Profit taking and consolidation

Last week, the KLCI entered into a profit taking week after a continuous 8 sessions of run up from 1166 on 180308. The profit taking is considered healthy. As mentioned in previous post, it was foresee that the CI will correct downward to the 1230 -1205 level. The CI has indeed did so and tested the 50% retracement level of 1215 for the run up. Now the CI is trying to find a footing at the 1220 level, in fact the small hammer like candlestick that formed on Monday, 070408 plus the very low volume of 428 million shares traded tells a clue that the selling pressure is waning.

For this week, the CI may continue to consolidate and move in range of 1205 - 1264. Internal political developments and external factors, especially the performance of the Dow will continue to have influence on the direction of KLCI.

As for the DJIA, it has gone through an almost three months of consolidation since January '08. From the chart, we can see that the DJIA is gradually moving upwards to test the resistance at 12760, if it is successfully broken, the Dow may continue to challenge the 13,000 level, otherwise, it may continue its sideway consolidation in the current range of the 12000 level.

For the medium to longer term players, the KLSE offers good opportunity to accumulate quality stocks that has corrected substantially; for the short term players, there are some trading opportunities too.


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.