Millionaire Trend Trader: 1300 - A strong resistance

Tuesday, May 20, 2008

1300 - A strong resistance

Monday, 190508 our ex-PM Tun Dr. Mahathir threw a bomb, declaring his exit from UMNO. This of course will cause some panic in the market. On Tuesday, Bursa Malaysia opened with a small dip on the CI, and going sideways for the whole morning session. The CI started to plunge just before lunch break at 1215. The afternoon session saw the CI plunging further to 1285.20(-15 points) after opening bell of the second session, and a technical rebound actually lift the CI off low to close at 1287.43 (-13.43 points). Volume was slightly higher at 652 million shares.

Many asked, "what is the impact of Dr.Mahathir's decision to quit UMNO has on the share market?" I personally think not much, except for a some panic among the usually panicky retailers who will get panic over any issues. The big boys usually make used of this human weakness to slaughter the retailers. The market will go where it wants to go.

Technically speaking, the KLCI is really hitting a strong resistance at 1300 points. Last Friday's close at 1300.67 was a weak one, a last minute job, as the volume was low. If one were to study the chart of the DJIA and other markets that opened on Monday (we were closed for WESAK day holiday), the DJIA already formed a top reversal candle pattern on Monday and a double top chart pattern at 13133. So, the DJIA is expected to reverse for the short term, and it did. The rest of the regional markets were also down, so we were merely following, and Tun's action was only an excuse for the big boys to push down the market after a two weeks rise on the Bursa Malaysia. Chart wise, the KLCI is also forming a double top at 1302.

With the current development, the KLCI is expected to consolidate first for the short term, it may move within the range of 1250-1300. There are still some counters that are quietly moving up, one will need to put in some hard work to do your studies to find them.

To all my Buddhist friends, I wish U a belated Happy Wesak day, and may we all pray for the victims of the Sichuan and Myanmar disasters. Ami Tuo Fo.

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Tuesday, May 20, 2008

1300 - A strong resistance

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