at 0.3% if it gapped up and it's ok. However, if daily candle is a buy signal, I will just enter at open. If the daily candle is bearish, I will just stay aside and wait for it to drop below the Friday's close, if only both the cycle and candle for the week are positive. Assuming my position is closed on Tuesday after it hit my expected returns; I will analysis the intra-week weekly and daily candlesticks and the weekly cycle trend again, and apply the same decisions as mentioned. For my students, these intra-day candle signals can be found in the web sites I suggested. Abiding by these rules is often challenging. Sometimes profitable trades can be missed and there will be emotional moments where orders are placed without any reference to the rules and most of the time these trades may ended in losses. If the intention is to trade the stock market as long as your career, it will be wise to stick to rules as over time, the profits can be more consistent.

NOV was up again last night, gaining 0.97% to close at $44.73. TDW was up 1.47% to close at $45.41, NE gained 1.15% to close at $41.48 and DOX closed $27.22, up 0.22%. FCN was the only recommended stock that closed lower at $46.07, down 0.24%.

Have a great day ahead!

Francies Cheng
BBus MAppliedFinance

Good monday for KUTE

Good morning,

I received an email article today from a prominent CFD Derivative brokerage house warning those that are planning to buy shares in December to be careful as that there will be a 10% correction in the early 2010. He predicted that there will strong headwinds into 2010 as US increases its’ interest rates and the problems with Dubai, Spain and Greece are not fully exposed and that gold price will continue to surge. There are also many research articles reporting that the market is peaking and nice rally will end soon. Just as many are predicting that the rally is ending, there are many other articles I received that are still bullish and believe that the markets will continue its’ run into 1st quarter next year.

Who is right and which side of the fence are you on? Firstly, I am sure US will increase interest rates and USD will strengthen, making carry trades financed by USD unattractive. We all know this, but none of us know when it will happen. With the current markets still recovery, inflation is still manageable and no hint yet from the Fed, I am sure they will not increase the rates in the next quarter. Secondly, since US will only increase interest rates once recovery is assured, there will be buying opportunities for good fundamental growth stocks. The markets may correct if interest rates are increased but since the economy is back on track, good companies’ earnings will be improved and this will cause the companies’ stock prices to appreciate. If my prediction is true, than my KUTE stock selection will be very useful, since the stocks selected are fundamentally strong with good sales growth. It seems a long time ago that interest rate of 3% is acceptable in a normal economy, so while I believe there will be corrections, I am sure the few basis points increment will be fine assuming the economy has fully recovered.

US markets advanced last night after Abu Dhabi had extended USD 10 billion to help Dubai and more signs of corporate deals. The Dow ended up 0.28% to close at 10.501.05. For the selected stocks for the week, NOV gained 0.82% to closed at $44.30, DOX was up 0.07% to close at $27.16, NE gained 1.51% at $41.01, TDW closed at $44.75, up 1.29%. FCN was down 0.04% at $46.18. There were confirmation candles for NE and TDW, so did you buy?

Have a great day.

Francies Cheng
BBus MAppliedFinance

New KUTE selection for week beginning 14th Dec

Good morning,

It’s another new week to look forward to and we are drawing near to Christmas. Christmas is the time to celebrate and it would be nice if we can make enough profits from our stock trading to enjoy the blessed occasion. So what will the week be for us to trade and make some money?

This week will be interesting. Stocks finished mostly higher last week because investors sounded more confident about the recovery. This week will tell us if they're right. We will have important earnings reports to indicate how well the economy has recovered. The Fed Open Committee will also be meeting and I do not expect them to raise interest rate, but it will be interesting to hear if they are optimistic with the recovery. I am also expecting the industrial production and housing starts reports to show improvement. There will also the CPI and PPI reports from the Labor Department and the initial jobs claim this coming week. With the Cycle Trend charting indicating range trading with downside possibility and the candlestick white spinning top formation for the week representing indecision between bulls and bears, I am expecting the market to be trading within the same broad range as last week. With this in mind, my strategic plan is to continue my buy at lower than Friday’s close and sell at targets.

The stocks selected by KUTE for the week are DOX, NOV, NE, FCN and TDW. FTI Consulting, Inc. (FCN) is a global business advisory firm. The Company assists its customers in addressing a range of business challenges, such as bankruptcy, restructuring, credit issues and indebtedness, mergers and acquisitions, interim business management, electronic discovery, management and retrieval of electronically stored information, reputation management, and strategic communications. The Company had operations across 37 United States cities and 22 foreign countries, which includes Argentina, Australia, Bahrain, Belgium, Brazil, the British Virgin Islands, Canada, China (including Hong Kong), Colombia, France, Germany, India, Ireland, Japan, Mexico, Panama, Russia, Singapore, South Africa, Spain, United Arab Emirates and the United Kingdom. The company’s operating income, operating and free cash flows are consistent and positive for the last 3 years. The Cycle Trend chart shows an upside potential and the candlestick formation of white spinning top is to hold. With the daily candlestick formation of bearish deliberation for a possible trend reversal, I will wait keep this stock in review and not buy.

Tidewater Inc (TDW) provides offshore supply vessels and marine support services to the offshore energy industry through the operation of offshore marine service vessels. The company’s operating income has been steadily increasing for the last three years. The operating and free cash flows are positive and constant over the same period. The weekly cycle trend chart is indicating a bullish uptrend, but the candle stick formation is a black spinning, indicating indecision between the bulls and the bears. With the daily candle posting a wait signal, I will wait for next period candle confirmation or for the stock to dip to buy.

As for NOV, DOX and NE, these stocks were covered in the previous recommendations so I will only look at the technical for entering decisions. NOV weekly Cycle trend and Candlestick formation are bullish; however the daily candlestick is indicating a hold. I will wait for the price to dip below last Friday’s close to buy and add on to my sole position. DOX cycle trend chart indicates a sideway range and its candlestick formation is to wait. I will not add on to the position I am currently holding. As for NE, the weekly cycle trend chart is range trading with upside potential and the weekly candle is positive. However the daily candle is to hold and wait so I will wait for buy signal or for the stock to dip to buy.

So the decisions for the week are add on to NOV if the price dip lower than last Friday’s close, do nothing with DOX, and wait for “buy” signals for NE, TDW and keep FCN in review.

Have a great week ahead!

Francies Cheng
BBus MAppliedFinance

The week ended good for me

Good morning,

It’s Saturday again and it’s time to evaluate the performance of KUTE’s stock selection for the week. I have to keep this blog short today. After the heavy drinking session with the financial editors of the nation’s newspaper s and correspondents from financial institutions, I have trouble waking up so early in the morning so that I can be on time for my stock trading seminar at 9.30am Singapore time. So I will just jump straight into the performance evaluation.

I had forecasted the US markets to be trading within range and it will be choppy, and would probably end the week flat. The decision was to buy at dip and set limits targets for the stocks selected. DJIA was 10,388.90 at last Friday close and gained 10,471.50. The range for the index was 10,207.29 to 10,471.50.

NOV last Friday’s close was $42.28 and last night close was $43.94. This stock price was volatile and the range was $40.92 to $43.96. I bought 5 positions in stages as the price declines and sold 4 of them at limits with profits. The remainder position is still in the money and I am happy with to hold this position longer.

DOX was $28.22 and ended the week at $27.14. The decision was to buy when the stock dip and take a quick profit and stayed out after the trades. The range was $26.74 and $28.58. I bought a position when it dipped on Monday but I didn’t get out fast enough when the position was in-the-money. The stock traded downward since then and my current position is in the red.

NE was $39.95 and closed at $40.40 last night, ICUI was $35.02 and closed at $35.40 and HP was $36.80 and ended this week at $38.28. KUTE’s selection was right for NOV, ICUI and NE. HP met the first fundamental selection but technical prevented me from buying this counter. As for DOX, it is a good lesion to learn that technical may tell us the current market participants’ behavior towards the stock but it can never correctly pinpoint a definite price for entering and exiting a stock.

I am looking forward to next Monday for the new KUTE selection and see you then. Have a great weekend and enjoy your profits!

Francies Cheng
BBus MAppliedFInance

NOV again

Good morning,

It’s Friday again, and I am looking forward to my ex-ACS classmates gathering with the senior editors and future journalists of my country’s top newspaper for drinks. I was in my bar before last night market session and they played the song it’s going to be a good night, and sure it was. Tonight I will also be drinking to my winning trades again for NOV. The share gained 5.13% to close at $43.82. Of the 5 positions I bought this week, 4 were closed last night with very decent profits. I am still holding to the position which I bought before 3rd December to enjoy the special dividend to be paid on 16th. This position is also in-the-money now.

I am looking forward to my stock trading seminar tomorrow and I am excited and ready to impart my trading methods to the new entrants to the trading game. I plan this seminar to be my last and hopefully I can use my skills to manage and trade for those who have faith in the KUTE selection process. I have always enjoyed discussing about equities and I do hope that I can have a major impact in their trading career.

Again US markets spend the session trading sideways but managed to end the session with solid gains, still in line with my forecast for the week. DOX lost 2.1% to close at $27.00.I wished I have waited for a deeper dip before buying this stock. I do make mistakes since no indicator can correctly predict a definite point of entry or exit, so I am hoping that the fundament strength of the company can pull the stock out of the red sea into the greener paradise. I am still holding to this share and will evaluate the company again tomorrow to decide if I need to cut loss. NE gained 0.52% to close at $40.5, HP was up 3.42% to close at $38.09 and ICUI gained 0.14% to close at $34.57.

Have a great day ahead!

Francies Cheng
BBus MAppliedFinance

Shouldn't have bought Citibank

Good morning,

I felt tired and sick from working too hard training my new hires. It’s never easy talking for more than 6 hours last night on finance topics and explaining basic concepts, ideas and principles. Honestly I should confess that while training is the reason I am feeling tired, it’s the glasses of wine that cause me to feel sick. Too much red wine and a choppy night of US markets don’t make a good combination. It got worse when I see Citibank shares declining to $3.86 last night. This is the only stock I bought without the due diligence of complying with the KUTE’s principle for stock selection. I bought believing that the stock price was cheap because the price then of $4.00 was cheap compared with the 52 weeks high of more than $9.00. I should have applied what I have been teaching others to do so, i.e. to study and understand the company and not the prices. If only I had used KUTE stock selection procedure on this company, for I am sure it will definitely disqualify with the stringent requirements for it to appear on the selected screen. I lost quite a bit on this counter, and I am telling everyone that I am holding this stock long term for capital gain. Other than this undisciplined purchase, the rest of the stocks I traded with the application of KUTE’s selection process helped offset the losses I have from Citibank.

US markets moved higher after a choppy session trading within a narrow range caused by frequent swing of USD last night. So are the stocks that I have trading positions. NOV gained 0.68% to close at $41.68 with the stock trading at the range of $40.92 to $41.91. I added another position last night at $41.41, adding to the existing 4 positions I am currently long. 2 positions are currently in-the-money. The other stock I am holding DOX fell 1.15% to close at $27.58. The range was $27.42 to $27.89.

NE closed at $40.29, up 1.95%, ICUI lost 1.43% to close at $34.52 and HP gained 0.88% to close at $36.83. I am still holding on to my view that USD needs to continue to weaken for the Fed to increase interest rates. With reports indicating that the U.S. government is not yet ready to leave the financial system completely to itself when word surfaced that the $700 billion financial bailout plan, TARP, will likely be extended until October 2010, I am quietly confident that the interest rates will not be increased anytime sooner and USD will continue to be weak, and my positions will soon be profitable.

Have a great day!

Francies Cheng
BBus MAppliedFinance

Lost but OK

Good morning,

It was a sea of red last night on my trading screen. US markets were down last night with DJIA losing 1% to close lower at 10285.97, S&P down 1.03% to close at 1091.94 and Nasdaq lost 0.76% at 2172.99. USD gained strength last night and as mentioned in my Sunday’s KUTE stock selection for the week, commodity and energy prices will decline if it happened and it will be tricky trading the stock market. So it happened, so my positions are all in the red. I am always honest enough to write about my losses, because this blog is not intended for marketing promotion of my trading business, rather it is a diary of my thoughts, stock picks and records of my trades. Just a few days ago there was an article claiming that S&P 500 will break 2000 soon and we will all be celebrating the year end rallies. I hope that the senior analyst is right, for we all need a end year booster, don’t we? For my friends who are following this blog, I must made known that no system or forecast are 100% correct all the time, and it is always prudent to have good money management plan when trading the stock markets. Good companies will grow and the stocks’ prices will appreciate, but there may be turbulence along the growth path. A good money management plan provides liquidity allows for such bumpy ride and allow time for the stock prices to recover and regain the normal growth path. I am glad that I am still in the 30-20-50 rules and I can still sleep well.

Just a quick recall at my plan for the week which I copied from my Sunday’s blog; So my decisions for the week are: Wait for confirmation to buy NE; buy ICUI and; wait for DOX to dip to buy. As for NOV both the cycle trend and candlestick formation are bullish….

I have only bought DOX when it dipped last night, and I didn’t buy ICUI with CFD because it was not offered on the CFD platform. However I have placed the order with my broker to buy the stock (not CFD) at the price of last Friday’s close.

NOV was down 1.97% to close at $41.40 last night. I took another position at $41.55, so I have 4 positions for this stock now. None are in the money, but the week is still young and I have confident that it will rebound. DOX closed 1.38% down at $27.80, so my single position is in the red, though not as much since I bought at $28.20. NE was down 2.83% to close at $39.52, ICUI down 0.34% at $35.02 and HP closed $36.51, down 1.8%.

Have a great day ahead!

Francies Cheng
BBus MAppliedFinance

Choppy flight

Good morning,

I have been receiving a well respected analyst group’s research paper every morning that predicts the Hong Kong index prices using purely technical chartings and out of curiosity I kept a record of their performance. I am glad that I did not follow the recommendations as the accuracy of its predictions is less than 20% for the last 6 months. Trading stock is like flying a plane. The pilot navigates the plane from take off to landing using information from data instruments in the cockpit. As long as the instruments are calibrated correctly and the pilots are well trained to understand the information and use them to fly, the plane will be flown smoothly. At times there will be unexpected turbulence but the plane will overcome such obstacles. If the pilots ignore the instrument readings and fly based on his emotions and past experience, likely the flight will be rough or the plane may even crash. In stock trading, having the methods the collect information and understanding these vital information is important to make winning trades consistently. Along the road of trading, calibrations are required to fine-tune these processes of information gathering and interpreting. Sometime we can face headwinds, turbulence and bumpy situations, but as long as the information is right and well-timed, the trading path will be smooth. Before a pilot can fly, he has to attend and finish a rigorous training program, including flying a flight simulator. So is a new stock trader. He should be attending a good course in finance and trading methods and use his understandings to trade a simulated demo account. Just as a pilot needs to prepare thoroughly before his flight, a stock trader should also do his homework and prepares as much before trading the markets.

US markets started the week as forecasted by KUTE yesterday, with DJIA ending the session with only a 0.01% gain after a choppy trading session. With the lack of market moving headlines, the day’s trading direction is largely determined by Bernanke’s comments and US dollars. Market breath was mixed with both the bulls and bears roughly even.

For the stocks selected by KUTE for the week, NE gained 1.8% to close at $40.67, ICUI advanced 0.34% to close at $35.14, HP was up 1.03% to close at $37.18 and DOX closed $28.29, up 0.25%.

My market order for DOX of $28.20 was hit and I am now 1 position long for this stock. My currently 2 position on NOV remains, and this stock lost 0.12% to close at $42.23.

Have a great day ahead!

Francies Cheng
BBus MAppliedFinance

New KUTE selection for the week

Dear Friends,

Someone posted an interesting question to me last week. He said he has been reading my blog and am impressed with my trading records. He wondered if the trades I made were real because the blogs only show previous day’s trades and he suspected that I only write trades that were making money. So now you understand why I posted my previous week’s trading records last Saturday. Having seen my records, he sent me another email asking me why I should be teaching others. He suggested that I should manage money using my KUTE systems instead, and mentioned that he will be the first to invest with me if I do. Perhaps I should consider that. I have more than 15 students willing to listen to my seminar for my KUTE selection method from my last advertisement. I am really considering returning their cheques and cancel my seminar, and plan to offer my discretionary CFD trading to clients using my KUTE system. I may just gather the few who has already sent me cheques to share with them how I trade using KUTE over a cup of coffee to reward them for the faith they have in me. So if you are reading this blog and are willing to trust me to trade your account, do drop me an email. (smile)

So what’s ahead for the stocks this week after finishing last week higher? It will be interesting to see if USD will continue its Friday advancement. USD has rose higher after the positive employment report and the question is whether it will continue to strengthen for the rest of the year. If it continues to strengthen, commodity prices will decline and it can be tricky for the stock markets. The market will also be tested by weekly jobless claims, retail sales and international trade reports. For the technical, Cycle trend is indicating range trading and would probably end the week flat. With the candlestick weekly formation showing a white spinning top indicating indecision between bulls and bears, the strategy will again be buying at dip and sell at target limits.

The stocks selected by KUTE screener this week are; NOV, HP (Helmerich & Payne, not the HP computer we all know), ICUI, DOX and NE.

Helmerich & Payne, Inc. (HP) is engaged in contract drilling of oil and gas wells for others. The contract drilling business is composed of three business segments: U.S. land drilling, offshore drilling and international land drilling. The company’s operating income has declined but still remains positive. Cash flow from operation has increased and is positive for the last three years. However, I am not comfortable with the negative free cash flow for the last three years. With cycle trend indicating a flat range and candlestick showing black spinning top, I will stay out of this stock for this week.

Noble Corporation (NE) is an offshore drilling contractor for the oil and gas industry. The Company performs contract drilling services with its fleet of 63 mobile offshore drilling units located worldwide. I like the company’s operating income, the operating and free cash flows, which are positive and increasing for the last 3 years. The Cycle Trend indication shows no immediate downside risk and the candlestick formation for the week is bearish. However there was a homing pigeon formation prior to last week’s bearish candle, there is a possibility that the stock will advance this week. With daily candle formation indication a new homing pigeon, this will be the stock I will consider to buy and sell immediately once the target is achieved.

ICU Medical, Inc (ICUI) is engaged in the development, manufacture and sale of disposable medical connection systems for use in vascular therapy applications. The Company’s devices are designed to protect patients from catheter-related bloodstream infections and healthcare workers from exposure to infectious diseases through accidental needle sticks. It is also engaged in the production of custom intravenous (I.V.) systems, critical care medical devices, including catheters, angiography kits and cardiac monitoring systems. This is one of the stocks that are recommended by many analysts. The company’s operating income is consistently positive and both the operating and free cash flows are good. For the technical, the daily cycle trend chart is indicating a strong uptrend. However the weekly chart is indicating downside potential. The candlestick formations for both daily and weekly indicate a good chance for upside gain. This will be the stock that I will also be monitoring to buy.

Amdocs (DOX) is the market leader in customer experience systems innovation, enabling world-leading service providers to deliver an integrated, innovative and intentional customer experience(TM) at every point of service. Amdocs provides solutions that deliver customer experience excellence, combining the software, services and expertise to help its customers execute their strategies and achieve service, operational and financial excellence. A global company with revenue of $2.86 billion in fiscal 2009, Amdocs has approximately 17,000 employees and serves customers in more than 60 countries around the world. I like the company’s operating income and cash flows. They are consistent and positive for the last 3 years. As for the technical, cycle trend is bullish and the weekly candlestick formation is a white Marubozu. However its daily candle is a bearish candlestick, so it will be good to wait for the stock to decline before buying.

So my decisions for the week are: Wait for confirmation to buy NE; buy ICUI and; wait for DOX to dip to buy.

As for NOV, both the cycle trend and candlestick weekly formation are bullish and with the 2 positions I am holding, I am expecting to enjoy more profits for the week.

Have a great trading week!

Francies Cheng
BBus MAppliedFinance

Evaluation for the week...NOV was down but I made profits from trading this stock

Good morning,

It’s Saturday again. Time flies, isn’t it? It’s time again to evaluate KUTE’s performance for the week. It was forecasted that DJIA will be trading within a broad range with the possibility of closing the week lower. DJIA closed the previous week at 10309.92 and gained 0.8% to close at 10,388.90. The range for the week is from 10,238.05 to 10,537.63.
With the expected volatility, the recommended trading strategy for the week was to buy at dip and sell at target. Let’s see how the KUTE selected stocks performed;
NOV closed at $43.30 last Friday and the recommendation was to buy this stock. It closed at $42.28 last night. The stock’s high for the week was $44.42 and its low was $41.73. I followed the broad strategy and took profits again last night when 3 of my 4 positions hit the limits. Another position was bought when it hit my market order at $42.24, so I have 2 open positions for this stock.
FRX last Friday close was $30.56 and it ended this week at $31.20. These are the trades I made for the week extracted from my IG Markets accounts;

If this screen shot looks blur (I am an IT idiot), try to click on the image to open in another window, otherwise the trades summary are as follows:

Bought FRX at $30.53, sold at $31.62;

Bought NOV at $43.13 and $42.49, sold at $44.10 and $44.15;

Bought NOV at $43.30, $43.69, $42.80, $42.99, sold at $43.81, $43.97 and $44.24 last night

Bought NOV last night at $42.24.

As for the other stocks, GIB was $12.40 last Friday and closed at $12.59 last night. SIM was $7.77 and ended the week at $8.69.

I can now restfor the next 48 hours before I start screening for the new stocks to buy with the KUTE systems. See you next Monday morning (Singapore Time) for the new recommendations.

Have a great week ahead!

Francies Cheng

BBus MAppliedFinance

Honest truth...

Good morning,

Once again the force of market proves my belief right that no one can beat the market consistently. Perhaps I should say that I cannot beat the market consistently. Last night was the first night that I am totally in the red for all my positions that I am still holding, though overall I am still profitable for the week. The ISM report didn’t help my positions. Also, too much is read into Obama’s speech and traders are worried about Friday’s unemployment report. Together with the White House hinting that this figure may tick higher, the markets declined into the sea of reds and stayed there for the rest of the session.

This is the time that KUTE’s selection criteria and money management principle helps. The stocks selected by the system are all fundamentally sound companies and as always mentioned in this blog, it is the companies that I am analyzing, not the pattern of price movements. Surely news can affect prices, but if nothing changes the companies’ fundamentals, I should not worry. Also, the money allocated to active trading is only 50% of the amount I deposited with the broker; I still have ample room for the selected stocks’ price to decline before recovering into positive territory. By then I will shout to the market again that I have made money in the US markets. (smile) The honest truth is I am out of the money today.

NOV lost 2.37% to close at $42.82 last night. I bought a position at $42.99 and another at $42.80. Together with the 2 position I bought the previous night, I am now holding 4 positions in the stock. Currently this is the only stock I am holding. FRX closed 1.05% lower at $31.23, SIM gained 6.13% to close at $8.49 and CGI lost 1.12% to close at $12.39.

It’s Friday and time to drink tonight. Why worry? I have my positions’ limit placed and even if these positions’ value continue to decline, they will surely re-bounce along with the economy’s recovery.

Have a good day.

Francies Cheng
BBus MAppliedFinance

FRX... limits hit and done

Good morning,

US private companies shed lesser jobs than the last reports indicating some stabilizing in the labor market but it is still larger than analysts’ estimates. Crude oil and related commodities had larger supplies and the Federal Reserve says the economy is getting stronger. The market had reacted to all these and closed flat but bulls beat bears by about 3 to 2 last night. My wife asked me while I was trading why do the stocks prices change whenever there’s news and reports. Perhaps there are many novice traders also asking the same question. It’s because of earnings. Companies (other than non-profit companies) exist to maximize wealth for their stakeholders. An efficiently run company maximizes its revenue with efficient usage of its assets and resources. It’s not easy and it’s a heavy course itself in Corporate Finance, but the bottom line is the company must make money at the expected returns of the stakeholders. Operating profit is one of the main factors and a company is valued by forecasting its operating profits for the future, determines its free cashflows and discounts this number back to present value with the expected rate of return. Company’s earnings are often highly correlated to the economy and industry factors and any news or reports can affect the forecasted earnings and therefore the value of the company can change today. Thus it is important to understand the company’s industry, business and financials before the stock is traded. It was often mentioned that good MBA graduates can be good investor s if they can apply their understanding in strategic management in analyzing the companies for stocks to buy.

My FRX was sold last night at limit price of $31.66, making some healthy returns for me. The counter closed 1.77% higher at $31.56. NOV lost 0.5% last night to close at $43.86. It went as low as $43.29 and I bought a new position at $43.69 and had another market order opened at $43.30 while I was sleeping.

SIM was down 1.72% to close at $8 and GIB gained 0.4% to close at $12.53.

Have a great day.

Francies Cheng
BBus MAppliedFinance

My prediction is so correct!! NOV NOV....

Good morning,

I remembered having coffee with the top economist in one of the stock broking house and we were talking about how accurate some analysts and gurus' market predictions are. He told me that anyone can be as accurate because none can pin point the exact day the predicted price move can happen. The trick is to announce the predicted change and wait for the change to happen. The rule is, if it does not happen, keep quiet and if it does, tell the whole world how good you are. He told me that he did the same because no one can remember all the wrong calls and one good prediction is enough to be exalted. This is also what I learned from my favorite lecturer in Options and Futures that over time good stocks should appreciate in value but the question of when it can fulfill its potential is unknown. The truth is no one really knows what can happen tomorrow, so all technical and fundamental analysis cannot help much. The best method is to look for good companies with good management, business and marketing plan and financially strong. Over time these companies should appreciate and grow and tell the whole worl your stock picks.
So it time for me to shout. In mu previous blogs, I had predicted that USD will continue to depreciate, Gold price will continue to soar, Dubai problem is the good for buying opportunity and the economy and companies earning reports will be good, and I am very correct. If only I had told the whole world!

So US market advanced again last night and I enjoyed it. My 2 positions for NOV were sold when it hit my limits at $44.35. NOV closed 2.46% higher at $44.08. The other stock I am holding, FRX gained 1.14% to close at $31.01. I am still holding and the position is still in the money. GIB closed 0.4% higher at $12.48 and SIM closed 3.43% higher at $8.14. I will be looking at NOV again tonight for buying signals.

Have a good day.

Francies Cheng
BBus MAppliedFinance

My wine bar is for sale?

Good morning,

I was at my bar last night when one of my partners told me that there is an offer to buy over the bar and the offer price was ridiculous. I was told that the buyer had visited the bar on numerous occasions over the past few weeks to observe the business flow and decided that his offer was good based on what he saw. This is interesting. I just wonder if he is interested to take-over the business or only the location. Didn’t he ask for our financials before he decide? Has not he research on the macros to know that we are the only wine bar in the whole vicinity and the authority will no longer issue any new alcohol license? Is he sure that our earnings will be good for the next 5 years and did he project the bar’s future earnings with all these considerations to discount back to today for the bar’s actual value?

Is not buying shares in the stock market the same? Successful stock traders do their homework to understand the macro economics, the industry the company operates in, the previous earnings and future expected earnings, the management and the company’s financial before they risk their money in the company’s share. They are interested in the company and not the share price. I sincerely hope that those who intend to trade the stock market to attend a short course on the fundamentals of stock trading before they get started.

So I was right about Dubai as mentioned in my last blog. The markets agreed with my prediction and US stocks ended little changed last night. Retailers were the main drag on the market on concerns over possible weak holiday sales. Banks led a late rebound in shares. The PMI report beats estimates and with the news coming out from Dubai that the debt in question is much smaller than previously been considered helped the market recovery. I am bullish for the ISM Index and pending home sales tonight and I believe I will ride on the shares I bought last night.

I bought NOV again last night at $43.13 and added another position at $42.49. The stock closed at $43.02, so on the average I am in the money. I am still holding on as the price did not hit my limits. I also bought a position in Forest Lab (FRX) at $30.53. It closes in the money at $30.66.

How did I trade when I was in my bar? That’s why I am beginning to love my 3GS iphone.

By the way the stock KUTE selected on Sunday, CGI Group, the symbol is GIB. I apologize for writing it as CGI on the blog. This counter closed 0.03% higher at $12.43. SIM gained 1.29% to close at $7.87.

Have a great day today.

Francies Cheng
BBus MAppliedFinance