STI: Marching in place in March?

TA is not about predicting price movements.  TA always presents two possible scenarios.  To most people, this immediately means it's as good as not saying anything.  Well, if we had a tool that could tell us if a security was definitely moving up or down, ..............; you fill in the blanks.

Then, why do we still have TA?  Well, knowing the trends, supports and resistance levels could help us make certain decisions when certain numbers are hit.  Is that it?  I am probably not doing the subject justice but for my purpose, in a nutshell, yes.

OK, on to what you are waiting for.  What do I see in STI's charts?

On the daily chart, we see that the MFI is clearly downtrending with lower highs and lower lows.  The stochastics is turning down from the boundary of the overbought region.  These are momentum oscillators and their current patterns indicate weakening buying momentum in the near term.

That the STI re-entered its uptrending channel is quite obvious and it is currently supported by the upturning 20dMA.  This is a positive.  That the rising 100dMA was taken out a few sessions ago suggests that this is not a strong resistance.  Instead, the resistance to watch would be the 50dMA which is still descending, albeit gently, and is at 2,813.  Immediate support is at 2,737.  In case of a breakdown, a stronger support is provided by the rising 200dMA at 2,615. 

If we look at the weekly chart which presents a longer term picture, we see the stochastics upturning.  This is quite different from what we get in the daily chart.  What does this mean?  To me, it means that the probability of a large downward movement in the index is low over the longer term.  The STI has weakened but is showing resilience and is more likely to move sideways for a while than to decline dramatically. 

The bearish divergence observed between index value and volume up to two months ago was corrected as the index retreated for three consecutive weeks accompanied by increased volume.  Subsequent black candle weeks were on lower volumes.  This supports the view that the STI is less likely to decline dramatically.

Remember, technical analysis provides probabilities and not certainties.  Good luck to us all in the month of March.

Passive income: A higher purpose.

Today is the 15th day of the Chinese New Year or Yuan Xiao Jie.  

It marks the end of the celebrations and, traditionally, the Chinese people would spend the evening together with family to have dinner together on this night before starting work in a brand new year.  

During dinner, glutinous rice balls as a dessert is a must.  

Of course, this tradition is more or less diluted or even forgotten in modern day society and most of us would have resumed work before today and some might not even be having dinner with their family tonight.






As if to support my observations, a friend called me out for lunch as I was blogging this.  

Over lunch, I asked if he would be having dinner with his family tonight and he went, "Huh?".  

Well, maybe not this exact word but you get the idea.  

Over lunch, we also talked about time as a form of capital and how when we spend time doing something, it is actually an investment and we must make sure we invest our time wisely because, unlike money, this is a form of capital that we cannot make more of.  






We have less and less remaining time on Earth as we grow older.

Suddenly, I feel philosophical.  

Life is so very short.  

We have only a few decades on Earth.  

Well, there are people who live to a hundred but I don't know if that is a blessing or a curse.  






Do we really mean it when we wish our elders "Chang Ming Bai Shui" (Long life and hundred years old) or is it just plain courtesy?  

I mean if we live to a hundred and have the good health of someone, say, half the age, good, but what is the probability?

Frankly, I don't want to live to be a hundred years old.  I don't want to be full of ailments and be a burden to others.  

When my time comes, I will go.  





So, what am I trying to say?  

We should cherish our loved ones because the time we have on Earth is limited.

I remember this from my primary school days (I went to a mission school):

"We often love things and use people when we should be using things and loving people."  





Overly idealistic?  

Maybe but you get the gist of it.

Humans have short memories and need constant reminders.  

This is especially true for people living in this modern world with all its distractions.  

These distract us from what is really important in life.





When asking myself why am I trying to secure a significant passive income stream in my investments, the answer is quite clear. 

This is so I do not have to spend so much time at work or any time at work at all and, instead, I would be able to spend more quality time with my family. 

In our pursuit of financial well-being, we should not lose sight of the most important people in life, our loved ones.  

I am looking forward to dinner tonight.

Happy Chap Gor Mei! (Hokkien for "Happy 15th evening!")




----
Added on 6 August 2017:

I have been spending every single Sunday with my family and the day started with breakfast with my dad.

Seven steps to creating passive income from the stock market.

I have made it known to my family and many friends that I aim to create a minimum of $50k in annual passive income from investments in the stock market alone.  Recently, while chatting in the cbox at Bully the Bear, I mentioned this and at least one person was incredulous.  How to achieve this?

Well, to me, it's quite simple, if I invest $500k in a basket of stocks that yields 10% per annum, I would have that $50k passive income.  Then, I gave it some thought later  on and decided that perhaps I should share more in detail how this could be achieved.

Taking a leaf from successful authors using the number "seven", this is AK71's "Seven steps to creating passive income from the stock market":

1.  Get full time employment - Sounds dreadfully straightforward, doesn't it?  Well, sometimes we need to point out the obvious.  We cannot grow money in pots of soil or fabricate it at home; well, not legally anyway.  Get a well paying job that pays you as much as you are worth (or more than you are worth if you are lucky enough).  Don't shortchange yourself.

2.  Be frugal - Again, this sounds straightforward enough but it is something that many people find hard to do.  Instant gratification is so common in our modern world, isn't it?  I want something and I want it NOW!  It is quite well known that George Soros takes the subway to work and that the founder of IKEA is still driving the same Volvo he bought more than 20 years ago!  I blogged about this recently.
Money management: Needs and wants.

3.  Save as much as you can.  OK, I'm cheating here.  This is really a combination of points 1 and 2.  Make as much as you can in your full time job and spend as little as you can.  The difference: savings.  This is your initial capital to realise your dream of passive income from the stock market.  Also, remember, money in your CPF-OA is savings and a percentage could be used to invest in the stock market too.  Start a SRS account and use the money to invest in the stock market at the right time.
Things Singaporean: SRS, CPF-OA and CPF-SA.

4.  Fundamental Analysis (FA): go learn FA if you have not done so already.  This is very important in the identification of good companies in your quest to build a passive income stream from the stock market.  This cannot be emphasised enough.  Look for companies with high yields but ensure that they have a strong balance sheet and good cash flow.  Do not look at the income statement only.  Otherwise, it might come back to haunt you.
Fundamental analysis: The income statement.
Fundamental analysis: Balance sheet.
Fundamental analysis: The cash flow statement.

5.  Technical Analysis (TA): go learn TA if you have not done so already.  If FA tells you a company has a fair value of $1 and the price is now 80c, is this good enough to buy?  Well, if the company's share price is going through a downtrend, no.  Cheap might get cheaper.  That's what TA can do for you: it shows you the trend, resistance and support levels.  FA cannot do that.  Market sentiments do not care two hoots what is the fundamental value of a company and you will do well to remember this.
Thoughts on methodology.

6.  Invest in the good companies you have identified and monitor them constantly.  There are quarterly and annual reports to analyse.  Use FA to ensure that they are still doing well and likely to continue doing well in future.  Use TA to check on the longer term trends. 
Identifying trends and value: FA and TA.
Risks and rewards: TA and FA.
Monitoring our stocks.

7.  Reap the rewards of your investments and collect the dividends.  Yes, finally, we get to the fun part!  You can decide if you want to use the dividends to reward yourself or if you want to add to your pool of savings to be re-invested.  Of course, if you want to achieve a higher passive income within a shorter period of time, re-investing is the answer.  Just employ FA and TA again to do this.

In the meantime, if you did not get retrenched (knock on wood), ensuring that you continue to save as much of your earnings as you can from your full time job will continue to grow your pool of savings even as dividends received from your investments pour in.  Year after year, your annual income increases through greater contributions from the passive income received through your well thought out investments (everything else being equal).  Sounds really good, doesn't it?

Before long, you would have a significant stream of passive income supplementing your earned income from employment.  After some time, your passive income might equal your earned income and that's when you work because you want to and not because you have to.  Now, if this does not convince you, I don't know what will.

It is definitely possible to create a significant passive income stream from investing in the stock market.  Like so many things in life, there is just no short cut though.  So, if this is your dream just like it is mine, get cracking.  Good luck.  Yes, you will need some of this too.

Finally, remember, if you find some good companies out there which the analysts haven't discovered yet, come back here and share with us.  This is most important.
Stock market analysts.

P.S. For the sake of brevity, "companies" in this post refer to REITs and business trusts as well since these are primarily dividend instruments and must be considered in our quest for passive income from the stock market.

Related post:
Recommended books for FA and TA.

The case for crude palm oil.

Some of us might be aware of the criticisms made against oil palm plantations in Malaysia and Indonesia.  The following paragraph from an article in the New Straits Times summed it up nicely:

"Environmental non-governmental organisations and parliamentarians in the EU and US allege that the new demand for palm oil in their newly developed biofuel industry will lead to deforestation in Malaysia and Indonesia to accommodate the expanding cultivation of oil palm. The alleged conversion of forests is then linked to habitat loss, biodiversity and now global warming. " By Yusof Basiron, 24 Feb 2007, New Straits Times.

The Malaysians have launched very convincing counter arguments to the contrary.  Here, I would like to share a short video clip found on YouTube:



There is some truth to the claims that Western developed economies seem to be practising double standards in their criticisms of oil palm plantations.  Some figures shown in this next video clip are quite telling:



The developing world has the right to economic growth, growth which the Western developed economies enjoyed at the expense of the developing world in the past.  If they want the developing world to cut down on what they call environmentally detrimental practices, they should make appropriate contributions.  To me, this seems to be the decent thing to do.