Be cautious this week

First of all, Selamat Hari Raya to all readers. :)

Ok now, back from the holidays, how would the markets perform? Dow last night fell 108pts on soaring oil prices and also more worries on the bad debt situation. "U.S. stocks fell the most in five weeks after Citigroup Inc. said defaults will plague the financial industry for the rest of the year" - (Bloomberg News). Consumer stocks are also starting to ease as some fund managers believe that the slowdown has just only started and has a way to go.

STI has had a double inside day which suggest indecision. The players do not know exactly where the market is heading. With overbought indicators, investors should move to a more risk-adverse stance on the market. Reduce some of your shareholdings would likely be the best option, I believe.

KLCI, closed yesterday due to the Raya Holidays, is expected to open flat. There might be some selling pressure on the Blues but penny stock would likely be actively traded. I think investors should start reducing some exposure to the market on rallies this week. If the market do not fall this week or next (i.e after neutralising the overbought indicators), investors could then get in again. Trade cautiously for now.