Get Ready to Ride the Bull..!!

In the last few days, the stocks have been in a pullback situation. Fund managers and major investors are taking some profit in the Indonesian market which has been the best performer this year. For me, as an optimistic and a very bullish trader, I see these days are the best time to enter the market.

I would show you guys some perspectives and ideas to time the market from technical point of view.

BMRI Daily Chart
(Source: Dongsuh Securities, edited)

The chart above is the Bank Mandiri (BMRI) candle stick. The chart shows that BMRI has been pushed down beyond the major moving average line (the red MA line). It could be seen as a sign that BMRI is entering a bearish situation. I tried to figure the fibonacci retracement from BMRI chart to get an ideal price to buy this stock. The March 2009 was the initial long rally, with initial price of 1750. The highest level was 5300. The 23.6% retracement for me is an ideal price to get in. The price of 23.6% retracement is around 4462.


INTP Daily Chart
(Source: Dongsuh Securities, edited)

This is another chart of Indocement (INTP). The rally was started on March 2009 with initial price of 4250. The highest level was around 12300. The 23.6% Fib retracement is 10400, which is an ideal level to buy this stock.

The best price level to buy those stocks are unique for every investor since every investor has his own risk-aversion or risk-taking level. For an aggressive investors, 23.6% might be the best level but for moderate investors 38.2% or 50% might be the ideal level.

Here is the summary of the retracement level for BMRI, INTP and SMGR.

Fibonacci	BMRI	INTP	SMGR
Retracement
23.60%	4462	10400	6174
38.20%	3944	9225	5663
50.00%	3525	8275	5250
61.80%	3106	7325	4837
100.00%	1750	4250	3500

UNSP is Undervalued

Reuters Code : UNSP.JK

President SBY just announced the ministers for the period of 2009-2014. I noticed that the economic coordinator minister, Hatta Radjasa might be the weakest person in the economic team. Lets look at the market reaction tomorrow...

By the way, the oil price has reached a new high today at around $81 per barrel. I believe with the upward move in the oil would influence other commodity prices such as crude palm oil (CPO). If you guys are following me, I wrote in my comment here: http://deroncapital.files.wordpress.com/2009/09/factsheet-sep-092.gif
On that comment, I have predicted that CPO price tend to be higher in the coming months. In early October I bought SGRO stock to overweight the plantation sector in my portfolio which had gained almost 20% before I sold it. You guys could check my portfolio here : http://deroncapital.wordpress.com/
SGRO, AALI and LSIP are outperforming the market month to date. UNSP is lagging the market. I believe UNSP would rise in the near to medium term to catch the other plantation stocks.

The 2Q-2009 UNSP financial report showed some sign of improvement, even though the market still think that UNSP is a risky kind of stock which is reflected on its stock price, with P/BV below 1.5 x. If you check the financial statement, obviously the profit were resulted in the April-June period. From here, I concluded that the trend is improving.


(Source : Dongsuh Securities, edited)

The thing that we should be aware of is the BV per share of UNSP is significantly lower than three months ago due to the increasing in the diluted weighted average share. I am expecting that when the CPO price increasing significantly, UNSP management would be able to buy back some of its stock in the market hence the outstanding share would be reduced.

I believe the ideal P/BV ratio of UNSP should be around 1.7-1.8 x, given its strong growth potential. I derived the ideal price of UNSP based on its ideal P/BV :

P/BV	Expected Price
1.7	961.32
1.8	1017.87

October: Continue Rally or Pullback ?

We are entering the 4th quarter in lack of confident. The JCI was opened in red but it managed to close in slightly positive, up only 0.08%. The unemployment report in the US showed a new record low since 1983 with 9.8% unemployment rate.

In my observation, I noticed that there were some re-balancing portfolio activities in the market lately. Fund managers and foreign investors are tend to shift their portfolio into a lower beta stocks. It could be seen as a sign that the market might be in a higher volatility in a near term. Investors are trying to enhance their portfolio so that their portfolio risk would be lower.

With this risk aversion condition, I am expecting the market in a ranging trade with tendency to go down a little bit in this month of October.

(Source: Dongsuh Securities, edited)

The trading range would be in 2400 - 2500 level or if the market go down further beyond the 2400 level support it would test the 2300 level.

You could check my portfolio here : http://deroncapital.wordpress.com/