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Wednesday, August 20, 2008

Taking a breather

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Since the last posting, the KLCI has plunged further by another 50 points to a low of 1064.58, led by heavy weights such as SIME, IOICorp, Commerz, Maybank, KNM, etc. This shows that the foreign funds are dumping the local stocks in view of the uncertainties lingering the local scene. As mentioned before, the KLCI came down to test the critical psychological support at 1100, no defense were seen there and the next level of support at 1189 were also broken easily. This shows that the foreign fund just want to cash out and local fund was just happy enough to let share price come down to collect at low level.

The falls of KLCI eased off slightly at the 1065 level, and the KLCI rebounded slightly today in line with other bourses in the region. Daily volume traded over the last few days was miserable at about 300 plus million shares a day.

Market was filled with gloom and doom. The listing of Perwaja today was at a wrong timing, where the share was opened at 2.80, -0.10 below the IPO price, the share was sold down to a low of 2.34 before closing at 2.48, -0.42.

The question on everybody's mind is where is the bottom? Seriously, the bottom is not found yet. Based on the chart pattern formation and the projection, a likely bottom may be around the 1014 to 990 level, which is actually not that far away now. A major panic that cause by the success of the Anwar's 916 plan can easily push the index down by few tens of points. What to do then? Get ready your ammunitions, as great opportunities are always found during a crisis, do your homework well so that you know what to catch.

At the mean time the KLCI may have some rebound, however, any rebound is going to be short live, as players will sell into strength to cash out. This is not the time to buy for long term yet as the bottom is not seen yet, one can only trade very short term for technical rebound provided you can read the market well, and catch the rebound right on dot. Otherwise stay sideline.

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.

Wednesday, August 13, 2008

Continued weakness

Since the last update a week ago, nothing very exciting happen, except for the Beijing Olympic Games 2008 which open on Friday 080808. Somehow the Chinese loves the figure "8".

Bursa Malaysia is experiencing continued weakness with the KLCI sliding down to close at 1118.78 yesterday on very thin volume of 292 million shares traded. Plantation stocks continued to weigh down on CI with IOICorp closing below 5.00 at 4.82. The CI has come to close at a very crucial support level now, as this was a strong support level previously. A break of this support may see the CI sliding further to test the critical psychological support of 1100. The low volume indicates that the buying interest is very weak, hence, the market may continue its current trend.

Our government has formed a national economic committee to strategize on measures to boost the economy, and hopefully the coming budget can help to inject some life into the market.

Wednesday, August 6, 2008

Continue Down Trend

The KLSE saw another round of sell down on the plantation stocks yesterday, with IOICorp -0.50, SIME -0.30, KLK -0.80, PPB -0.25 dragging down the CI to close at 1128.86, -19.82. The falls of the plantation stocks was anticipated in light of the falling commodity prices with crude oil down to an intraday low of USD118. This has cause the recent short term uptrend or rather technical rebound to end its uptrend at 1164.

As mentioned in last week's posting, the 1160 level of the KLCI is an important level to hold, if this fail, more downside will be anticipated. As of yesterday's price action, the CI has made a 50% retracement of its recent run up, the critical support is at the 62% level of 1117 which happen to be the strong support area of the previous down trend. If this level is violated, full downside is expected, and of course the 1100 critical psychological support is of utmost important. There after we are talking about downside targets of 1090, 1050, 1030 and even 980. Numerous factors can bring down the CI, somehow.

Technically, we can see that 1164 was actually a strong resistance area with the down trend line blocking the way and the long term MA are still pressing the price downward. However, if one do pay attention to individual stocks, one would have found that there are stocks that are not falling in tandem with the market, bucking the down trend. Perhaps these are the opportunities during a crisis. The dump money is selling now, and the smart money is accumulating. Try to spot signs of accumulation. For the retailers, money and risk management is most important at this kind of uncertain time.