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Tuesday, November 25, 2008

Is Now a Good Time to Invest in the Stock Market? / Composite Index 24/11/2008 / 综合指数 2008年 11月 24日

Is Now a Good Time to Invest in the Stock Market? By Zhuge Liang

According to mkt survey, less than 2 million Malaysian citizens own shares. That is less than 10% of our population @26 million++You may even own shares without realising: many pensions, insurance policies and KWSP which are invested in the stock market, to name a few.

Shares are popular with investors because of the high returns that they can potentially yield. Typical returns are higher than interest on regular savings accounts. That said, the nature of shares is that you also risk losing the money you have invested if the value of the shares falls.

Even those who know little about shares will have probably heard about the turmoil surrounding various global stock markets. As investors look to protect themselves from potential losses, many are ‘panic selling’ causing the stock markets’ overall value to decrease.

With that in mind – is now a good time to invest in the stock market? The answer to that is much the same as when the stock markets were thriving: maybe. Investing in shares is always a risk, but with the right preparation and guidance, you can minimise the risk of making a loss, and you can potentially make a good return.

The upside of the current situation in the current stock markets is that shares are cheap. You will get a lot more for your money now than you would have when the stock market was booming.

But that doesn’t mean you are necessarily buying lesser-quality shares in the long run. A number of people have made massive amounts of money by investing wisely in the stock market, buying up cheap shares with then rise hugely in value. The nature of the stock market means that if investors become confident again and start buying, and/or if the companies have an upturn in fortunes, share prices can rise.

On the other hand, if share prices to continue to fall, you will not see any returns on your shares until the value has risen. Much of the time, low share prices are an indicator that a company is struggling – and if a company goes bust, you will automatically lose any money you have invested in that company.

The best course of action is to seek independent advice from a stockbroker or other financial adviser, who will be able to tell you which shares are expected to do well, the levels of risk associated with each company, etc. There is always an element of risk when investing, especially in times like this – but with the right advice and sound judgement, shares could bring much higher returns than your average savings account.

Okay, if someone who buys now is called a fool; what about those who bought when KLCI was @1400? 1300? What shall we call them?

HAPPY INVESTING

Composite Index Daily Technical Analysis 24/11/2008

As indicated by A, the KLCI remains below the Bollinger Middle Band as the Bollinger Bands Width expanded 21% on Monday, therefore, the KLCI bearish movement continues, ended 1.3% lower. As long as the Bollinger Bands Width should continue to expands, more downside movement for the KLCI is expected. If the Bollinger Bands Width should contracts again, it would be a signal suggesting a consolidation for the KLCI. Support for the KLCI is still at 800 Fibonacci Retracement while the resistance is still at 887 Fibonacci Retracement.

As shown on the chart, the KLCI is still trending in the downtrend channel of T1 and T2 lines, and therefore, unless a valid break out above the T1 line, the outlook shall remains bearish biased.

As indicated by B, total market volume declined 34.8%, and volume is still below the 40-day VMA level, suggesting a rather quiet trading day.
As long as the volume should stay below the 40-day VMA level, chances for the KLCI to pick some strength would be low. But still, as KLCI is falling with rather lower volume, it implies that the selling pressure was not tremendous.

As circled at C, the Stochastic is still falling while breaking below 10% level, which entered a short term over-sold region. This suggests the current movement for the KLCI is indeed weak, but might have started to gone over-sold. Therefore, there might be a chance of a technical rebound in the near future. But still, as long as the Stochastic is below 30% level, the market movement for the short term is still bearish biased.

综合指数 2008年 11月 24日

如图中箭头A所示,由于布林频带(Bollinger Band)打开了21%,而综合指数始终处于布林中频带(Bollinger Middle Band)以下,所以综指进一步下滑1.3%。通常综指将继续的维持在这转弱的格局里,直到布林频带打开的幅度缓和下来或布林频带开始收窄为止。

如图所示,综指当前的支持水平依然是800点的胜图自动费氏线,阻力水平则维持在887点的23.6%胜图自动费氏线。另外综指目前也继续的处于由T1及T2组成下降轨道(Descending Channel)内,这表示综指继续有转弱的迹象,直到综指所以突破此下降轨道为止。

如图中箭头B所示,成交量锐减34.8%,使到成交量再度跌破了40天的成交量移动平均线(VMA)的水平,则表示投资者纷纷采取离场观望的态度,等待市场进一步的明朗化。无论如何,由于成交量偏低,这也表示综指的跌势不太严重。

如图中C圈指示,随机指标(Stochastic)跌破了10%的水平,这表示综指的短期走势有超卖的迹象,这暗示综指有出现短期技术反弹的可能。无论如何,这只是一个纯技术性的反弹,因为随机指标是必须成功的上扬突破30%,综指才有望确认出现短期的上扬趋势。

3 comments:

banking88 said...

i think it's a good time to start investing now using the dollar cost averaging method.

Zhuge Liang said...

banking88,

It's your wish, your perogative & YOUR $$$ as well.

Listen to your HEART 88 .... All de best 2u

HAPPY INVESTING

Ivan said...

Banking 88,

Let say you enter Public Bank at RM8.80, what happen if Pbank drop to RM8.50?
OK? Regrect? No?

RM8.00?
OK? Regrect? No?

RM7.50?
OK? Regrect? No?

RM7.00?
OK? Regrect? No?

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