KLSE : my outlook update

klse composite index chart

As in my last post see KLSE my current market outlook , I prefer to wait and see whether there will be any changes in sentiment at around 1135 pt zone. KLSE composite index went down to 1119 pt , and two days later (today) rebound to 1139 pt. That close enough and considering the prior trend (8 straight down days) and pattern, we can say it is a good sign for one to three days more of up trend. See KLSE composite index chart above.

Now, will this be the start of a primary trend to recover the primary downtrend since  20 May 2008 (1287 pt). I don't think so. For a start, there's not much of a volume to shout about. A change of market sentiment? Not yet.The reason for today gain of 18 pt may largely contribute by a better sentiment in US. Read Star Biz News
Technically speaking,  I expect a "lantunan kucing mati" (dead cat bounce). My primary downward target at 1050 pt still 'on'. In the current market environment, we need to be-aware of bear trap.  We think it will be up for some more days, so we take some positions and then ah, we caught in the trap again. Too bad for trend following trading methodology.

Why any up trend in the current market will not sustainable? Suspected there are many foreign funds that are very eager to get out in any recovery situation. Need to be careful when some unheard before foreign fund (with names like they come from somewhere in British's islands or Arab countries) bought million of shares many months ago and still holding. And yes, these hedge funds or private equity funds have been exiting.

Check the last few weeks' announcements or with your remiser, who's who is selling your counter. 

If you must trade, suggested to look for liquid stocks. That could be some blue chips, GLCs or O&G counters with high trading volume. Avoid counters that went up because of some foreign fund buying. Avoid call warrant at any cost, yes they are relatively very cheap but the call warrant play have been surely over this year. Avoid buying just because a counter look cheap. Buying liquid stocks make it easier for you to get out once you decide you need to get out. Go for liquid stock. Isn't it  a ground breaking trading advice? (yeah, like you didn't know)

Noticeably, current interesting event is that there are more and more companies buying back their well beaten stocks. A positive sign I will say. If you prefer 'cheap' counters rather than blue chips, look for counters with buying back event.

P.S: Did I hear somebody said last week that steel price stabilizing, so the theme play on steel counter could be over. So are oil price. I will not simply discount that statement.