Seeing more and more negative signals this week. Volumes have been falling and RSI is still showing a negative divergence. To me this means that investors are taking their chips off the table again. No one is particularly buying, but no one is particularly selling either. Quite teling for a pretty decent earnings quarter on the whole. On the macro front, exports are also down, spearheaded by a drop in demand for electronics.

I continue to think that research houses, stockbrokers and government sharks are still pumping companies along the Malaysian macro theme such as IOI, UMW, PETDAG, Tenaga etc. (oil, construction, infratructure, property). I consequently believe that these are expensive. However I am optimistic about the Malaysian economy on the whole, so I am on the lookout for good companies in sectors which have gone unnoticed like manufacturing, electronics (which I like despite the drop) and services for the medium term. These have been suffering because of the drops in industrial production and exports since Jan 2007 so I’d love to find some value there. You can see one on my watchlist already and the other counter I like is Dlady which will by tomorrow have formed a breakout on the weekly charts. I like this counter because it is also a consumer staple business which is likely to represent safety if we see a sell-off.

Summer is traditionally a slow time for markets as traders fly off on vacation and liquidity dries up a little. Therefore the market generally goes into zzzzzzz mode (hence the saying “sell in May and go away”). I would advise my readers to also take their time over the next few months to catch up on reading, do some more research and trade less frequently. But if you still wanna swing trade, then this would be a good time to practise some nimble strategies (like range trading or even short term breakout strategies) without fearing too much about getting swallowed up in a tsunami when there are big moves in the market.