What 1350-point pundits missed... and sorely missed
There is a website that offers free (but qualified) advisory on Technical Analysis (TA) of the Malaysian stock market movements -- www.tradesignum.com.
For Bursa Malaysia Market Analysis for the week ending February 17, 2007, TradeSignum said it was time to let go before it was too late in the short term:
The Bottom LineContinued strength in the intermediate term is seen for the KLCI. Caution however is required against buying into the market at current levels as major long term resistance is near. Now may be a good time to realise some of the gains built up in the last few months.
The Observation
Since our last analysis in late December 2006, KLCI and Bursa Malaysia has continued it strong ascend after a brief correction. With Bursa Malaysia back on the radar screen of foreign funds, we expect the recent strong gains to be sustainable in the long term, if not in the intermediate term, with the usual corrections in the short term. [...]
As you can see from the long term chart, we have had an extremely strong run in the last six to eight months and we are now drawing ever closer to our all time high for KLCI and will potentially spell strong resistance for the bulls. 1,280 appear to be the logical first target to breach giving the strong momentum that we have enjoyed in the last few months. Should KLCI breach above 1,280 and sustains above there, the likely resistance zone remains between 1,280 to 1,330 levels.
Given its current momentum, I suspect the KLCI will continue its climb higher and charge into the resistance zone after returning from the holidays and will probably take a breather once it gets there and we will see a few months of consolidation. I expect 1,250, 1,200 and 1,150 to be provide some solid support in the near term before the longer term supports are required.
Folks, you hear the 1,150-1,250 band? That was two days BEFORE the Big Mouth battle-cried for a rally to 1,350 points, and 10 days BEFORE the market tumbles on Feb 27., and the drop touched 1,180 points on March 1.
For Bursa Malaysia Market Analysis for the week ending February 24, 2007, TradeSignum again said -- three days before the Black Tuesday of Feb 27:
The Bottom LineContinued strength in the intermediate term is seen for the KLCI. Short term weakness is expected in the coming weeks ahead. Caution is required against buying into the market at current levels as major long term resistance is near. Now may be a good time to realise some of the gains built up in the last few months.
The Observation
Although we had only three days of trading this week, on Wednesday and Thursday we have witnessed unprecedented volumes ever being transacted on Bursa Malaysia.
Do we have to thank Thailand for scaring the foreign investors to readjust their portfolios and relocate their funds into Bursa Malaysia? Or is it, the word on the street is that, this is going to be an election year and the Government, through quasi-government agencies, is just propping up the index to make the market look good and create a “feel good” atmosphere for the general public?
Either way, we will continue to rely on the technicals to give us a handle on the market. Wednesday, fresh from Chinese New Year celebrations, we can see that the market sprinted out of the gate and following the good lead in the morning, the market never looked back and closed on another multi-year record high and record volume.
The mood on Thursday was clearly different from Wednesday as we can clearly gauge from the doji candlestick that there was more selling pressure and although buyers were ready to mop up some of the selling pressure, they were not as ready to push the market to another record high. While the selling pressure appeared to have subsided on Friday, the fact that Friday pushed higher without the accompanying strength in volume makes Friday’s ascend a slightly vulnerable one. [...]
Whenever a trend is in motion, we will always favour its continuance rather than reversal. However, given the market was only at 1,096 level at the beginning of the year and has rose to 1,283, giving it more than 17% of gains in just two short months, logic demands the market to take a breather as it approaches this new “challenge”. Though, the market is not one that will normally operate in a logical and rational manner especially in the short term.
Whether the KLCI will test the upper band of the expected resistance zone is as good as anyone’s guess. The most likely situation to pan out from here, from my point of view, is that the market will charge higher still, possibly another 20 to 50 points higher, before it begins its consolidation. I expect 1,250, 1,200 and 1,150 to be provide some solid support in the near term before the longer term supports are required.
On Black Tuesday, TradeSignum issued a special release: Trend reversal in the making.
Will someone kindly advise the Puytrajaya boys to help the boss hang on to the Hanging Man candle sticks, and Look East? The advisory, no less skewed on technical analysis methodology, is readily available online for free!
My position is still this: There's no single trigger to the bulls and bears. And stock movements do not necessarily reflect the fundamentals of the national economy, much less can it be used as a spin and a mural painting of 'feel-good' indicators of economic performance.
Thanks Marcus Fei and Daryl Chong for the great effort, and thanks JKY for the heads-up.
Comments
In summary - pak lah thinks like a mak cik investor with no clue about stock market dynamics.
Why is this not surprising?
Posted by: berserk![[TypeKey Profile Page]](http://www.jeffooi.com/nav-commenters.gif)
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March 2, 2007 09:57 AM
"no single trigger"..borrowing from Bernanke?? ;)
JEFF OOI says: It's from a 2001 article about water eco-system: here.
Posted by: kowlat![[TypeKey Profile Page]](http://www.jeffooi.com/nav-commenters.gif)
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March 2, 2007 11:17 AM
Jeff, what is the point with all these tips AFTER the fall? Even if we have let go, the greed in us all will go back for another try. It is now crazy for the DAP leader to suggest to the government to “cushion the losses” and he has filed it under “good governance”. This will set a very bad precedent. It is unthinkable if the government allowed this as the taxpayers eventually would carry the tabs.
What is most perplexing is why the national news agency Bernama is giving this DAP statement so much prominence. This March 1st news item (Opposition Wants Govt To Cushion Losses) time stamped 15:15pm) is still NOT in their website under business. Are a lot of greedy UMNOputras severely burnt that they need some “crutches” this round and too shy to ask for them? This is NOT a bloody natural disaster like the floods and they all went in like the lemmings going for migration and be “drowned”.
And there was this big contradiction between the father and son. The father said the “bulk of losses had been born by the small investors”. And the son Guan Eng had a Feb 23rd press statement that “such goods news may be an inspiration to the rich and those with cash to invest but NOT to the many small businessmen and workers”. So who got burnt, the affordable and the scars will take a long time to heal.
And what was the latest advice from PM Abdullah:
“Don't Waste Time Speculating On General Election – PM and waste time over it”. Shouldn't it be “…Speculating On the Stock market - PM and waste MONEY over it”
More details from:
http://powerpresent.blogspot.com/2007/03/malaysias-economy-2006-expands-59-us.html
Posted by: mwt![[TypeKey Profile Page]](http://www.jeffooi.com/nav-commenters.gif)
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March 2, 2007 12:38 PM
The way I see it, TradeSignum's analysis doesn't make it a star - it is simply that its analysis is accurate this time. Okay the analysis has some truth in it, but what happened to KLSE can actually happen within 1 day, 1 month or even 1 year from the analysis report. All it takes is some bad news which triggered herd instinct selling spree.
Posted by: syedhs![[TypeKey Profile Page]](http://www.jeffooi.com/nav-commenters.gif)
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March 2, 2007 02:22 PM
Pak Lah should focus his job as PM and not stock market analyst to make a buy call. This is the second time he comment on stock market in less than a month and the rakyat should question why he did that. Is He or his family ready to unload all shares when he make the buy call?
It is not the business of PM to speculate on the stock market performance as his words carry weight to the rakyat. It is his duties as the PM of Malaysia to remind and educate the rakyat over the pitfalls in investing in stock market during the bull run. The rakyat should be reminded not to overtrade and practise cash/risk management to protect the downside of their investments in the event the market suffer a big correction.
I for sure will not put so much faith on him as much as when he won the landsilde GE in 2004 . His 3-year report card on delivering his election promise is at most a mediocre "C" grade. "E" grade for fighting corruption and implementing IPCMC, open tender for govt contracts.
The Star Online > Nation
Friday March 2, 2007
PM: Have faith in KLSE
By JOSEPH RAJ
SANA'A (Yemen): Malaysians should have confidence and be prepared to invest in the KLSE to attract bigger foreign participation, Datuk Seri Abdullah Ahmad Badawi said.
“When Malaysians show their confidence and their preparedness to invest in their own stock market or in their own country, this will give a signal to investors to come in bigger numbers to Malaysia,” the Prime Minister told the Malaysian media here on Wednesday.
He was commenting on the drop in the KL Composite Index since Tuesday.
The KLCI fell in tandem with regional markets on Tuesday, shedding 2.81% to close 35.79 points lower at 1,237.08.
On Wednesday, the KLCI closed at 1,196.45. It dipped further to 1180.91 yesterday.
Abdullah said the 2.81% drop in the KLCI on Tuesday was the result of the dip in the bourses of other countries.
“I read about it. It looks like because there was a drop in the bourses of other countries, the KLSE also followed suit,” he said.
“I hope that we don’t always follow other people. We need to show our confidence in our own stock market.”
On a news report quoting Tan Sri Muhammad Muhammad Taib as saying that the Umno machinery at all levels had been put on readiness for the next general election, Abdullah said people should not “make too many predictions”.
“People should stop speculating about when the next general election will be held. I have already said we should not be speculating.
“What is important is to work. When our work is good, when all elected representatives are working well, what is there to worry so much about the next general election?”
But I think, as the (Umno) information chief, he (Muhammad) was asking elected representatives to work,” he added.
Posted by: ktak![[TypeKey Profile Page]](http://www.jeffooi.com/nav-commenters.gif)
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March 2, 2007 02:59 PM
Jeff,
Wasn't it Pak Lah who said that bloggers should blog responsibly?
Shouldn't the same rule applies to him?
Quote:
“I hope that we don’t always follow other people. We need to show our confidence in our own stock market.” Unquote.
It is now another day of going south (and BIG losses) on the KLSE. Can those who followed his advice by buying shares ("to show our confidence") for the past week take him to court or impeach him or something?
Posted by: JacknJill![[TypeKey Profile Page]](http://www.jeffooi.com/nav-commenters.gif)
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March 5, 2007 11:03 AM