Sell in May and Go Away?

Sell in May and go away... Seems like it is a mixed myth and fact throughout all these years. Will this myth continue to happen in this year? First, let's look at the FBMKLCI monthly chart and try to correlate...

FBMKLCI Monthly Chart

From the past year statistics, 2013's May shows a bullish month. 2014's May show a doji with thin body and long tails. For 2015's May, it is a big bearish engulfing which in the following months drag down the FBMKLCI to the lowest of 1503.68 in August 2015. In my previous post[3], i still remember for the month of March, there is a bullish engulfing, and this month April it forms a bearish engulfing. The market is totally unpredictable. 

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As for the daily chart, do notice there is a huge selling pressure from 26 April till 29 April, mounted up by huge volume recently.

FBMKLCI Daily Chart

Actually the foreign funds are selling after few weeks of heavy buying. Foreign funds must be selling after hearing the 1MDB news. 

Daily Participation in 7 days (21 April to 29 April)

When foreign funds sell, our Ringgit will be weaker due to the demand for Ringgit is not high. 

USD/MYR Daily Chart

The immediate resistance for our FBMKLCI will be 1720, while the mid term resistance is 1764. Luckily the chart did not close below the support at 1670. In daily chart, the Bollinger Band and RSI had been oversold. Therefore, i expect a small rebound from the technical point of view, and if the chart did not close below 1670, it will continue to go sideway between 1670 and 1720 because do remember our chart is still in bullish mode, whereby SMA50 had crossed over SMA200. For me, sell in May and go away might be true this year. Let's take this opportunity to fish also~

There are a few reasons which led to the bearish engulfing this month. Internally in Malaysia, we had our very own 1MDB issues[1], and in macro economic, BOJ's (Bank of Japan) no action had turned market into turmoil, as Japanese Yen rallied stronger[2]. Hit by both news, i think this month might be a tough month. So, do trade carefully and remember to fish some bottom stocks. Maybe now it is the right time to hit some Oil and Gas stocks. Let's look at the Brent Chart.

Brent Weekly Chart

From the technical point, it is forming a round saucer and now waiting to break out the resistance of around 50. We look at SKPETRO, which is one of the constituents in our FBMKLCI. From the highest point of around 5.00 in December 2013, it had suffered a big hit and now is around 1.60. Even though there is no action or decision to freeze the oil production in OPEC meeting on 18 April[4], the oil price plunged but immediately it recovered. I guess the market had digested the news. Lately there are news on Seadrill selling SKPETRO which caused the gap down on 28 April[5]. However, EPF had been actively buying the shares. So, what's next for the oil? If 40 to 50 is the bottom for Brent, i think 1.60 to 2.00 might be the bottom for SKPETRO. The risk and reward ratio for the oil and gas is very interesting, the room for uptrend is much more higher than downtrend. Maybe can have a few oil and gas counters in our watchlist.

April had gone and May is here. A lot of annual reports are out. Do spend some time to read more annual reports especially the chairman statement. There are sure some hidden gold in it, just like UCHITEC. The company "ValueCap Sdn Bhd" had been surfaced out in its Annual Report, you can also refer to my previous post on UCHITEC. Below is my Gainvestor Portfolio for April.

Summary of Gainvestor Portfolio for April 2016

Sell in May and Go Away? Unless there are big bearish negative news coming out, if not, i will spend some time wisely reading the Annual Reports and go for bottom fishing~ Let's see if we can defy the odds this year...

Let's Ride the Wind and Gainvest

Gainvestor 10sai

1 May 2016
5.55pm

Sources:

[1]: 1MDB Confirms It Defaulted on $1.75 Billion Bond Issue: http://www.wsj.com/articles/1mdb-confirms-it-defaulted-on-1-75-billion-bond-issue-1461637595 

[2]: BOJ throws curveball, Japanese economy could strike out, http://www.cnbc.com/2016/04/28/boj-throws-curveball-japanese-economy-could-strike-out.html

[3]: FBMKLCI - Bull In Charge Now and Plantation to Flourish: http://gainvestor10sai.blogspot.my/2016/03/fbmklci-bull-in-charge-now-and.html

[4]: OPEC Meeting Ends Without Deal on Oil Freeze Production: http://www.aljazeera.com/news/2016/04/opec-oil-producers-weigh-temporary-output-cap-160417061135501.html

[5]: Seadrill to Exit Sapura Kencana: http://www.thestar.com.my/business/business-news/2016/04/28/seadrill-to-exit-sapurakencana/

[6]: UCHITEC - U See That II *VALUECAP*: http://gainvestor10sai.blogspot.my/2016/04/uchitec-u-see-that-ii-valuecap.html

 

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