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Friday, December 12, 2008

Bullet Or Bul(late)? / Composite Index 11/12/2008 / 综合指数 2008年 12月 11日

Bullet Or Bul(late)? By Zhuge Liang


Is the Uptrend tradable?

Ironically, the KLCI bull arrived at the very last minute, just as we were going to give up on it ever showing up. The late arrival of the bull raises the question on whether the KLCI is becoming a speeding bullet or is Mr Bull a little too late? Is the short term uptrend tradable?

More importantly,
can traders make money out of this short term uptrend wave? How sustainable is the KLCI and for how long?

Tradability depends on Dow Jones
The rally in the KLCI over the past 2 days was caused by news that US Automakers would be bailed out by the US government. Encapsulating that very piece of news is positive Dow Jones Futures which pushed our local market up by 19 points on Wednesday plus another 6 points on Thursday to close at 860.68. It is obvious that the KLCI needs a positive Dow to fuel its rally. As such, the tradability of this current up-wave in the KLCI will
depend on how much more will the Dow rally.

Uptrend wave in KLCI may not be tradeable – Sell into strength
To put things in perspective, global equities markets have begun their rally since the
20th of November when the Dow formed a short term bottom. Since then, the Dow has gained 16% while the FTSE has gained 12%. The KLCI on the other hand, has just begun its rally only 48 hours ago which is in other words - 3 weeks too late.

After a 3 week relief rally, global markets will
begin their correction soon. To put it mildly, it would be difficult for the KLCI to resume its rally when global markets are correcting. Hence, because of the late arrival of the KLCI bull at the tail-end of the global equity recovery, the KLCI uptrend would be short-lived and virtually untradeable. For traders, it would be difficult to make serious profits out of this short-lived up-wave. it would be safer than not to conclude that this wave should be used to sell positions at strength rather than accumulate or to top-up long positions. Bursa is now a sell into strength equity market. Majority of retailers are adopting the "See$$$Take$$$" policy which coincidentally, keeps vindicating itself rally-on-rally.

Furthermore, after the US Big 3 automakers bailout and year end window dressing activities, the next market boosting event will be a comprehensible CNY rally. Upcoming Chinese New Year falls on the 26 & 27 Jan 2009. What lies at the end of the rainbow? Some pot luck for a lucky few. There will not be any gold to fantasize.. Instead, rest assured of FYE negative reports and even more negative reports sweeping into equity markets.

Can any reader pls give ZL just one good reason to further hold equities - WAY OVER YONDER ?

Disclaimer : Readers should bear in mind this is only but a view and an opinion. Pls refer to your remisier / broker for further infos. TQVM

TAKE NOTHING FOR GRANTED
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Composite Index Daily Technical Analysis 11/12/2008

As indicated by A, the KLCI is now above the Bollinger Middle Band, and therefore, the immediate outlook for the KLCI is on the positive side. However, since the Bollinger Bands Width has not expanded, it has not shown any signal of the new movement yet.

Generally, if the Bollinger Bands Width should expands clearly with the KLCI above the Bollinger Middle Band, it would be a bullish biased signal. But if the KLCI should failed to maintain above the Bollinger Middle Band, it would ended the positive signal.

Support for the KLCI is still at 800 psychological mark while the 875 Fibonacci Retracement is still the next resistance for the KLCI. Nevertheless, the T1 downtrend line is also the dynamic resistance for the KLCI. In other words, the KLCI has to break above the T1 or the downtrend is still intact.

As indicated by B, total market volume declined another 17.1%, despite the KLCI ended higher on Thursday. This shows that the market sentiment as a whole is still weak, as investors confidence is still relatively low. It is absolutely important to have a significant increase of volume (above the 40-day VMA level) if the KLCI should attempt to break any further upside resistance.

As circled at C, the Stochastic breaks above 70% level on Thursday by margin, entering the short term bullish region. If the Stochastic should remain above the 70% level, the short term market movement for the KLCI is expected to be bullish biased.

综合指数 2008年 12月 11日

如图中箭头A所示,综合指数终于站稳在布林中频带(Bollinger Middle Band)以上了,这表示综指继续在酝酿转强的趋势。无论如何,由于布林频带(Bollinger Band)还是保持未打开的状态,所以综指的涨势还是未获得布林频带的确认。

通常布林频带是必须明显的打开,那综指处于布林中频带以上才能算是确认出现上扬的趋势。换句话说,若综指接下来再度跌破了布林中频带的话,那综指转强的走势将再度的结束了。

综指当前的支持水平继续的落在800点的胜图自动费氏线,阻力水平则是887点的胜图自动费氏线。无论如何,如图所示,T1这下降的趋势线也是综指接下来的动态阻力线,若综指能上扬突破T1趋势线的话,这就意味着综指有望摆脱T1及T2的下降趋势轨道(Descending Trend Channel)。

如图中箭头B所示,虽然综指上扬,不过马股的成交量进一步萎缩17.1%,这显示投资者对综指的后市继续抱着谨慎的态度,并不愿意太早进场。无论如何,若成交量接下来配合综指上扬而增加至40天成交量平均值的话,那综指将有望继续的转强。

如图中C圈所示,随机指标(Stochastic)上扬突破了70%的水平,这表示综指的短期趋势有继续走强的迹象,通常综指的短期走势将有望继续的看高一线,直到随机指标跌破70%的水平为止。


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