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.