Sunday, 13 October 2019


To our audience who don't give a hoot about our long-winded stories that go nowhere and all that, here's a treat for you - just the list of stocks that we think would be affected in some way from the Budget 2020 speech last Friday. 

We'll keep the summaries short and highlight the relevant passages from the Finance Minister's speech (which you can read in its entirety here).

To be extra cute, we will also arbitrarily mark the stocks to indicate their must-watch-ness on Monday (14 October) and the rest of the week. 

* - "Can watch lah if bored"
** - "Can get the heart rate up abit only"
*** - "Uncle says you need to watch this"


A few caveats here:

1) These are just stocks that may be linked to the Budget 2020 announcements. They are not buy recommendations, and the potential impact is not necessarily a positive one. It's a watchlist.

2) We chose the themes that we feel are most relevant, or contain a direct impact, to the companies.

3) We chose the stocks that are most relevant and filtered out the more speculative names. We also left out certain lousy stocks that we would not buy in a million years.

4) These are short summaries only. You have to do your own homework and dig deeper.


SIMEPLT - Largest landowner on Carey Island. The speech excerpt implies that the Carey Island port project is still seriously being considered, despite adequate capacity at Westports. This thematic is in the 5 to 10 years range, so don't get too excited just yet.

WESTPORTS - Klang Logistics Corridor to improve transport/efficiency.

IJM - Kuantan Port development funds.


OPCOM - Fiber optic cables manufacturing, installation activities.
OCK - Provider of telecommunications network services.

BINACOM - VSAT capabilities and specialisation in satellite broadband tech.

SEDANIA - Hey, they just got into e-sports OK...


GHLSYS, REVENUE - Provider of electronic Point of Sale systems and payment services.


SOLARVEST (to be listed on 26 November 2019) - Direct beneficiary of GITA and GITE. The company's unit also runs a solar leasing programme.


GENM, OWG - What counts as 'new investments'?? We have no clue so far - the wording leaves things open to interpretation. We're just saying that theme park operators should really consider throwing some money into new theme parks to enjoy these benefits...


A lot of labour-intensive manufacturers are impacted by this, but we will pick TOPGLOV simply as a representative example. That RM100 increase sounds small, but it makes a lot of difference to both employee and employer.

What does 'major cities' mean? Where does the boundary lie between those who are entitled to get a minimum wage of RM1,100 or RM1,200? 

TOPGLOV's main factories are in Klang - is it a major city or not? Would its competitors - some of whom have factories that are definitively not in 'major cities' - have an upper hand? Interesting hypotheticals to consider.


 HSSEB - Already tendering for East Malaysia water projects. The contracts are there to be won.


GAMUDA, LITRAK - Let's cash out, baby.


This cuts across a large swath of property developers in Malaysia, so let us be more specific. For this incentive, the clear(est) beneficiaries are property developers with substantial exposure in affordable homes priced at RM300,000 or so.

To narrow this further, it would likely be for homes located outside of the Klang Valley, given the price point. We discount any listed developers with exposure to PR1MA - the agency was not even mentioned in the speech...

For us, the compass points squarely at several smaller property developers with projects in states like Johor. So our representative pick is LBSBINA.

MAHSING, UEMS - inventory clearance soon hopefully. These are our two representative picks. Purely from our personal bias, we like the stocks.


BJTOTO, MAGNUM - We think these companies should thank their lucky stars (ahem) as the Government inexplicably chose not to hike gaming taxes for NFOs.


EKOVEST, IWCITY - Another round of this again then??

To conclude, we'll leave you with this quote:

"Where the hell are all the construction counters?"

Sunday, 6 October 2019


Gross Profits : RM6,383
Return on Investment (ROI) : 6%
Duration : 2 days via 2 trades

Rules are great; they are what separates humans from animals. Without rules, a show monkey can day trade and statistically deliver results that are equally comparable to yours.

We obsess over rules. They are crucial in everything that comes with the practice of trading. They tell us when to trade and more importantly, when not to.

Just as important is to follow another bit of folsky wisdom:

"you ain't ever gonna go broke taking profits".

Rules can separate the diligent trader from greed-driven temptations. They help provide better clarity in thinking, and that's the most important asset you can possess in this business. Many blogs and guides - including this one - talk about rules when it comes to managing losses. This time, we will talk about managing profits, which is a difficult piece of skill in itself.

We say difficult because it applies to ourselves, and we are not immune to the vagaries of greed. Instead of being content with 10% profits, that primal, Neanderthal, dumbass part of our brains tells us to go for broke and target 20% profits instead. What eventually happened was that we lost everything and ended up with a 10% loss - and that was just one real life example!

Greed creates indecision, but rules help extinguish greed. Know these two maxims and you're (almost) set for life.

Today's trade contains two parts that utilise completely different skill sets. The first is momentum trading, and the second is downside volatility trading. Over the span of 24 hours, we did both to great effect, and we will demonstrate how theories behind both approaches can be applied in a real life trading context.


If we were to summarise this into a neat all-inclusive formula, it would be this:

profit target met (A) + peak bullish condition in the stock (B) = take profits. Go home. Sleep.

(A) is the part where your rule-setting exorcises all those greedy demons. It must be absolute, inviolable, and... chaste. You must write it all down before it happens, otherwise you won't know what rule to follow, comprende?

What you need is a series of predetermined targets. You can use ours; we keep them very simple.

(Editor's Note : your targets should apply to you alone. Adjust things like profit targets based on your skill level and you amount of capital. It's not realistic to expect thousands of RM in profits if your capital base is RM5,000 or below. Be honest, and adjust these targets upwards when you become a better trader).

1) Profit target per trade, absolute number : RM1,000

2) Profit target per trade, yield % : 5-10%

3) Consider an exit when threshold(s) are hit: 
- 1st threshold : profits hit RM5,000
- 2nd threshold : profits hit RM10,000

4) Get out at all costs if:
- yields hit 30%

From (1) to (4), our range is between RM1,000 to RM10,000 in profits or between 5% to 30% in yields. Depending on market conditions, or how the stock is performing, we may decide to stay or sell. 

Obviously the intention is to maximise profits as much as possible, but those thresholds keep us grounded. When we hit them, an internal alarm automatically sounds. Think of Thumbelina on your shoulder, but this time it's a pot-bellied uncle who's also a master trader.

"Bro, this point hit already bro. Take that money and run. Don't be greedy."

Our first trade in PRG shows we applied this thinking. Following the rules saved our skin, and then some.


We encountered a riddle right at the beginning : how on bloody godforsaken Earth can you trade a stock that looks like this?

PRG, August to September

That's a daily chart. It's ridiculous. There's not much else to add. So can buy or not?

'Can buy' is the answer, but this is a very risky and dangerous situation. It's a stock that had gained 100% in 14 trading days. Suspension of disbelief is necessary.

The 'buy and close one eye' brigade will say that no skill is necessary to approach this trade. You can sort of just buy and see what happens. 50% of the time it might work, but this also includes the probability of you losing 50% of your capital if you're not careful.

No, what this trade needed was a specialised and calculated approach. We did indeed buy shares at the top of this price activity. And it went even higher.

We'll explain our approach step by step. 

We first got into PRG on 24 September. The stock closed at RM1.08 the day before but it opened at RM1.10. This nice little 'gap up' was the first good sign.

There were two things working in the stock's favour, in our view.

- there wasn't much resistance or outsized selling at the RM1 point. PRG blazed a path right through it on 23 September. We liked that.

- on the morning of the 24th, there was curiously little resistance at the RM1.10 level too. In fact, it strengthened some more. We hearted that <3

To begin with, we entered into a position and set a very tight stop loss point. We were wary, not worried. Either this thing works or it doesn't work, but quickly.

We were only willing to risk a 2 sen loss per share with this move. We were fully aware of the risks of buying at the top. The RM1.18 target was a lofty one, considering where the stock is trading at in the charts.

There were some minor selling activity at higher levels but eventually the stock ended the morning session at a new high. We were holding on to our position.

As we anticipated at the time:

To cut a short story shorter, the stock eventually rallied some more in the afternoon. We were committed to hold the position at least until the end of the day. Our initial target of RM1.18 had already been met; we didn't mind pushing this further.

As at 4PM:

And then, by 4:40PM:

We decided to exit even though the stock closed at its highest point of the day - chartists would consider this the bullish-ish-ness sign of all. Such price activity tends to lead to higher prices tomorrow, or a 'gap up'.

But having met our targets, we knew to count our blessings! We did not give a damn about gap up potentials or what your neighbourhood chartists say. Taking profits is far more important.

We outlined the risks much earlier; just minutes after we entered into the PRG position, in fact. Upon hindsight, it was an ominous warning of what's to come, as you will see...

Included the timestamp so you know exactly when we came up with this.

All things considered, the returns were anomalous in a good way. Not every day does this happen. 


On 25 September, the stock did pretty much what most of us expected. It opened at a 'gap up', eventually rising to RM1.30 in the morning session.

We admit; we were slightly kicking ourselves for selling a bit early. But then we reminded ourselves that we don't have superpowers. There was no spider bite that suddenly gave us the ability to time peaks in stocks. Selling at RM1.22 instead of RM1.30; so what? 

We didn't have a spider sense to tingle us. But we did smell something funky. 

Over the two days, instead of being an illiquid counter (or a 'lousy stock to trade' as we'd usually call it), PRG suddenly encountered massive buying volumes queued at lower prices. We're talking about thousands of lots, which can be interpreted as a ready supply of buyers.

But the presence of buyers does not necessarily mean actual buying interest. Like Fat Joe on a boat, they can simply disappear when no one's looking. 

On this particular day, PRG peaked at RM1.30 and showed some stability at the RM1.27 level. Within minutes, all hell was about to break loose.

In a five-minute period from 10:15AM onwards, all the purported buyers disappeared. The support at lower prices - those big lots we mentioned - became no more than a mirage. And of course at this time there were a few opportunistic uncles and aunties who were chasing the rising stock. This was a rollercoaster - but it had stopped going up.

So we watched with curiosity as the stock staged a dramatic drop from RM1.27 all the way to 96.5 sen. How do we convey the magnitude of this move - 24% drop in 5 minutes! - other than with  facepalm and shrug emojis?

What the...

Look, this kind of thing does not faze us. We have seen this before - we knew that it could happen, and this time it did with a vengeance. In fact, if there's one thing that haunts as at night from trading - we usually sleep soundly - it's this very situation.

Those who had 2,000 lots of PRG at 1.27 for example, would be deader than dead when the stock immediately falls like this. The only recourse is to dump at any price, and we were willing takers.

Call us whatever you like : predators, bottom feeders, etc. We like to think of ourselves as the bringer of balance to the Force. Our small participation creates a little bit of liquidity for sellers to go into cash, mitigating potential further losses.

Our purchase records below clearly show that we had an idea to buy at the peak (trough?) of the panic phase. We even somehow got a bit at the absolute low of 96.5 sen for PRG. Remember that this stock was trading at RM1.30 barely an hour earlier.

The accumulation and exit phase did not last much longer than seven minutes. Realising that our targets were met. We chose to exit at RM1.10.

The full narrative as described in our members only Telegram channel:

Our final gross receipts weren't bad:

Well, we got our happy endings and whatnot. But the stock didn't peak at the point of our exit. It went up to RM1.27!

The 25 September stock price chart is a thing of beauty. 

The stock market can be extra crazy than usual sometimes. We try to do our part by tracking inefficiencies and pounce on them. But the most important thing to remember is; don't push your luck.

Accept the profits. Go to sleep.

Tuesday, 24 September 2019



Gross Profits : RM13,300
Return on Investment (ROI) : 20%
Duration : 7 days

It's been three months since our call on PENTA*. Since then, our gross profits have accumulated to RM20,000. It's one of those car-sized profits we try to hunt for every year. If we can get a few of these each year, we'd be pretty happy.

We did not conceal or kept anything to ourselves in our coverage of the stock; every inch of our thinking is on this blog. We just thought it was a good company with all its stars neatly aligned.

And when the stars do align, it always makes for a very powerful trade, and our eventual profits have not disappointed. And we're not saying the rally is over; did you notice that it has only been three months??

Since flagging this stock, we have discovered some interesting things:

- it is the best kind of momentum stock relative to the market. When the stock market declines, PENTA declines at a lesser rate. When the stock market recovers, PENTA rallies much, much farther.
- it is a clear leader in the broad tech sector category for companies of its size.
- it's closely correlated with FRONTKN, another of our top picks which we have not been smart enough to buy into recently. We do tell our readers about it constantly in the Telegram group, though.
- over the past three months, PENTA has returned 33%. The FBM KLCI? Down 5%. 

The alignment of stars that we mentioned was also very straightforward. You don't have to be Svengali or Sherlock to realise this. We realised it, and we are not smarter than you. We just took note of it and did our jobs. 

- fundamentals remain solid.
- technicals (the price chart) were favourable, especially in the context of this trade.
- market conditions paved the way for a blistering rally (that window of opportunity opened).
- our timing was impeccable as we correctly anticipated the breakout in the stock price.
- we had the perfect instrument to trade this in order to express our view.


There was really one thing that made this trade stand apart - the timing. We nailed that not out of luck, but preparation.

After a flattish post-earnings performance since the end of July, the daily chart for PENTA looked like this.

As at 11 September 2019.

What looks like a disfigured 'M' is actually a representation of PENTA stock reacting to different stimuli. The first one is the post-earnings blues; the 'sell on news' adage was well and truly alive.

Remember our earlier trade in PENTA-CB? We sold that after the stock retraced from RM3.75 to RM3.40 in early August. Poor form on our part; we sacrificed about 6 sen per share in profits for that one. Yes, we sold at the bottom, at least in a three months context. But that's a forgivable sin; we met our profit targets and exited with dignity.

Notice the first two peaks of this 'M'? They are failed breakout attempts. If you really want to picture it, it's essentially a bunch of uncles trying to drive PENTA stock beyond that RM3.75 range, only to be met by selling pressure by sellers (possibly uncles who are institutional traders) both times. That resistance point was Normandy on D-Day; the Allies are being repelled by Nazi firepower. (Editor's Note : we're not trying to compare institutional traders to Nazis...).

Another factor you should know: during the time period captured above, the markets also underwent a mini-Doomsday scenario. Stocks in Hong Kong and the US were hit hard by potential market crash jitters and Trumpian B.S. ; these are not new things, but they hit hard regardless. Such concerns drove down prices of stocks in the volatile tech sector, and PENTA was no exception.

The second failed breakout was when we started paying attention again to the stock. It had been just a few weeks since we got out of PENTA-CB. Buying into it again was not an option due to the low liquidity and low trading volumes.

It's also priced much higher than at the point when we sold it, so we felt icky about buying into the same warrant at higher prices. That love affair was over; it was time to seek a new date.

We found true love with PENTA-CG on September 11 (Editor's Note : never thought we'd write that sentence in a million years...). It was a quick introduction, companionship, and consummation of marriage. We bought into the warrant in a big way on the 12th, just one day after it made its market debut.

There was really no need to wait; this bit of timing made all the difference. We ended up finding the right trading instrument, but more importantly, we successfully executed this trade at the right time.

We were anticipating PENTA to break out strongly beyond RM3.75 when we got in. Third time's the charm, but there was also something else that went in our favour.

Whatever this is, we love it. Source.


That something else is this : positive market conditions provided a window of opportunity for stocks like PENTA to rally onwards and upwards.

While markets were abuzz on the Saudi oil attacks an implications for Malaysia stocks, we were also counting on the leading tech players to outperform.

Here's the thing about PENTA and FRONTKN, regardless of whether you have full conviction in their fundamentals or not. Both stocks will do well in a good market; by this we mean an active market with enthusiastic buying and selling of stocks, and some prominent leading counters.

A good market is not just about whether the KLCI is positive or negative; it's also about the breadth of activity in Bursa Malaysia stocks. A rally in crude oil prices is typically positive for Malaysian stocks; you're probably aware of this.

With the right timing, the right instrument and the right market conditions, we were able to achieve significant profits. The chart below illustrates what we mean.

It was important that PENTA-CG was newly listed when we bought it on 12 September. It made its debut on 11 September, just the day before.

It just so happened - and this is a coincidence - that PENTA stock exhibited signs of breaking through to a new all time high after two solid months of consolidating, trying and failing. We were very comfortable to take up a large position in the warrant just to get exposure in this angle.

Because we were early to get in, we managed to enjoy a profit buffer of 1 sen per share from the outset. We first entered into PENTA-CG at 15.5 sen, and by the time the breakout happened - as we anticipated - the warrant was already trading in the 16.5-17 sen range.

We had not been constantly watching the stock since July, by the way. We only began paying attention again after the stock made a strong move up from RM3.50 to RM3.70 within days.

As one of our favorite sayings goes, "if the stock wanted to collapse, it would have done so a while back". But it did not, and the repeated signs of strength and buying interest made us pay attention.

On 12 September, PENTA stock broke a new all time high and practically never looked back. This particular breakout was good for a 13% gain within a single week; it was a very strong move. (Editor's Note : as a general rule, the longer the consolidation phase, and the more failed previous breakouts, the eventual breakout move would be much stronger).

Recall our previous posts on the importance of creating profit buffers. In PENTA-CG's case, ours were large enough that they allowed for further accumulation of warrants. We bought a large position at the 18.5 sen mark, with a view towards the warrant breaking 20 sen. This it did within a couple days.

You may think we were lucky to have found the right timing and the stock just so happens to break out. We'd partly agree, but we were also thoroughly, fully prepared.

How do we prove this? Simple: this trade uses the exact same trading strategy that we had shared in our first PENTA post back in July. It is literally the same angle: newly listed warrants, good company prospects, good charts, positive catalysts.

The only difference? We traded a different warrant. Indeed, this strategy can be replicated for future trades, and for different stocks. You just have to find one with similar circumstances, and that confluence of factors culminating in a trade with massive profit potential.

This is the true power of warrants trading. By choosing the right warrant, and under the right conditions, you can boost your profits sky high.

For PENTA-CG, our holding period was just under a week. We fully exited on 19 September.

This is worth repeating: 20.5% yields and RM13,300. From one Thursday to the next.

It all stems from one good idea and some good execution. Really, anyone can do this.

*Our PENTA series of posts for further reading:

9 July 2019 ~ PENTA stock was around RM3 at this time.


7 August 2019 ~ 1st round profits of RM7,700


Friday, 20 September 2019


When light goes down, I see no reason
For you to cry. We've been through this before
In every time, in every season,
God knows I've tried
So please don't ask for more.
~ "Carrie"

Gross Profits : RM1,750
Return on Investment (ROI) : 12%
Duration : Intraday

At the risk of turning into a Hong Kong blog covering Hong Kong things only, our foray into trading Hang Seng index warrants continues. We've written a few lengthy posts on this topic, from the broad and simple to the narrowly complicated.

This particular trade was only notable for the fact that it was down to pure luck. Yes, it happens sometimes. We try to make peace with this.

While we are proponents of the 2:1 reward-to-risk ratio, we can stretch the thresholds a bit when our trading stake is small. Given that we were dealing with the most volatile trading instrument on Bursa Malaysia, sometimes we fail to follow our own rules. We're only human.

Below is an illustration of our purchase point, and why we were willing to temporarily ignore our tight stop loss thresholds. 

The rationale for this trade is simple. The 'gap up' as seen below is an indicator of bullishness. So we started building a stake. At the time, the Hang Seng was in the doldrums and has been for a fair number of weeks due to a confluence of negative factors, mainly the Hong Kong protests and a recent downturn in global markets. 

Since the trade was done, the index has jumped by more than 1,000 points.

The gap open in the Hang Seng encouraged us to stay invested. There was a decent decline in the markets of about 0.4% or so in the opening hours of trading on 5 September 2019. Over a 40-minute period, we managed to build a stake totaling 70,000 put warrants.

HSI-H6Q, the put warrant in question, actually fell steeply after we got in as the market suddenly stages a strong recovery. It was down 19% at its worst point, from a nice peak of 23 sen to 18.5 sen. Our temporary paper losses were in the RM1,000 plus range as of 10AM as the market continued rallying. (Editor's Note : remember that the put warrant correlation is inverse : a rising market means a deterioration in the value of our put warrant position)

At this point, we were faced with two options: dump everything or add to the position. This is where we have to admit that we were not abiding to the rules. If we had a threshold for an exit, that point had passed. 

In our minds, we had already absorbed the paper loss as a real one. Guided by instinct, we decided to grow the position at 18.5 sen with a purchase of 25,000 warrants. A reminder, though : instinct is always a lousy excuse for not following the rules.

You can see below that this bold move has a happy ending, but we will explain our thinking for this trade while admitting that luck played a prominent role in the outcome of this trade.


Here's a list of the myriad ways in which we were wrong. 

This was considered a mean reversion trade. Having gained an astonishing 4% the previous day, our wager was actually on a decline in the Hang Seng; perhaps by 1.5%. As you can see in the charts, we were completely wrong about that. 

We were wrong that we did not set aside solid thresholds as viable stop loss points. In effect, we underestimated the volatility of the index, exposing us to that 19% paper loss. 

We were wrong about the direction of the market and followed our biases. A large upwards move in the Hang Seng can mean either of two things : capital flows are well and truly back in, or that it was just a temporary bounce. We thought it was a bounce, and we erred in our judgment spectacularly.

One of the reasons we wanted to be contrarian in the first place was due to the very sharp fall in H6Q the day before. As you may be aware, this was due to Carrie's (bless her!) announcement that the government is proposing to withdraw the much maligned extradition bill. As it turned out, it was a bloody poor timing to be contrarian. Since 4 September, the index has pretty much gone up and up.

Back to the morning of the 4th at 10AM. Shortly after, the price and volume movement in H6Q was enough reason for us to stay in. At the aforementioned 18.5 sen level, our expectation was for the warrant to return to 20 sen, in effect creating a profit buffer of sorts for this newly assumed stake.

Given that H6Q closed at 21.5 sen the day before, we know that there is a strong tendency for the warrant to return to status quo levels. This is called mean reversion. 

As it so happens, the warrant returned to 20 sen levels shortly before the midday break. We were roughly breakeven at this point, covering our entire paper losses. 

The chart below shows the price fall in H6Q on 4 September as well as the price activity on the 5th: the warrant indeed closed at breakeven. 

In effect, our profits were down to our success in catching the trade at its extremities. Somehow we ended up buying some of the put warrant intraday lows (18.5 sen) and managed to sell at close to intraday highs (23 sen).

As you can see here, something happened during the midday break that allowed us to be bailed out, at a nice profit, by the 2:30PM re-opening. The put warrant made a 'gap up' move, and we quickly got out. For the rest of the day, it slowly descended back to 21.5 sen. 

So what made the markets jump? Well, it's this. Derivatives trading was halted for the rest of the day due to a cyberattack. Traders in Hong Kong could not place their orders. The futures market was closed but the cash market (the actual index) was still quoted*.

Between 1PM and 2:30PM, as the Hang Seng reopened for the afternoon trading session, the index plummeted due to this anomaly. Bursa Malaysia is not open during this time period of course, so the activity was only fully reflected by 2:30PM. Put warrants hit their intraday highs as the index plunged to intraday lows. We got out.

This was just a random occurrence that put us in a favourable position. We had a semblance of a trading strategy and all that, but the truth is we were bailed out by the market gods. That's it.

*technical explanation : the futures market is where large institutional traders do their hedging activities, sometimes to catch small short term profits.. They may buy a basket of Hang Seng component stocks and hedge that by selling short index futures. When the futures market shuts down, there is a risk that the position is imbalanced. A halted futures market means that some traders cannot get out of their intraday positions. To offset that risk, they may be driven to sell that basket of stocks bought earlier. In large enough sizes, this selling can potentially drive down the Hang Seng index itself. This is just one probability; the market ended up rebounding pretty quickly after this temporary selling.

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