Saturday, October 11, 2008


BLACK FIRDAY will be remembering as the darkest day of the world global financial history. Now is this the right time to catch the deadliest FALLING KNIFE ? Yesterday while I was sitting and studying the KL Composite Index movement couple with the global market movements, I would suggest that next week market will be an entry points.

In my previous article posted on Thursday, October 9, 2008 KL Composite Index To Rebound or Just Move Sideway ? I did mention "Whenever there is a sharp drop in KL Composite Index during that time (refer Point B,1) the index will recover for few days before went down again.

After a period about two weeks when the index reach the bottom (refer Point B,2) it will start to climb back again but now, where is the bottom ?

The index might either go down a little bit more (refer Point C,2) or stay sideway before the index start to climb up again. Don't be surprised if the index might touch 1,000 points again." SO WHERE IS THE BOTTOM ? That is a very good question to ask but no one will know.

Based on my calculation and reading towards the charts, if the KL Composite Index still move down and create new lows on Mondays, I can says that will be the bottom but if the Monday market open up or didn't make any new lows, Friday lowest points 931.79 will be consider as the bottom.

As I mention before if I want to make an entry to the share market I will prefer a significant move like what we use to call a "Collapse" or "Tumble" or "Panic Selling" or "Tsunami Selling" like it happen once before (after the 12th General Election - KL Composite drop 10 percent). Friday market seems to be panic.

Certain factors that argues very well towards my suggestion.

1) The world market has down drastically within 7 days and some of it only posted slightly rebound (highly oversold)

2) Dow Jones Industrial Average from as high as 11,218.48 points recorded on 30.09.2008 and drop to lowest points recorded on Friday (10.10.2008) at 7,882.51 points, a drop of -3,335.97 points before the market close at 8,451.19 points (-128.00 Friday closing) still a drop of -2,767.29 points without any gains been recorded for the past 8 trading days.

3) Based on the charts given whenever our KL Composite Index enter to an oversold position, it start to make a comeback. Charts already proved that each time whenever the indicator oversold it will rebound.

4) Counter look very attractive with the recently new low prices.

5) G7 Group announced a five-point plan to counter the world's financial turmoil after a hastily-arranged meeting in Washington.
  • Take decisive action and use all available tools to prevent "important" institutions from failing.
  • Take steps to unfreeze credit and money markets and ensure that banks and other institutions have broad access to liquidity and funding.
  • Ensure that banks and other major financial intermediaries can raise enough capital from public and private sources to re-establish confidence and kick start lending to individuals and businesses.
  • Ensure that each country's deposit insurance programs are strong and consistent to assure depositors their money is safe.
  • Take action to restart the secondary markets for mortgages and other securitized assets

6) U.S. government was working on a plan to buy stock in financial institutions by using part of the USD 700 billion authorized by Congress to stabilize the financial system.

7) When there is over fears and no one dare to buy any shares, loss of confident and some even cut their losses, that would be the exact time to make an entry (with right timing)

8) Malaysia banking systems still standing well despite global financial meltdown.

This is just my own points of views and cannot be consider accurate. Still we need to be careful because recently in Japan, Yamato Life Insurance Co. has filed for bankruptcy. I just worried that whether the bankruptcy of Yamato Life Insurance Co. has already start to trigger a DOMINO EFFECT on our Asian Financial System ............

1 comment:

alexlee said...

High possible KLCI will rebound next week. Since KLCI's weekly and daily charts RSI indicator were in highly oversold position. These may trigger a strong rebound next week.