Technical rebound

The world market rebounded strongly on Friday, thanks to the concerted effort by the six central banks and the U.S. government on the bailing out of AIG, the largest insurer, and the market responded strongly. However, that may not be the end of the U.S. financial crisis yet, as how many more big trouble case are there is still to be uncovered. For the DJIA, It is just a technical rebound for the time being, and back to its sideway consolidation zone of 11,000 - 11,800. It need to be able to break above the 12,000 mark before any meaningful trend change and bull run can take place.
As for the KLCI, the index has tested its downside targets and rebounded from the lower trend channel support strongly, forming a long lower shadow doji star reversal pattern. This reversal pattern was confirm on Friday by a bullish candlestick. The bullishness may continue, however, the overhead resistance will be seen at the 1038, 1050 and the 1070 levels.

Technically, this is just a technical rebound which could be shortlive, and maybe view as a good opportunity to get out. The down trend of the KLCI has not change until the CI can work its way to break above 1100 level.

As it was mentioned before, there are always opportunities during a crisis. Those who have followed the market closely and understood the market signals of smart-money accumulation would have made some quick profit on many counters.

Anyway, trade carefully with your stop loss always in place, you'll be alright. In trading, it is not how much one can make per trade, it is how consistent and how long you can last in the game that counts.

Back to the beginning

Took a break from writing to observe the market. Situations have not change very much. Since my last posting, KLCI has not moved anywhere, it was trapped between the recent low of 1064 and the high of 1100.50 registered on 29 Aug '08 on budget announcement. It losses steam very fast, as mentioned before that was just a technical rebound. Foreign fund continue to sell down on blue chip shares has dragged down the KLCI, we are just at the edge of retesting the 1064 low, if this is breached, which is likely to happen, will see another round of selling that would bring the CI down to 1048 level. The government is trying hard to prevent Anwar's 916 plan from happening, but would that stopped the CI from sliding down? The fear factor is dominating the market, many are just selling to stand sideline. Volume has remained very-very low in the 300 million shares region, showing a lack of interest from the retailers, however, the smart-money or the big-boys are happily collecting from the fearful sellers.

The charts of all other major bourses show that the market has come back to where it begun. The chart of DJIA and S&P500 of the U.S market shows that they are in a sideway market, one day up and one day down. For the time being the DJIA support at the 11,000 is crucial, and the ultimate support will be 10,698. If the is breach, the whole world will have another knee-jerk, and DJIA will go back to where it begun, the is the 10,000 level.

Update

(Click to enlarge)
Regional bourses all open with a panic gap down on Tuesday morning following the falls of 218 points on DJI on Monday which closed at 12958, below the 13000 psychological support, this really cause the regional market to jitter, hence, the panic gap down opening. However, one can observed that the downward selling pressure did not last and the bull was fighting in the afternoon session. HSI and STI closed the day with a bullish reversal candle. HSI will have to go back above 28000 to maintain the medium term uptrend, and STI will have to go above 3500 to keep its long term uptrend intact. As for our KLCI, we lack a bit of strength, and closed the day off low at 1371.70 (-8.21, -0.59%) to form a bottom reversal black Hammer candlestick. Whatever it is, KLCI is now stuck in a sideway trading range of between 1360 - 1400, hopefully the listing of Synergy Drive will bring the KLCI above 1400, and that will bring life to our market again.















The DJI has on last night seen a roller coaster ride with the bull winning the battle for the day to close Tuesday at 13010, and the psychological support of 13000 was temporary defended. This also keep the DJI within the uptrend channel which must be defended, otherwise the whole world will purge.



Some of the stocks that may offer short term trading opportunities are CBSTech, GPlus and Tanco. However, one must be quick in taking the profit when you see it.


















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 sole your own responsibility. Do consult your dealer before taking any action.

Sideways

Last Friday(161107) was generally a down day with the KLCI trading in the red zone most part of the day. Regional market was generally down with HSI taking the lead with a fall of 1100 points, a result of the Chinese government curbing the underground currency exchange activities. The KLCI actually showed mild selling pressure with the CI hitting a low of 1377.43 intra-day and closed at 1386.64 (-3.36, -0.24%) with a last minute magical touch, volume reduced to 1.01 billion shares with losers (519) outnumbered gainers (276), forming a Doji candlestick. The Doji formation indicated that the market (CI) is uncertain of its direction, however, the price action for the day showed that the magic-hand is trying to maintain the KLCI above the 1380 level. For the moment, KLCI is finding good support around the short term 27 days MA, the medium term 50 days MA is coming to meet the short term MA, and the long medium term 120 days MA has gone flat indicating that the market is probably going into a sideway condition in the short to medium term. The long term 200 days MA, however, is still pointing northeast indicating that the long term trend of KLCI is still up. Looks like the market is taking a breather while waiting for a catalyst to move it further, probably the listing of Synergy Drive at the month end.

As for the DJI, it is probably trying to find a base around the current level of 13000 to 13400 amidst the many troubles the US economy is facing. As mentioned in the previous posts, the 13000 level is critically important for the DJI to defend in order to maintain its medium to long term uptrend.


Back to our local market, some of the stocks that we are following such as BHIC, KNM, MPHB, and MPCorp, the uptrend is still intact. MPHB will be suspended till Wednesday awaiting the result of the announcement on its intention to privatize Magnum.

Maybulk, Landmrk, BJCorp, Kretam and a few other plantation stocks have gone into a short term sideway consolidation. Their medium to long term uptrend is still intact.

Time and Timecom may offer short term trading opportunity as a result of the positive development between Timecom and Digi.

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 sole your own responsibility. Do consult your dealer before taking any action.