New Page 1

STEPS will introduce you to some basic and intermediate concepts of capital market analysis.

This session, STEPS will provide you some important concept of Technical Analysis. Technical Analysis is one of the analysis, which popular among professional analyst. This concept can be used with other analysis concepts and techniques, to increase analysis result accuracy.

STEPS contents will be up dated time to time, to increase investors knowledge of market analysis techniques. This column is important to every investor, to be prepared with maximum knowledge and skills before makes any investment decision. Well-preparation can reduce potential risk, through a proper analysis and decision making process. It also increase investor's confidence.

Currently, there are a lot of analysis techniques used by market analysts. For example, Statistical Approach, Financial Approach, Economics Approach and Technical Approach.

Technically, all of the techniques used are technical. It based on quantitative and geometrical techniques. But some focus on quantitative only, mixed of quantitative & geometric and some focus a lot on geometry. Technical Analysis is in third category, focus on geometrical analysis.

Geometrical is a part of mathematics. It widely used in applied mathematic such as physics and engineering. It is analysis of graphics. And it is an interpretable graphics !.

Geometric in technical analysis need a lot of mathematical skills. It is applied, to calculate slope, correlation, volatility, value, objective and so on.

Mathematic also used to calculate indicators value, such as Exponential Moves, Relative Strength Index, Stochastics and etc. To be a professional analyst, the person must fluent in using at least 40 market indicators.

It is very complex !. You must understand history to predict future. And there is a lot of risk.

It is important to say, that this technique is not perfect. There is no future window, but we can trace the trend which we think will happen in future. And also we must ready and quick response to any changes. But all are our predictions and thinking !.

No risk, no returns. This is a fact and has proven true by scientific research. Nobody can ignore the importance of the risk.

Risk is interesting, because without it , we get nothing. And bigger risk means bigger problem. We must be patient to understand the risk. Research shows that risk is manageable and can be reduced. Well-managed risk, open you to wide opportunity to succeeds.

A series of research shows that, normally only 5% to 10% of the population are the best. Others can be categorized as average and lower. This Normal Distribution is "normal" in investment field.

Analysis shows that, only 10% well-understood on what and how to use Technical Analysis, others are failed. All in 90% group are failed to understand the technique and make mistakes in their prediction. They lost a lot of money, in process to understand the market.

Markowitz, a Nobel price winner proved that the risk can be reduced by diversification. "Do not put all of the eggs in only one basket, because if the basket dropped, than ...", trust me you will not only lost those eggs but more, time, efforts, money ..... .

By distribute those eggs in more baskets, can reduce total loss, if only a basket drop down and else are saved.

Diversification concept is simple but meaningful and can be applied in many situation and elements. Either it is a physical or money investment, both can be diversified to reduce risk.

To be a professional, the person must masters his/her profession. He/she must be a true professional. He/she must do a lot of research, to wider his/her knowledge. Too many things to be studied is not a question. Well-prepared is the answer of a good professional.

To some investors, it is difficult to them to master the technique. A good advice is to get a professional in this field and work together with them. Work or get advice from professional can reduce your risk, by getting a lot of advices from various sources.

Every investor must know the quality of the professionalism. Mastering and ethical are some elements of a true professionalism.

Every investor must always remember his/her investment objective. The objective is to get return. Other way, the professional must consult the investor on how to maximize his/her investment return.

This column can help investor to understand the concept of analysis. By understand the concept, the investor can understand the quality analysis and analyst. This can help investor to find a reliable analyst or professional.

In Information Technology era, the financial industry is transparence. Information of market performance can be easily get through television, internet or cable system. Investors must always check the analyst or professional performance by compare their advice and prediction to the real result. If a lot of mistakes done, the analyst or professional is not mastering his/her profession which is an element of a true professionalism.

In this session, we provide example of mini report by our analyst, dated Friday, April 7, 2000. We will add more information on analysis in future.

KLCI Market Performance (Daily Basis Analysis).

Friday ( April 7, 2000)

1) Last Week Market Performance.

Open : 977.51

Close : 949.85

High : 979.49

Low : 947.88

2) Trendlines Analysis.

Support Trendline : 950.00.

- possible up bounce at 950.00, otherwise the price will going lower.

Resistant Trendline : 965.00

- If the price is higher then the resistant level, up trend is intact.

3) Bollinger Bands Analysis.

It is a dynamic oscillator, for overbought/sold analysis.

On Wednesday, the price reached the lower average line. It's means the price in the oversold zone, and it will bounce to a stabile or neutral zone (stabilize).

4) Stochastic Analysis.

It is a momentum analysis.

- The indicator reached the oversold zone (under 20 zone). The price will bounce to a stabile zone.

- It also shows that the indicator will intercept it's average line (Buy indication).

- The price and the indicator moved in different directions or Divergence. In the short term, the price will reverse from negative trend. (Reversal )

5) Relative Strength Index Analysis.

It is a momentum analysis.

- RSI reached the neutral zone at 50. It means the price will stabile and down trend has finished in a shorterm. (Stabile )

6) Momentum Indicator Analysis.

It is a momentum analysis.

- The indicator currently reach the neutral zone or 100. It means the previous up trend has finished and the price is stabile. No up trend or down trend indication.

7) CCI Analysis.

Divergence Analysis.

- The indicator has intercepted it's average line, and in reversal position. It means the price and the indicator moved in different directions or divergence. It shows that the momentum or the speed of the price has slowed and possible reversal movement in shorterm.

CONCLUSION

All indicators show that the previous up trend has finished. It means that in intermediate term, the price is stabile.

Many indicators are in stabile zone. It means that, last week down trend has slowed and more stabilize. The price stabilization will be continued in shorterm or within 3 to 4 days.

Although many daily-basis indicators show that the price will stabilize, but in longer time basis analysis show that the down trend still intact. It means the price stabilization is only in shorterm (3 - 4 days) or as a correction. Any price incremental is a temporary moves.

Longer time basis analysis show that the down trend will continue for another 2 - 3 weeks.

Although our economic fundamentals are good, any down trend is anticipated because of international risk, for example U.S Economy dan Dow Jones performance

* ALL TERM USED ARE LESS THAN 2 WEEKS.

***************************************

Report of Accuracy Analysis ( RAA )

This is an accuracy statistics report. All of the analysis will be checked by a comparison study.

FINDINGS:

1) All indicators show that the previous up trend has finished

In mid of March, Composite Index rose near 1000.00 points. Then the index fell near to 970 marks on April 7, 2000. Our analyst found that the previous up trend (mid-March) was finished.

This is true, the market went down or down trend and the index fell below 900 points.

2) Our analyst also mentioned about the price will stabile in intermediate term.

Intermediate term means 3 - 6 days later.

This is correct when the index became sideways in April 11, 2000 which 4 days after our comment.

3) Our analyst warned the market players about the down trend was still intact, in longer term.

Longer term is longer than intermediate term, which is about 7 days more or average 12 trading days.

This is absolutely correct when the index fell near 100 points between April 15, 2000 and April 19, 2000. It was 10 days after our comment.

COMMENT:

All of the findings and recommendations are correct and credible.