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Monthly Sector Report: Heavy Equipment & Machines

Once again the season for farming, construction and engineering is at hand. Thus, it is meet that we revisit the industry that supports all these infrastructure-based sectors – Heavy Equipment & Machines.

The last time we featured a similar industry was in November 2011. That report would have given you a 23.4% average return in three months. We’d like to see if we can repeat that success with this report.

Click here to read more: http://www.patterntrader.com/product/sector-report-1406-heavy-equipment-machines/

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June 2014 Review, July Preview

June was a month of recuperating and rest so there isn’t much to update. The first week was spent in Paris and Normandy – the girls went shopping in Paris and the boys went to Normandy to commemorate the 70th anniversary of the D-Day landings. The photos and commentaries of that memorable trip are on my Facebook album here:

2014 Paris/Normandie

Apart from that, it was a thankfully uneventful month that allowed me to put my feet up (literally) and let them recover. As I write this, I am so happy to say that my right foot is well recovered and I am getting back to fitness again with regular swims and gym sessions.  I pray that this is the end of a two and a half year ordeal and the end of a chapter that has plagued me since 1996.

Its good to have my feet looking normal again. Now I just need to work to make it feel normal and regain the form they used to have.

Market Matters

America’s GDP contracted but almost everything else on its economic kaleidoscope is showing signs of an improving economy. Employment is back up to pre-subprime levels and the inflation rate seems to be staying constant. The CPI, however, is getting scary.

The DOW is on an elevator to heaven and reports are emerging that this will continue over the next six months. Wall Street is very bullish and advocating that the rest of us do the same.

I would suggest prudence and defense while you stay long on the market. We are, after all, in the worst quarter of the year with August and September being the most bearish months of the trading year cycle.

After not selling off in May or June, I fear any sort of correction now will inevitably be a severe one.

While the rest of the world grapples with incredibly high inflation rates and rising household debt, the answer to what could crash the market next would be exactly that – Inflation. We’ve not had an inflationary crisis since 1974. As a reminder, the conditions that led to that crisis is not that different from the circumstances we are facing today – excessive printing of money, divergent monetary policies and rising commodity prices.

Yields on the 2, 5, 10 and 30-year bonds have also been indicating a level of doubt in risk by flattening on the longer terms. PE ratios on more than 65% of the S&P stocks are indicating grossly overvalued levels.

Yet there is no doubting that this rally still has legs. Just be careful when its legs run out of steam – what follows is usually termed as “collapse”.

July Preview

July is the start of quarter three and is the best month in the worst quarter of the year. The three months of Q3 are extremely varied with July being extremely volatile (reputed to be the most volatile), August being the most bearish in the last 20 years with no reliable patterns and September, known famously for having the lowest volumes of any month and the most bearish of the calendar year over the last 80 years.

July 2014 has 21 full trading sessions, one half day and a public holiday (Independence Day on 4 July). July is known for its volatility with huge swings either way. It is also the start of the third earnings season of the year when companies are known to pull back on their guidance and become conservative about their outlooks.

July Trivia

Commodities

Summary

As I get my life back in order again, I will be relishing the months ahead as I slow my schedule down and get back to trading again. It has been a fast and furious eight years to recover what I lost from my bankruptcy and build on what my peers have taken their lifetime to achieve. I’m glad that I can now slow down and enjoy life a little more.

After all, what is all the hard work for if you can’t enjoy the fruits of your labor? I am not a slave … I am a free man.

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May 2014 Review, June Preview

Last month, I had a last minute emergency on my right foot just before I had to fly off to KL for my book launch. The 30-month-old surgery wound flared up and had to aspirated at Changi Hospital at the risk of getting infected. Nothing untoward happened thereafter and the wound looked like it was starting to heal again.

Prior to this, the issue with my right foot had been planned to be addressed later this year around July or August with a surgery scheduled to end this problem once and for all. After the KL book launch, we decided to move up the schedule.

However, things took a turn for the nasty. On the weekend of May 9 – 11, the wound flared up again while I was in KL for a booster with WATMY26. It was a struggle to get home on that Sunday and thought it best to check into SGH just in case. The wound had started to look and feel really bad and I feared infection had finally set in. I was warded while waiting in line for surgery. However, my surgeon was out of town.

Minutes turned into hours and hours turned into days. I had been starved on and off several times for hours in preparation for the surgery that never happened. It didn’t help that Tuesday 13 May was Vesak Day. By Wednesday 14 May, I could take no more. My right arm had become so sore from all the saline and Augmentin they were pumping into that vein that I could lift the arm at all. It hurt so bad that they had to switch veins. They couldn’t find a better vein on my left arm after some probing which made my frustration and pain worse. I was hungry, constipated and miserable.

In spite of all this, I have to say that the nurses at SGH Ward 75 really did everything they could to make me comfortable and happy.

Then I got the good news – my surgeon was back and was on the way to see me that Wednesday morning. I insisted that I didn’t want to be poked anymore till he came and assessed my situation. If I wasn’t going to get any surgery done, I didn’t want to and couldn’t take any more poking.

Surgery was schedule for Monday 19 May at 8am. It went well without any complications. As I write this from home after more than a week’s rest, I am healing well and the wound looks very healthy indeed. I pray and hope that this is the last episode in this very painful ordeal.

Now I need rest … lots of it.

Not just for my foot but for my whole body, mind and soul. I need to slow down and even get away from everything to just live life and enjoy it.

Since before my discharge from bankruptcy, I have been working like hell to make up for lost time and build up what my peers have taken their lives to make. I was starting from scratch, from negative in fact, to build a future that my peers had 30+ years to achieve. It has been a mountain to climb especially when you’re doing it in a hurry. Its never going to be easy at age 43 to have nothing at all and make something of yourself.

I can now look back and tell myself that I have done enough for now. There’s still much to do but it can wait. My kids are on the verge of becoming adults and I want to live and enjoy their last years in teenage-hood. I want to spend more time with my long-suffering wife and give her what she so rightfully deserves – a good life. I want to spend time to enjoy what I have achieved and take the time to plan what I want to achieve moving forward. I need to take time off to think about how I can improve what I have and make things better for the Tutorial, my school and my students.

There is still much to do but it can wait for a bit.

I need to breathe and smell the roses, give thanks and be grateful for what I already have.

And I will start by thanking everyone who has supported me and helped me back on my feet from bankruptcy. Thanks to all my graduates who have kept faith in me and continue to support our cause. And thanks to God for the most amazing seven years of recovery in which He has given me the strength and courage to help others do the same.

MAY IN REVIEW

On the weekend of 2 – 5 May, WAT72 got their weekend tutorial. For a small group, they sure had a lot of questions! Thanks for an extremely active weekend, guys. It was really great fun.

I now only have two batches of Tutorials left to complete – the Weekly Batch (WAT73) in Singapore starting June 11 and the Weekend Tutorial in KL on the weekend of July 11th. After these two batches, I won’t be doing another batch till October or so.

I think my competition is going to be very happy about this! Enjoy it while it lasts … because I will be coming back with a vengeance – bigger, better and still the best.

MARKET MATTERS (As of 26 May, BMO)

Not much for a Sell-In-May, was it? Market actually broke to higher highs this May instead of selling off like it usually does. But let’s not forget what happened last year – we didn’t sell off in May 2013 but June took a very nasty drop instead.

Dow Jones – 1 year as of the close of 23 May 2014

DOW and NASDAQ close above the year’s opening price on Friday. DOW has closed all of only seven sessions this whole year above the year’s open. This is the DOW’s worst opening five months since 2008. And its looking like 2014 is going to be volatile like this just as I said it would at the start of this year.

S&P500 – 1 year as of the close of 23 May 2014

The S&P is by far, the best of the major indices … which is not necessarily a good thing because S&P was the best performing index in 2007 and 2008 just before the big drop.

VIX – 1 year as of the close of 23 May2014

The VIX dropped to its third lowest close since 2007 and its lowest in 14 months. Would you read that as “greed” or complacency?

With the major indices fighting to get free of their major moving averages, I expect the volatility to get worse and I suspect that last year will repeat itself this June by selling off big time.

June Preview

June is the last month of Quarter Two and is a rather bearish month. Traditionally, this is more so if May had sold off. June 2014 has 21 trading sessions. There are no public or trading holidays in June.

June Trivia

Commodities

SUMMARY

Just like that, we come to the last month of quarter two and the market has had little to show for 2014 being bullish. Now we move into the heart of the worst six months of the trading year – June for being the most unpredictable, July for being the most volatile, August for being the most bearish in the last 20 years, September for being the most bearish in the last 80 years and October for having the most major stock market crashes in history.

A graduate of mine from K.L., Jeanne Kong wrote a piece on her Facebook page which is definitely worth reading because it very much reflects my own sentiment for Malaysia and Singapore moving forward in the short to medium term.

The STI, as I mentioned at the start of the year, closed in negative territory without much fanfare so much so hardly anyone noticed it closed 2013 in the red. YTD 2014, its looking very toppy again and economic circumstances still don’t justify this top …

Our GDP is definitely not growing after three years since the high of 2010. If anything, we cheated technical recessions three times by revising the past numbers upwards, once by as much as 11% from -4.7% up to +6.9% … how does one make an 11% error and still keep their job?

And while GDP stagnates, Inflation stays at record high levels amidst stagnant wages, low interest rates and increased consumer spending … and if you thought that didn’t make sense …

… unemployment is spiking just like I said it would two to three months ago. Remember all those job losses I talked about in the recent monthly updates? Well, things are getting worse with every week that passes.

Here’s an interesting statistic for you; every time our Government Budget dipped, the STI made a major correction in the following months.

In mid-May, I will be doing a full summary of the Singapore and Malaysian economies just before the half-year mark. By then, we’re going to be privy to more numbers and revisions. I suspect, the shit is travelling up towards the proverbial fan again.

It’s time to think of survivability and protection. It’s time to be defensive!

Trade Safe & Happy Hunting Always!

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Few More Must-Watch Videos

Here’s a really good dose of weekend edutainment starting with the 98 minute award-winning documentary that will blow your mind away, “The Four Horsemen” … truly visionary stuff.

Then there Mike Maloney’s 5th episode of “Michael Maloney’s Hidden Secrets Of Money“. In this episode, he also shows where he believes we are in the following cycles:

Inflation/Deflation
Quality Money/Quantity Currency
Capitalism/Collectivism

NOTE: Maloney is a known Gold Bug.

Just for good measure, here’s two more Maloney videos worth watching …

Here Comes The Next Great Depression

… and “A Warning For Americans – Atlas Shrugged

To cap it all off, don’t forget to read my latest Facebook note on
Hidden Erosion of Corporate Worth Since The Government Abandoned Money
By Robert Prechter

Happy reading and have a great weekend!

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Random Update … Wed 14 May 14 @ 20:13

I’m sitting at home.

After 60 agonising hours of being warded at Singapore General Hospital, I am finally at home and temporarily untortured. But the ordeal is not yet over …

In November 2011, I had an operation done to remove a gouty tophi from my right foot (big toe). It had become so huge that I couldn’t wear normal shoes without much agony. The operation went well except that when my surgeon stitched me up, the same wound was actually undergoing another gouty attack. Thus, while it healed, a new but smaller bunion formed. This bunion never really bothered me over the next two years.

Then four weeks ago, just hours before I was to depart for K.L., I had to go Changi’s A&E to get the wound looked at because it became inflamed and posed a threat of infection. The doctors initially refused to aspirate the fluid for fear of aggravating any infection but later agreed with me that it would be better to aspirate in a clean environment than to have it burst in the middle of K.L. over the weekend. After puncturing and getting most of the fluid out, the foot was “back to normal” and I went to K.L. without incident or discomfort.

Then over the past weekend, on another trip to K.L., the wound leaked and I felt some pain. Upon returning on Sunday 11 May at 10pm, I immediately went to SGH to get it checked and once again, the fear of infection was the prime concern. They shot me up with antibiotics and scheduled to have the wound operated on to remove the gouty tophi and clean up any infection. However, the threat of infection was just precautionary as I showed no signs of fever, high blood pressure and severe pain that normally accompanies an infection. I was warded and put on the waiting list for surgery.

And it was a long waiting list given that Tuesday was a holiday and all.

While waiting, I had to fast ahead of the surgery. They pumped me up with plasma and antibiotics till my right arm became so sore from the inside out. By Wednesday morning, my arm could take no more. Now as I write this, my right arm is stiff and sore and unable to lift anything.

Starved, in pain and frustrated with all the waiting, my surgeon, Prof Inderjit Singh returned from a trip just in time to stop my misery. I was talking a walk outside the ward, wandering quite aimlessly and feeling totally depressed. I have never been happier to see my surgeon and I am not ashamed to tell you that I almost cried with relief to see his familiar face walking towards me. He stopped the needles and made an assessment on my foot. He then sent me home with instructions to stay off my feet with a stack of antibiotics for good measure. He assured me that the wound was not infected and scheduled me for surgery on Monday, 19 May first thing in the morning.

This is much sooner than I had expected but this doesn’t help the problem with my schedule. I still have some outstanding engagements to fulfil but Prof Singh assured me that the surgery would be a minor one compared to the other surgeries I’ve had over the last 30 months. But he did advise that I should take time off to recover and rest. I do have several previews to fulfil over the next few weeks but that is all the work I will be doing for now till my next class in a month’s time.

I have known for some time now that my body has been breaking down. I have known that I needed to take better care of myself. But I have been stubborn. I have always put others before myself and now, it has been at the expense of my health.

A good friend once told me that if I wished to continue to help others, I have to take care of myself first. I am of no bloody use to anyone if I am sick as it will only make others worry for me. He was right and now, those I want to help are worried for me.

Yes, I have been selfish and now I pay the price.

No more. I will be taking better care of myself and after my surgery, I will be slowing down and taking time off. I will never make anyone worry about me ever again. Especially my loving and over-caring wife. Its time I starting taking care of her instead.

At the end of it all, I close this day on a high after reading my student’s frank and honest post on his blog about my new book, “Winning Psychology Of Defensive Traders” and the Tutorial which he attended a couple of years ago. You can read his review here: http://sgyounginvestment.blogspot.sg but don’t stop there. His blog is a must-read for anyone who wishes to get more insight to what every good financier should know.

Well done on a fine blog, Sing Heng.

Now, I am going to take things easy. And I am going to start by getting a good sleep tonight.

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April 2014 In Review, May Preview

It was another busy month and it wasn’t helped by my right foot when it chose to swell up the old surgery wound 9 hours before I had to depart for K.L. for my book launch. I spent more than four hours between 11pm and 3am in Changi Hospital to temporarily fix the problem and have been on solid antibiotics since then.

April was a rough month for me and a mental strain. Too many challenges and trials in a month that has otherwise been good to me in the past. Maybe this is a sign for me to slow down?

On 29 April, I wrote “Taking a long break” in which I mentioned that I would be slowing down for the rest of the year.

I will be running only two more batches in Singapore; WAT72 (starting on 2 May) and WAT 73 (starting on 11 June) and one in K.L. (starting on 4 July). After that, I will be taking a long break to recoup during which I will be having my fourth operation in three years. The break will give me time to heal properly.

The earliest I may return to teaching could be in September. However, if circumstances don’t improve by then, I may choose to return in November.

The Tutorial will be undergoing some administrative changes within AKLTG during this period and I expect things to get busier and better after I return with overseas engagement taking up most of my time.

During this break, I will also be reorganising how The Pattern Trader Tutorial & Tools will run in the future and how it will move forward for the coming years. Change is necessary as the brand expands. How the changes will shape up is something I need time to work on. Thus, this break will give me time to clear my head and plan for the long term future.

I guess the break will do me some good. Time to clear my head and start planning the next phase for the business.

APRIL RECAP

WATMY26 for their Tutorial between 4 to 7 April and after a weekend of brain pounding education, the class survived and left me with yet another memorable session. Thanks WAYMY26 – teaching you reminded me about why I love to teach so much.

On the weekend of 25 to 27, “Winning Psychology Of Defensive Traders” was launched in Kuala Lumpur and Penang. The Malaysians finally got their books. MPH was on hand to support the event and sell the book along with the other best-selling AKLTG publications.

On Tuesday, 29 April, WAT71 completed their Tutorial and will now go into Tutelage for the second half of the education – the hands-on application part of the whole package. Keep up the good work, WAT71!

Market

How much longer and how much higher can this rally go for?

Dow Jones – 1 year as of the close of 30 April 2014

As of the close of 30 April, the DOW faces 16,600 for the third time since December 2013 and is barely above its year’s open of 16,572.17. Not a good place to be going into May, notorious for selling off. The S&P is faring no better.

S&P500 – 1 year as of the close of 30 April 2014

The broad-based index is on a Head & Shoulders (left shoulder in March) and also looks due for a correction in May. The neckline is on the 1,845 support while the support on the DOW is at the 16,000 to 16,100 confluence.

VIX – 1 year as of the close of 30 April 2014

The VIX is showing little sign of fear – something that the Contrarians would read as Complacency at 13.41 – but it would be prudent to note that the Fear Indicator has been making higher lows all through April. I’ll be keeping a close eye on the VIX through May for signs that the market could sell off big time.

May Preview

May 2014 has 21 trading sessions and one public holiday. May is infamous for having the year’s most fearsome correction. Some Mays in years past (also in 2012) are known to have wiped out the whole year’s gain in a single month. May starts well but almost immediately goes into one of the most bearish weeks on the trading calendar.

May Trivia

Commodities

SUMMARY

It’s been a great run but all good things always come to and end. Could this notorious month of May be the beginning of the end of the five-year-old bull? I certainly hope so – the correction is way overdue.

Trade Safe & Happy Hunting Always!

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Taking A Long Break

I am tired. And I need a break. I also need time to regroup and reorganise.

My health has taken a beating and I need to slow down. The demand for the tutorial has also slowed significantly. Thus, I don’t see the point in pressing on too hard while I should be using this time to rest and recoup instead.

I will be running only two more batches in Singapore; WAT72 (starting on 2 May) and WAT 73 (starting on 11 June) and one in K.L. (starting on 4 July). After that, I will be taking a long break to recoup during which I will be having my fourth operation in three years. The break will give me time to heal properly.

The earliest I may return to teaching could be in September. However, if circumstances don’t improve by then, I may choose to return in November.

The community will still go on with their monthly Gatherings and Specialist Workshops in Singapore and Kuala Lumpur. I will still continue to support my existing students and past graduates. I just won’t be taking any new Tutorial batches till either September or November.

During this break, I will also be reorganising how The Pattern Trader Tutorial & Tools will run in the future and how it will move forward for the coming years. Change is necessary as the brand expands. How the changes will shape up is something I need time to work on. Thus, this break will give me time to clear my head and plan for the long term future.

I am also looking forward to accepting an offer from an American publisher and that means I might be away for up to a year if and when it happens. On top of that, I also need to consider my expansion into India and Australia next year. All this means that I will have less time in Singapore to do my Tutorials from 2015 onwards.

So, if you had plans to join the Tutorial or if your friends were planning on doing the same, you’d better jump in now or it will be a long and possibly indefinite wait till I resume teaching again. For details on the up-coming Preview dates, schedules and costs, send your queries to patterntrader@akltg.com.

The upside for me is that I will have time to trade properly again while I recover from my op.

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WPODT: Book Launch – Kuala Lumpur & Penang

To attend this event, register here:

https://docs.google.com/forms/d/1NxdbOkXFX5n2Lngljx-XHXxvtrNsc_lilgYpKIpg04I/viewform

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March 2014 Review, April Preview

Busy, busy, busy … That’s what March 2014 was all about for me. Week after week, one thing after another and on top of the usual brouhaha, I had a book launch.

On Monday 10 March, I did a talk to the WA Investor’s Inner Circle and got their record biggest crowd for any of their gatherings. We had fun and learned how Macroeconomics can give Investors an edge in their positions.

On 12 March, we completed the very first batch of the Options Tutorial (Module 1) conducted entirely by Wong Chen Pang. Congratulations to our inaugural batch of 31 students. And well done to Chen Pang for a most impressive first-time performance!

He then went on to complete his first Options Bootcamp on the weekend of 28 to 30 March.

We’re now working towards bringing this amazing workshop to our graduates in K.L. by May this year.

Then on 21 March, my fourth effort as an author and second solo effort was made public at the Official Launch of “Winning Psychology of Defensive Traders“.

The event kicked off at 1700 hours at AKLTG’s Trainings Centre. More than 300 people attended the launch. The pictures were posted in the previous posting here:

The book should be hitting the shelves within the coming week. If its late, its not my fault!! I’ve already delivered the lot!

The Pattern Trader also officially launched their new website, www.patterntrader.com, boasting a host of new attractions like financial and economic articles, newsletters, market updates, trading products and on-line tutorials.

MARKET MATTERS

At this time last year, I mentioned that the PE Ratios in the market were getting scary …

  • DOW: 15.95
  • NASDAQ: 17.05
  • S&P500: 18.35
  • TRAN: 20.75
  • UTIL: 25.03
  • Russel 2000: 34.88

Today, those ratios are now;

  • DOW: 15.89 (UNCH from a year ago)
  • NASDAQ: 21.15 (Up)
  • S&P500: 17.69 (Down)
  • TRAN: 17.50 (Down)
  • UTIL: 21.33 (Down)
  • Russel 2000: 74.88 (Up)

(Source: WSJ.com)

The NASDAQ and Russel 2000 are up in divergent fashion. Ordinarily, it won’t be so worrying to get some divergence amongst the indices. However, when the Russels start gaining that much (+114.68%), it tells me that fear is back on the table. The VIX is showing that kind of fear yet but it has been on a steady rise since the start of the year and that alone is hinting that something fearsome is afoot.

Things are now going to get really confusing – January 2014 wore a Bearish January Barometer which conflicts with a Bullish December Low Indicator. If historical behaviour is anything to go by, such conflicting signals have often brought on much volatility as was the case in 2010 (until QE2 in October 2010) or in some rare cases, a very flat and bearish market for the rest of the year.

The S&P500 is barely positive for the year at noon of 31 March while the DOW is still in the red.

NASDAQ is practically unchanged at +1% YTD. The NASDAQ sits below its 10, 20 and 50DSMAs while under a 10/20 Deathcross. At this rate, its 10DSMA will cross below its 50DSMA within a week.

April Preview

April is reputedly the most bullish month of the calendar year with an average gain of 2% since 1950. The last eight years were up, including 2008, with an average gain of 3.4%. April is the first month ever to have seen a 1000 point gain on the DOW in 1999.

This April 2014 has 21 trading days and no one public holiday. It is the start of Quarter 2 and the beginning of Earnings Season for Q1 results. April is also the last of the “Best Six Months” on the DOW and S&P500.

April Trivia

Commodities

SUMMARY

With the market showing signs of being very toppy and economic data indicating a slowing to the American recovery, Janet Yellen’s tapering plans are taking a slow but sure grip of greed and making investors very nervous. Bond yields are indicating that fear may be creeping back into risk and although April, with all its bullish reputation starts tomorrow, I cannot but be extremely cautious in these conditions. Too many familiar signals are in place and way too many “noisy” factors are telling me to take it easy.

So I will.

With a weekend batch in K.L. this coming weekend and my book launches slated for 24th and 25th April in K.L. and Penang respectively, April is going to be a busy month too. That is good enough reason to take it easy and trade cautiously.


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WPODT Launch – What A Party!

Thanks to Soon Ghee for the great shots!!

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