Two days away from the computer

Wow!! 2 days being away from the computer and see what happened to the markets!! :)
The FED cut 50 basis points and global markets rallied strongly. Like I mentioned in my previous note, we may have to see if the dollar tanks. If the dollar tanks, then US markets may undergo a sharp correction. As of now, the US dollar has only eased a little since the cut. Investors may have to track the dollar carefully. For now, the US markets are expected to stay range-bound as funds digest the 50 basis points cut. For the Dow, a break to a new all time high suggest that this correction could be over. Howwever, it is still possible for its to break below the 12517 level. So, keep a look out for 14,021 and 12,517 for the Dow.

Regional market are expected to stay bouyant for another week at least. The momentum indicators are still buoyant. STI could possibly retest the old high 3,688 but some weakness is starting to show. KLCI looks positive for now (my indicators have turned positive again, suggesting to close out shorts) but it has lagged its counter parts across the region. So, I reckon the KLCI is just playing catch up. Upside strong resistance is at 1,330-1,335. Only after a break above the 1,335, I would then change my view from being bearish to bullish. Otherwise, I am still a bear, at least for the short-to-medium term.

Why am I still a bear? There is a lot of differences between the Feb correction and the current one. The most important issue is that the volume on this current 'rally' has been a lot weaker. Volume is the fuel for the bullish train. Without volume, the upward journey would not last. And besides, LT indicators have yet to turn bullish. I believe that the correction is not over. Only 2 weeks of correction after a rally of about 4.7years - very unlikely. So, be prepared for more downside volatility.