Monday, November 24, 2008

KL Composite Index Still Very Weak. A Roller Coaster Move?

Overall today market performance can be consider dull. Nothing to talk about. Everything is about the same things. Last Friday movement was just a technical rebound only.

I still stick with my decision to wait and to see how the market will react in tandem with overall world market performance especially Dow Jones Industrial Average. Today the KL Composite Index went down -11.49 points to close at 855.39 points.

Share prices seem to be going down further after their recent run up. More and more counters are facing further selling pressure. MMC Corp was the next victim that facing the selling pressure today. IOI Corp also faced the same problem. Today downwards turn cannot be consider as an opportunity to buy but rather an opportunity to study how the share market movement and behavior after their recently side way movement for almost two weeks.

From my experience in monitoring the share market movement, I always found out that usually in order for the share market to make a solid U-turn (moving up); they must always tumble first for a few days before they managed to climb up. Can we consider today share market experiencing the sharp falls today ? Not yet. It is still early to assume that the market almost near the bottom. No doubt most of the share market went down today but tomorrow morning it might go up as well. It might be a roller coaster ride.

Tonight the DJIA performance will depends on how the investors will react against the announcement of a massive rescue package for Citigroup.

The U.S. federal government on Sunday announced a massive rescue package for Citigroup - the latest move to steady the banking giant, whose shares have plunged in the past week. The plan has two key features:

First, the U.S. Treasury and the Federal Deposit Insurance Corporation (FDIC) will backstop some losses against more than $300 billion in troubled assets. Second, the Treasury will make a fresh $20 billion investment in the bank. The government has already injected $25 billion into Citigroup as part of the $700 billion bailout passed by Congress in October.

Citigroup is the second largest bank in U.S. Any massive rescue package will sure lift the confident of the U.S. financial banking system. Anyway stay away from the share market will be the best option to adopt. Any risk taking right at the moment will not benefit us in the long run as our KL Composite Index still in the downtrend channel.

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