KLSE : My Current Market Outlook

It's been over 2 years since my last posting on KLSE market outlook in this blog. I am not going to say much for the year 2006 or 2007; it was indeed a fun KLSE roller coaster ride experience.

Enter 2008, not a good opening anyway but because of so, then I am expecting a beautiful year end closing. 
Started February 2008, it was a slow dull KLSE train riding and until today it’s not getting better. The already injured bull haven't yet even recovering, the bear still in control.

We have sub-prime issue, we have the ever persistent crude oil price hike, and came March, we have the political issue which is not settled down yet. Add manipulated oil price with global food crisis, with get the product of what we call 'inflation'. This time the inflation is really 'real", isn't it? (watch out for interest rate announcement:  Bank Negara likely to follow other countries soon - see in real-time how interest rate increase affect Bursa Malaysia) 

Occasionally, I do read the economic financial analysis or fundamental analysis; I find it clouded my vision (information overloaded?). Not much of help, maybe because I am trying to look for a more objective signal and its something no there. It’s like, everybody waiting for more and more financial figure release. Okay, I got the message, it’s bearish.

As a share trader / investor you need to anticipate, you need to forecast, you need to decide to be the bull or the bear, doesn't matter you are looking for profit within a day or a year or even a decade. You can look at some sexy financial figure, you can look at some beautiful chart lines or you can look at some dramatic political or financial events unfolding to come with a conclusion. Or you can 'rojak' everything.
In my case, I just open my KLSE charts.
above : KLSE composite index chart as 02 July 08 (click the chart for full view)

Since February, I almost half-ignore KLCI seeing the market volume getting thinner (the volume is my main reason for been 'bearish" that early). (Check out Bursa and stockbrokers' profit this quarter compare to last year's quarter). It’s only when sometime in the month April, a friend show me a KLSE chart and I noticed the nice little up trend forming (two higher low - shown as the yellow line in the chart). Thought that could be the signal I was waiting for but to my dismay, the volume as the force the trend just relatively not enough. Nevertheless, I did call for an up trend and yes it was a short live one indeed.

Here is on my current opinion on KLSE assuming my oversimplified Elliot Wave reading is correct: 
Referring to current relevance primary corrective 5-wave series, we are now in the final wave, that is wave 5. So, I am we are waiting for this wave to end (wave 5 can be complicated because of a simple wave 1). Current downtrend need to go to at least 1157 point* (obviously that was the end of wave 3 in March) to qualify as wave 5 . Bad news is wave 5 can go well beyond that (especially in current scenario, other technical indicator can show that).

For a more objective target, I expect the current downtrend to go to 1,135 pt.  It’s very near and it made my next target at 1,050 pt not too pessimistic. One target at a time, right now I prefer to wait-n-see whether there will be a change of sentiment or turning point around 1,135 pt. 

Hey, look at the good side, we are in the last wave of the primary correction 5-wave, the sooner the wave ended, the sooner there will be a new up trend , the sooner we can see new sentiment, the sooner we can see a better environment for active trading. Let the market flush out all the bears and leave the bulls standing.
In short I prefer to wait until the index to 1,135 pt or even 1,050 pt before shopping for some bargain-value-for-money stocks. Yes, it’s true that the market will never wait for us but in the current scenario I prefer to wait.

* As at today close, it’s already a 'breakdown'. (Can we see a double bottom rebound?)