Taking a breather

(Click to enlarge image)
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.