Muscat Securities Market - Update

I thought I'd analyze my own market right here in Oman for a change, looking at the MSM (Muscat Securities Market), its clear that that the market is basing. The Arab spring had a strong impact on equities here in Oman, with the market yet to recover from the destabilizing blow. The near absence of IPO's has also taken its toll on the markets as old names struggled to impress.

Looking at the MSM chart, the MSM had a gold cross with the market re-testing the 50 SMA at 5700 and holding backing March. The gold cross still remains in play, however, as I indicated here fear isn't going anywhere anytime soon. I don't expect the MSM to hold the 200 SMA but I do expect it hold above support at the yellow shaded area. This push lower should be a buying opportunity on fundamentally sound stocks. Timing is everything in this game.

Looking at stocks, only one company caught my eye, AACT (Al Anwar Ceramic). Technically, this stock is perfect, it demonstrated relative strength in comparison to the MSM and held its ground by not following the market down. It also formed a beautiful head & shoulders pattern.The stock is also above its 200 and 50 SMA's.  Fundamentally, this stock is sound with its current assets double its current liabilities. It almost has no debt and it has a high gross margin. EPS has grown over last year with its P/E being its only dent at 46 times earnings. R.O 370 is the level to watch here, a breakout could see this stock go.


This isn't an invitation to buy or sell, its just my insight into the current situation on equities here in Oman. Information on stocks is very scarce here and unless you have bloomberg, everything has to be done manually though raw data. I would have loved to conduct quantitative studies on the stock but obtaining the data need was impossible. Other stocks worth looking at are OCOI (Oman Cement) and Al Saffa chicken which is up almost 500% since its IPO in 2010. My only issue with Al Saffa is its illiquidity.

To conclude this post, the MSM is still a difficult place to invest. Its nature makes it very volatile, Ill leave the reasons to another day.

Monday's Gameplan (3/6/2012)

From time to time, I intend on posting my gameplan here (with charts) with some explanation of my daily gameplan. Preparation plays a huge role in my trading, I typically spend hours preparing for the trading day, after all, luck favors the prepared. I am competing against the sharpest minds in the world on a daily basis, being second best means loosing money and you wont be the best unless you prepare with the will to win.

I have several charts below, all being stocks. If we get a lower open on Monday which is likely, one of three things will happen, we rally (30% probability) or head lower sharply due to fear (60% probability) we go no where (10% probability). I have selected my stocks to prepare myself for any outcome. If we open lower and rally, I have X which I intend on being long for the day. If we decline sharply I have a bunch of stocks on my radar, mainly being LEN, BHI, MOS, AKAM and FDX. Panic is right around the corner, things could get very volatile and to prepare myself for the volatility, I have adjusted my position sizing to handle the heat. I wont push my luck on Monday, things could get really whacky in this environment. Flexibility is key.

Watch for avalanche of sell orders Monday - Panic - MarketWatch

Watch for avalanche of sell orders Monday - The Tell - MarketWatch - In other words let the panic begin

VIX and More: Worst Post-2009 Week in Economic Data Relative to Expectations

VIX and More: Worst Post-2009 Week in Economic Data Relative to Expectations

7 Charts on Panic

I believe that the market might be set for one more push down. Investor sentiment has moved from various stages the last being panic, we started with:

Euphoria: Record US corporation earnings and the super Apple along with a Fed that wouldn't allow the markets to go down due to their printing press also known as quantitative easing.

Anxiety: Europe and Greece's problem looming in the background along with signs that the global economy was slowing down.

Fear: The fear of a default in Greece with the government failing to reach a solution. Chinese economic slowdown sending AUD/USD south along with gold.

Desperation: Turmoil in Europe, with the markets pricing in a a Greek default along with strength seen in the USD and Treasuries along with the Bund as investors look for a place to park their cash. Oil also falling like a falling knife as investors price in the global  economic slowdown on the demand for oil.

Panic: This will be the final push down that should cause capitulation among investors. I have various charts explaining the possibility of this occurring:

On currencies

On Credit

On Volatility

 On Commodities

On Equities

The charts above demonstrate the likelihood of a market low. Of course the market always has the potential to go lower, however, that shouldn't stop us from looking at what's happening along with setting scenarios at various market stages. A breach of the support levels listed above and failure to hold above them could cause things to get ugly, however I see that scenario as unlikely especially given the relative strength in Chinese equities along with the expectation that officials wont allow for such a crash to occur by intervening in Europe. That being said, the only thing we know for sure is that anything can happen.