Saturday, April 11, 2009

My Opinion on Current M'sia Stock Market

Sorry for no update on last week, folks. I just came back from a business trip, and I enjoyed it very much. I promised I will reimbursed the missing part soonest. Anyway, it's good Friday on yesterday, and tomorrow it's Easter Sunday! Happy Easter Sunday to all my dear friends & colleagues folks here!

Well, it's good to see the global stock market has surged to few months high these few weeks, where every trader is making money, including myself. So far I managed to recover 60% of my previous lost in stock market due to overall economy recession. We always wish we can earn more especially during this hard period. But, will it (sorry, I'm just focusing on Malaysia stock market, KLCI here) continue to surge, perhaps the following weeks or months?

Most of the stock traders are aunties & uncles , because they are the richer than us.

I personally think it might continue to soar for another 1 or 2 weeks, but my answer is NO after the end of this month. To be honest, I wish it can soars continuously so I can recover my earlier lost soonest. However, in my opinion, there are 5 main reasons that convinced me the index might encounter pullback right after 1 or 2 weeks time.

Reason 1 - Recession still take place globally.
Overall recession is still ongoing, where most of the corporations are facing jobs cut, making loss, struggling, facing tough budget & bankrupt anytime etc. Even my respected Obama saying US economy is showing 'glimmers of hope'. Until now, we still conclude that, US down, we all down?

Economy life span chart, where are we now?

Reason 2
- Overseas projects dramatically reduced or cut.
We understand most of the giant corporations facing toughest time to obtain overseas projects. And some of them even facing awarded projects being cut off due to the country budget constraints. No project = no revenue = no profit = no stock rise. This is the real recession.

Reason 3 - Corporates earning to be announced by early of next month.
Due to reason 1 & 2, do you think they, especially on finance, industrial, construction & plantation section will still able to make profits like before? It should be good enough as long as they don't declare a loss!

Will there be any surprise for corporate earnings announcement day?

Reason 4
- Technical Analysis is yet to be in favor.
1. Moving Averages - KLCI continued to stay below its 200-day moving averages.
2. Momentum Index: Its short-term momentum index continued to stay below the support of its neutral reference line.
3. KLCI's envisaged resistance zone hovers at the 944 to 980 levels, while its immediate downside support is at the 904 to 938 levels on next week.
4. The bull level should be around stage 2 and everyone is waiting for a pullback now.

Stage 2, resistant level is about 20 points to go for KLCI.

Reason 5 - Lack of buying power
If you can see from most of the finance broker, most of the shares are changed from buy to neutral/sell ratings. And from most of the finance analysis opinions, the stock will pullback definitely within the few weeks time. If it is so, many buyers might still scared and don't dare to enter to the market yet. Since most of the aggressive buyers & early birds are already entered the market, so who else left will enter the market on next few weeks?

What if we have Mega Sale on shares too? I'm the 1st one to join!

So are you as a trader, agree with these 5 reasons? In fact, they are just my analysis outcomes & perspectives. The finance analysis and I unable to predict what will happen in the market, as we are only trying our best to study what the chart and price action told us. Once again, no one can predict the market. I'll just wait for the best time for me to enter in big hand by now.

If you think the shares now are pretty low and it's time to enter regardless any TA or FA, just go ahead with your best instinct and discretion! Most importantly, you know your risk, you'll know how much you'll gain. Good luck and do share you opinion if you have any!

Happy Easter Sunday once again! :)

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