Where the KL Composite Index Is Heading To ????

Malaysian share market recently moves very strongly not because of UMNO general assembly and the movement also got nothing to do with our current new Prime Minister, Datuk Seri Najib Tun Razak. All in all it is because of our global financial market is performing very well. Correction might set in this week after recently movement.

Dow Jones Industrial Average managed to stay above 8,000 points at this moment. It will be very important if the index can stay longer at this level. But we need to remind ourselves that the global financial market already moves since the announcement from CEO of Citigroup, Vikram Pandit.

He is the main reason that brings the whole U.S financial market and the global financial market moving after he made an announcement that the Citigroup is starting to make profit.

Back to KL Composite Index. Based on the chart, a correction will happen soon but no one really knows when the correction will set in or how long the correction will take place. There are two possibilities that will happen here.

Possibility 1: Inside the chart I did draw out an assumption if the correction set in (red colour) then the share market will move down to absorb any correction before any attempt to move higher (green colour).

During this correction it might be an opportunity to accumulate as the prices will decline after recently moves up. These have to be confirm if the current trend was a trend reversal provided that the DJIA didn't break the recently low created in the early March of 2009.

Possibility 2: (Orange colour) Based on the Bearish Rising Wedge formation as I have mention earlier in few of my articles, the possibility of the KL Composite Index to move down further exist. Usually when they break the formation and move down, sometimes they attempt to move up near to their formation before losing their strength, momentum and move further down.

These were the possibilities that might occur and we must not look down at it. Current situation suggested that the share market is heading for the Possibility 1. No matter what are the formation will be, sometimes if we want to worry about the Possibility 2 that might take place, then we will be a loser because we might lost an opportunity of it if the current Possibility 1 do take place.

I was hoping that current explanation will not jeopardized anyone in terms of their decision to buy or to sell as this is just only my opinion based on the current situation. We need to be aware that share market is not a place that we can foresee where they would be heading to and where is their next course? Sometimes they behave without we knowing it.