KLSE Technical 2010-01-21

I have stopped stock market talks for a while based on comments received in the past. But about 20% of the old readers unsubscribed following that. So I am guessing there may still be some silence readers who love stock market talks. And I feel very itchy not to share my view seeing that no one else publishes my opinions. So pardon my incidental randoms.

As some may have known by now that KLSE is damn HOT now! Axiata, PBBank, KYM, RCECAP, LIONDIV, LIONIND, MBSB, AFG etc. all shoot up 8-12% in a day. This has happened since 2 days ago KLSE finally broke its 1300 ceiling after 10 months of 'recovery'.

Things are indeed great. But you may want to know a few things;

Despite higher closing price, MORE number of stocks are dropping THAN rising, 2 days in a roll. This may imply that only a few stocks are being speculated. Investors may even withdraw from other stocks in order to join the hot stocks growth. This also shows that there is NOT ENOUGH investment money flowing within the market now. So whatever the reasons are for the up swing, its NOT going to be able to keep it for long.

There has been a "closing up swing pattern" for the last few months. This shows that certain parties are manipulating the open and closing price so that certain trends are shown in technical analysis (so that other fund managers will join in the game). This is not totally a bad thing but if you are not following what these big boys are doing, its very likely that you don't catch their next moves.

According to Bollinger Band (20d, 2), KLCI is hitting its top band soon ie. 1315 by 25 Jan. So correction is coming very soon. Tomorrow is going to be a red day, if it goes on the day after, then the correction will be confirmed and it will be a good news where you can start accumulating again.

All the other indicators also show that there may only be another 10-20% room for growth in the next month or so.

So what should you do ?

Well, the heat is not going to fade away that fast neither. Tomorrow will be a red day. If you pick some stocks up, you may still be able to get 10-20% gain by February.

If you have already kept some, you may want to plan to profit take when it goes up another 5-10% in the next 2 weeks.

If you don't plan to profit take within the next couple of months anyway, the next obvious chance would be in Q4.

What are the jewels now if you haven't bought any yet ? Well, I have only concluded KNM and BAT for now. Keep KNM for these 2 months and BAT until year end.

Avoid warrants and all derivatives at all cost now!

How do I know tomorrow is going to be a red day ? Well, I just keep my eye on how the whole world market is going before ours are opened ... http://stock.malpf.com/