Plantations - Holding the support channel.......up trend will continue this year based on Tea Supply and Demand

Plantation index held on to the channel between 898 and 956, closing a touch above the upper channel line yesterday. To expect a resumption of the rally we need to see the levels of 973 and 986 being broken with strong volumes. Reduced Tea supply in the world markets, gave an upward pressure to the Prices in 2017. This impact will not ease off in the immediate future. The display of the volumes behaviour will certainly keep up the fierce competition amongst the Shippers and Traders through out 2018, with those who will have higher stocks in their warehouses with further buying power will be the winners. As far as the Plantation Companies are concerned their Sold volumes relative to the realized prices will be key to watch for the increased profitability. The biggest game changer will be the Rubber Price behaviour, which is not the best at the moment. This will be closely monitored....

Rubber Monthly Prices:

 There is a small up tick in December over November, yet there is a long way to go.
 

ASI gave new hopes, on the last working day of the Month......heading to test the recent high

The market closed on a high on the last working day, with the ASI breaking out of 6456 which was a mild resistance point. We can now expect the up move to re-test 6545 points, the recent high. Momentum is very interesting, and the Seasonal Quarterly figures are trickling in alongside the customary dividend pay outs. Both giving a bolster to the sentiments, despite the noise. If you are a CDS account holder through who ever the broker is, I strongly recommend to build up your Portfolio ASAP. This market will give you a minimum of 15% YOY. Don't be just reading these posts.What's holding you? Your money is yours, don't park them in the bank and regret later. Don't be stupid to try making quick bucks in the CSE. You will just be another looser joining the 99% of the ignorant, foolish lot who are willingly getting their monies burnt by all sorts of tricksters. Have a plan and invest into the best stocks, and wait....by actively watching the movement of your investments. I have given a model portfolio in my earlier post, which listed 9 SL20 stocks, also I have included the wish list I covered in another post. These will be watched and updated in this blog regularly. Last year one fund manager had recorded 11% increase in his portfolio, another 6%, and yet another -7%, whilst the model portfolio we tracked recorded 14.22%. That was when the market had given only a 3.5% return. I believe the model portfolio I have posted in the following link will out bid the ASI this year too. Check it out here:
https://docs.google.com/spreadsheets/d/1MBvPqvREQ8D-1TaudExsZwYyDUJ8ALkn-hc62w5mQyI/edit#gid=0

For all those traders, let me remind that the stop loss is very important. The reason why many are not trading in the cse yet some are happily trading forex and bitcoins or other cryptos is that they are getting stopped automatically. But when they trade in the CSE they do not apply that descipline, and get disgruntled. As we have begun another new year resolve to apply the stop loss principle, and buy only what you can loose without feeling frustrated. If you have the guts only to loose Rs.1000.00, then buy a volume to loose that amount if your trade set up fail. Be a mature Trader, without being a novice all the time.

Omnium Optimi - All the Best

Model Portfolio for 2017/2018 - Gained 14.22%, when ASI returned 3.53%

You would have heard or read that many Fund Managers have given a decent return during 2017, well above the return given in the ASI. Some of these Fund Managers have achieved negative returns, but given their long term approach towards the Funds they have turned a positive return surpassing the ASI. A Model Portfolio we created on the 1st day of 2017 gained 14.22% by the close of the 1st day of this year. That was when the ASI achieved a gain of just 3.53%. I like to share the details of this portfolio, together with the portfolio that was re-balanced. You can find it in the link here:
https://docs.google.com/spreadsheets/d/1MBvPqvREQ8D-1TaudExsZwYyDUJ8ALkn-hc62w5mQyI/edit#gid=0

It is well known that having a long term approach in the Stock Market, helps you to  increase value of your precious investments. In that sense building and keeping a very close scrutiny on your portfolio will certainly achieve fantastic results.

As we returned 14.22% last year, our goal now is to increase the invested amount together with the return on a compounded basis. Let's see how that will be achieved within the current year.

Let's look at a few more model portfolios with different combinations in the coming days.

SDB - Heading to 111/=

SDA was 104.20 on the 17th instant. The day I included it into my wish list. It will most likely hit 111.00, and test 114/= to finally test 118.30 in the short term based on the present interest. I expect 106/= to be the short term support.

JKH - Reached 165...... Now what?

It was only on the 17th we discussed about JKH. Close on that day was 160.00. As expected it tested 165.00. Trend continuation will test 168-172. All will happen with strong volumes and active trading. Else the trend would be fragile. 100 sma acts like a strong support at 158.30 in the short term.

ASI reversed within the support channel

I expected the ASI to find support between 6400 and 6430. It did just that. The next break out to watch will be 6456 points, the level I thought it would reverse earlier. If the ASI breaks out with a force above that, then we will see a trend continuation, else the higher close is just a false reversal. Let's see.

Strategies of RETAIL INVESTORS - BLIND YET INVESTS Part 3

 The Investor I am talking today is in his early 80's, and due to glaucoma he is totally blind. I repeat TOTALLY BLIND.
He had been a brilliant Engineer upto 1983, He was 48 years. He was completely shattered when he saw how people got massacred in 1983 riots, right in front of his eyes. He never entered His office ever since. Instead He decided to stay at home and make a living. His living was so successful that he had built 3 houses for His children and gave them all the best of education, as they are now well established. Why I say that he is brilliant is because he just keep the records of his share dealings in his brains. As he can't see his wife helps him to write them and keep the accounts, whilst reading financial reports and announcements so that he could study the stocks to invest into. His strategy is simple. He swaps his funds between Fd's and Stocks. Also he is buying in stages way below the present Price when he believes that the market is coming down, whilst selling way above the Selling price when the market is going up. Even if he could pump in millions of cash, he will always buy and sell in 100's,200's,300's or max 500's. Is this a simple strategy or not!!!

A&D Strategy (ADS) - Please read if you like trading

Despite the theory and real lessons teach participants in the Stock Market, that the real gainers are the INVESTORS who take a long term view, the truth is that over 90% of them want returns in the short term.

Trading and Short term gains are very important factors in a market come rain or shine. There are many Strategies you could follow when you are in the game. That too is important. You can have numerous strategies, as long as you stick to them. That is something that one should train one's self to adhere to.

One Strategy that can be used is called the A&D Strategy or ADS. ADS stands for Accumulation and Distribution Strategy. Some might think that this refers to the accumulation and distribution line created by Mark Chaikin. It is not, I have used the 2 words as they are relevant to this strategy. Also it is useful to combine the A/D line to analyse the accumulation and distribution phases in the stock. But there are many indicators or oscillators that can be usefully combined.

Why am I sharing this strategy? the reason is that this technique is being followed by many veterans in our market with gut feelings, before and after the charts were introduced. As they have been successful doing the hard way, we are now so fortunate as charts and indicators are at our disposal to be used.

As in the case of any Strategy if you want to test this you need to follow RULES. If you don't want to follow rules then no point following any strategy in the first place. Hence worthless reading this any further. DON'T WASTE TIME READING THIS. DO SOMETHING USEFUL INSTEAD.

Ok! now that you are interested to read further let's look at the guidelines:

1. Select a stock or a sector which has a promising future.
2. Pick the winners in the sector.
3. Know the key performance indicators relevant to those stocks.
4. Short list them to a manageable number.
5. Study the charts.

Thereafter you need to spot the up and down trends and keep accumulating little at a time, and distribute also the same way.

In the ADS Strategy we consider the price increase as DISTRIBUTION, whilst the Side way movement, aka consolidation as ACCUMULATION. The challenging part in this strategy is the decrease/down trend in the price. As such you need to be bold in applying stop loss rules.

Say that a stock's price go up from 10 to 15 it is the range in which the Distribution took place, then when the stock moved down from 15 to 13 you wait until the side way movement/consolidation takes over. Once you spot the consolidation you start the Accumulation. Can the price fail to move higher once the consolidation is over? Yes ofcourse it can, hence the stop loss. This happens mostly in very high overbought areas. If you patiently postpone your accumulation until the price move into an oversold area, you will have more success in this strategy. This is common to any strategy right?

One might have different ideas about it, BUT REMEMBER THIS IS ONLY 1 STRATEGY OUT OF MANY STRATEGIES AVAILABLE OUT THERE IN THE MARKET.

Classic example will be the Stocks in the Plantation Sector. As we can see this sector is coming out of a slumber of 4 years. It got battered so much that no one cared or dared to look at it. But then it is history now. We can expect the sector to perform well in the next few quarters or more.

Balangoda Plantations is one leading company in this sector. With a decent earnings record, we can assume that the stock could test the historical highs in the uptrend that it had gotten into.

By looking at the chart below let's see how the DISTRIBUTION and ACCUMULATION Takes place in Balangoda weekly chart.

1st the Distribution takes place from the week ending 27th of March 2017 to the week ending 15th May. The price from a swing low of 10.60 to a swing high of 17.50.  Stock falls from 17.50 to 14.20, thereafter the Accumulation takes place from the week ending 12th of June to 26th of June, between 14.20 and 15.70. As the price move higher during the next week, the distribution takes place for 2 weeks until the week ending on the 10th of July. Price moved from 14.80 to 18.90 during this period. Again the price fails and come down to 17.20 on the week ending 17th of July. At this point the accumulation takes place till the 31st of July between 17.20 and 18.50. Thereafter the Distribution took place from 17.90 to 29.30. This rally lasted for 6 weeks at a stretch.

My Wish List for 2018

2018 - My Wish List

MGT now 14.50, target 20, roi nett 34%.

Tokyo.n - now 67, target 95, roi nett 39% + dividends.

SDB now 103, target 126, roi 20% + dividends.

Dial now 13.40, target 16.60, roi nett 21% + dividends.

Samp now 316, target 361, cost will reduce if you take the rights+additionals, roi 12% + dividends + gains on rights.

Let's watch these stocks regularly. 

MGT - Probable turnaround story......could give you more than 30% within 2018

Let's see whether we will see that MGT is going to fulfill my expectation of  reaching 19-20 within the year.
Presently trying to test the 100sma at 14.90/15.00. Breakout of that could take it to test 16.00 in the short term. Price behaviour alongside bottom line recovery could take this counter to test my ultimate target for the year of 19-20.

JKH - must stay above 153-156 to trend higher in the short term

JKH to breakout of 165, it must hold between 153 and 156 range. As we can see it's trading above that range, we could see a re-test at 165. If the strength is strong enough to break out above 165, it could head higher.

ASI - Heading down to test - 6400-6430 points

ASI couldn't hold on to 6456. Now heading down towards 6400-6430. This is an important area as it is within the 50-61.8% fib retracement area of the previous up move. I expect that range to be respected. Failure to hold that will expose the previous low of 6316 points.

ASI - would test 6456, then reverse upto 6600

The present retracement in the ASI will test 6456, thereafter will reverse to test 6600. Break out from that would take it upto 6680.

Balangoda Plantations Plc - BALA.N.0000. Risk 2/50 to Gain 9/50

Balangoda too is in a correction and at present entering it at 30/50, will risk 2/50 to gain 9/50. This counter will 1st test the Gap Resistance between 34 and 35 before its rally to test 40.
As long as commodity markets in the world flourish their produce will follow suit, which will help their bottom line, and sentiments. Traders should not ignore this counter.

Maskeliya Plc - MASK.N.0000, Testing the Gap Resistance. Breakout could take it up to test 28.00

After a massive rally in 2017, the counter is in a major correction. Once done we will see new highs. But before that it is checking in a Gap Resistance between 22 and 23.20, once complete it could test 24 as the near resistance and 28 as the distant test. There after with strong growth potential it would move higher. As there is a strong support at 19, if any one wants to collect at the present levels, should know that the down side risk is only 3 rupees.

Tokyo - Collect

Tokyo had to face a lot of resistance as one of their major share holders divested its holding. We saw this strong selling forcing the bulls to form a fierce support between 57.50 and 63.50 for a period 7 months. There after the counter rallied to a high of 78 in a matter of 5 weeks, since then the supply kept the price under check from Apr '17 to date in a range bound trend between 60 and 78. Presently it's trading towards the low end of the range. Once the accumulation is complete the counter will take off to strongly break out of 78. Before that it will test resistance by short term players at 68,70, 75 and 78. The 6 to 12 month expectations would be to test 85 to 90, completely supported by strong growth expected in the year. If anyone ENTER it at 65/66, you have a ROI running up to 38% WITHIN the next 12 months.

ASI - Weekly Update....heading towards 6700 Resistance, Get in!!! Avoid Regrets!!!

Normally we were taught that the Foreign Fund Managers and the Local Institutional Investors/Funds start buying from/after the 2nd week of the 1st month i.e. January for the New Year. But it is different this time. The Foreign Funds have started shopping from the very 1st week. Amongst their  picks there are 4 banks, and 4 large cap stocks. If you want to know who they are click on : https://gallery.mailchimp.com/e967ee100b16f124932888c5f/files/ab66a505-a2fe-4587-8412-7ecb80c1a185/WeeklyChangeinForeignHoldingofSharess_05012018.pdf

REMEMBER THIS!!!
If the Foreigners are collecting, they are bullish not only on the Sri Lankan Market, instead they are bullish on the Emerging and Frontier Markets as well. What is important for us is that IF they have allocated funds for Sri Lanka, amidst their overall weight-age towards EMs and FMs, THAT IS SERIOUS BUSINESS.  As long as this trend persists then my friends expect this market to hit higher.
FOLLOW THE FOREIGNERS NOT THE LOCALS.

The week just finished saw the ASI hitting a gain of 145 points against the last weeks gain of 50 points. The market thus have increased 2 weeks in a row, after a stretch of weekly drops for 10 straight weeks. 3 big banks and the largest conglomerate are leading in front, which is very bullish.

ASI will test the resistance between 6627 and 6770 during this uptrend, and do not regret for not getting on board timely. Stocks to pick will be covered in my other posts expected today and tom.