Technical Rebound

Last week our KLSE went through a volatile week with the CI gone through a big swing, where it opened at 1436 on Monday, plunged to a low of 1340 on Tuesday, and swing back up to close the week near the high of week at 1405.40. Daily volume traded was active, generally above 1 billion shares.

The question on everyone's mind now, is the correction over? Based on chart, the KLCI has completed a 50% correction for the up run which started on 17/8/2007. Now the CI may go through a technical rebound phase where we may see the CI swinging between 1340 and 1435. For the short term, a strong support for the CI may be found at 1363, and resistance at 1423. On the longer term, the uptrend of our CI is still very much intact. From the chart, one can see that the 240 days MA is providing a strong support for the CI, and it is still trending up, the mid term 120 days MA has gone sideway and the short term 30 days MA is pointing downward indicating short term correction.

Technically, one of the characteristics of a long term bull market is that the downward correction is rapid and the rise is gradual. One can see the same patterns occuring in February 2007 and August 2007, after a rapid downward correction, the market goes yo-yo up and down and later make new high.

The DJI is still very much in the correction phase, and the index may swing up and down between 11630 and 12500, while trying to settle above the 12000 mark to build a base.

Opportunities are always found during crisis, for those who have master the art of entry well, opportunities to pick up long term bullish stocks are plenty.

Correction

KLCI on last Monday started the week with making the record high of 1524.69, but ended the week with a very weak closing that form a bearish engulfing pattern. Technically, this is a correction to the run up from 1141 point. As mentioned in the previous post, the break down of DJI below 12,500 may lead to some fear in the world market, indeed, it actually caused flu. If DJI don't perform well, we may see our KLCI to further test the support of 1412, a 60 days MA support. In the worse case scenarion, CI may correct as far as 1380, be prepared. Technically, even if CI corrects down to 1380 it is consider a normal correction, the overall uptrend is still not spoil. Hopefully, with the coming election factor and the roll out of more economic corridor, our KLCI is able to sustain above 1400.

As for DJI, it has already gone into a bear phase, the support at 11,900 is important, hopefully with President Bush's economic rescue plan and further rate cut can save the DJI.

When market is panic, it is time the smart-money will come in to collect quality stocks at discount, don't get panic, just follow the foot print of the smart money. Some of the quality stocks worth watching are Sime, KLK, IOICorp, BSTEAD, Gamuda and many more. Buy near the major support.

Disclaimer: The above is not a recommendation to buy or sell, all suggestions mentioned are purely for academic study purposes for our trend trader club members only, and the author may have personal interest and position in some of the examples mentioned. Any losses incurred if you were to trade base on the study examples above is solely your own responsibility. Do consult your dealer before taking any action.

Profit taking

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As mentioned in previous post, the KLCI hit the high at 1524.69 on Monday and went into a profit taking mode. I hope all of you has locked in some profit. On Tuesday, KLCI started the day with a positive mode, gainers were more than losers. However, the bear came in quickly, and the market went into a profit taking mode after 10.00 a.m. The bear drove the CI down to a low of 1497, but the magic hand managed to bring the CI back to close at 1505.71. Losers lead gainers with 605 to 208, volume is healthy at 1.1 billion shares. From the volume traded, most of the retailers are still sideline, probably protest against the new minimum commission rate of Rm40. For the next few days, the market will hover around the 1500 level with the support at 1488 and resistance at 1524.


DJI has gone into a bear phase, with the index hovering near the important support of 12500 level, if this level can't hold, the index may go down to test 11900. Be prepared, if this happen, it may cause some fear in the KLSE, and the bear will take excuse to drive the market down.
Some of the stocks to watch: KPS, Proton, Astro, Unico and MBFHldg

Disclaimer: The above is not a recommendation to buy or sell, all suggestions mentioned are purely for academic study purposes for our trend trader club members only, and the author may have personal interest and position in some of the examples mentioned. Any losses incurred if you were to trade base on the study examples above is solely your own responsibility. Do consult your dealer before taking any action.

The Bull is back

The KLCI had a good run last week led by the plantation stocks and some heavy weight blue chip stocks. CI hit the intra-day high of 1521.56 and closed at 1516.22, a record high closing. Market breadth had 451 gainers and 403 losers, volume grows to 1.69 billion shares. The bull is coming back to our KLSE.

The KLCI is really pointing at a different direction when compare with the major indices in the region; Nikkei 225, HSI and STI are moving in tandem with the DJI in which all the indices are in the consolidation mode hovering near their major support. The bullishness of the KLCI is backed by the strong performance of the plantation stocks and the coming soon election factors. I guess the run will last up till the present government announcing the next election date.

"Buy on rumours, sell on news", this is a good time to trade short term. As the CI is at the peak, profit taking is inevitable, do remember to lock in your profit when you still have it.

Wishing you a Happy and Properous New Year 2008

Year 2007 was passed; it was a fruitful year for the KLCI in terms of percentage gain. CI gained a hefty sum of 348.79 points or 31.82% year-on-year to close at 1445.03. In fact our KLCI is the only index in the region that closed the year at near the year high or the all time record high of 1452.57 (up till 31-12-2007). Cheers, and thanks to the effort of the hidden magic hand. CI has shown a good performance, what about you? Did you perform as well? During year end everyone was on holiday mood, including the market. But that was actually the good time to take inventory and run a post mortem of one's own performance for the year. Trading is a journey where learning is never ending. The key to successful trading is to improve on one's skill and weakness after every trade. Hence, a post mortem and evaluation is essential if one wants to make money out of the market. Also very important is reading, if one wants to do well in trading or investing, knowledge is very-very important. There are plenty of good books in the bookstores, do invest some money in books, but make sure you buy and read it. The problem with most Malaysian is they don’t like to read, they just want something quick and easy, that’s why those seminars that promises huge return with a no brainy method on trading still attracts large crowd. As a New Year gift to all my readers, I’ll present you an eBook titled “How I make 2 Million Dollars in the Stock Market” free, just send an email to trendmaster77@gmail.com. What’s your plan for 2008? Just continue trading and lose money as before? Or you have determined to make a change to do better. As the saying goes, “Those without a plan to succeed are planning to fail”. I hope you are not. The first week of 2008 started with profit taking on the first trading day, but ended the week on record high with CI closing at 1466.67, a glittering performance, thanks to the plantation stocks’ gain as a result of crude oil hitting a record USD100 per barrel which sparkle the run on CPO. Apart from that, the hefty 0.60 gain on TM also contributed greatly to CI’s gain. At the same time, our Ringgit also hit a 10 years record high of 3.28 to a Dollar. Volume traded also improves to 942 million shares on Friday. Hopefully, this will spark off a run before Chinese New Year.


On the other side, the DJI is not looking too good with the index closing below the 200 days long term MA. Looks like DJI may test the critical support at 12,500 points soon.













Some of the stocks to watch: SIME, IOICORP, ASIATIC, KLK, KRETAM, TM