Last week we asked our Squad members to be precautious and
be aware as the market is now anticipating rate hike from the FED in US. As we
can see, the US dollar index is now hitting 99.5 which is about to touch 100
while their 10 years yield is hitting 2.351%, these are sign of market betting
on a rate hike.
As we mentioned last week, we can’t control the market but
all we can do is just monitoring the direction and react accordingly. All we
can do now is monitor whether can DJIA breach new high again and it is
important to break 18k as it is a very strong resistant at this level. We might
not be able to see it breach 18k in a short term if the market really think
there will be a rate hike soon. On the other hand, we have
Big Canon would like to share some history that happen not
long ago with all the Squad members. Looking back in 2014, we’ve met a
situation in Malaysia where we have got a rate hike for OPR from 3% to 3.25% on
10 July 2014, on the other hand our index had hit historical high of 1896 on 8th
July and our index never able to breach new high after the rate hike. As we can see, the rate hike had absorbed the
liquidity in the market which indirectly causes the market not to break new
high.
Our question is “will this happen to US market after rate
hike?
As for Bursa Malaysia, it is important to monitor whether it
can breach 1700 points again, if the index failed to hit it and fall below 1660
then it might be a time for Put Warrants. We are currently directionless but we
are cutting down our shareholding and increasing our cash position. However, we’ve
started to monitor put warrants.
The put warrant that we would monitor is H5, H27, H21 and
HW. Please notice that these 4 put warrants are having SKY HIGH PREMIUM,
however we like H5, H27 and H21 because it is cheap enough in terms of price though
it is having sky high premium. The reason behind is that these cheap put
warrant will always get attack by banker when the market tumble and the
percentage of return is higher since its cheap but NEVER FORGET HIGH RISK HIGH
RETURN too! The reason of HW is because it is having longer maturity.
WARNING: PUT WARRANT BEING MENTIONED IS HIGHLY SPECULATIVE
AND IS ONLY FOR MONITORING AT CURRENT SITUATION. PLEASE BE AWARE OF THE RISK WITHIN.
THE RISK OF THIS INSTRUMENT IS TOO DAMN HIGH!
About D&O that we highlighted on Sunday, we have written
down the reason we like it and also the risk within in our blog. You may read
it at the link below.
D&O Green Technologies (7204) - The 2nd last L.E.D Dragon
awaking
Highlight for tonight is a bit special as we are going to highlight
a stock that is on its way to listing in Bursa Malaysia and its KIM TECK CHEONG
(KTC), this counter is undergoing IPO process where the due date is on 12
November before 5pm. We strongly encourage Squad member to look into the
company.
Before ending the day, Squad members are advised to exercise
more caution and try to be safe on each trading as we feel that there are
storms coming in our way. It’s better to be safe than be sorry.
Warrant Buffet Rules:
Rule no 1: Never lose your money
Rule no 2: Remember Rule Number 1.
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Channel: https://telegram.me/bigcanon
May all the HUAT be with us!
Team Big Canon
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