Is the KLCI index hitting a low?

Is the index hitting a low? It appears to be building a base above the 1,188 support level. I think we should see a low this week, probably marginally lower then the 1,188 level - maybe 1,180 or so. Being a contrarian is akin to taking on high risks - so, investors who cannot or unwilling to take on such high risks ought to wait a while before getting. And for those who choose to get in, keep your stops tight - very tight.

Because there are too many stocks to buy and you don't know which is better, you might want to learn a bit more about trading futures. Trading the KLCI index futures (which is listed on Bursa) can offer certain oppotunities which stocks cannot offer - such as Leverage and shorting, where it is allowed in futures trading. Nevertheless, it is a double edge sword. You can make as much as the market gives you but you could also lose all in a blink of an eye.

Things are looking bearish here in Malaysia but...

Everything are starting to look bearish right now. Even our Bank Negara's governor - Tan Sri Zeti Akhtar Aziz says that BNM may revise their GDP forecast for 2008 of 5-6%. She says that "Right now there is also a risk that we may have a slower growth and this is being experienced in the global economy, including the region." The general feel is definitely cautious with a slight twist of bearishness right now. I think that this is common within a Wave 4 correction or a Wave 5(ii) correction. I believe that we are in a Wave 5(ii) and once this is over, the KLCI could rally strongly to all time highs by the final quarter of this year. Stay tuned!

Everything is looking bearish but...

Right now, everything is looking bearish... globally, everyone is facing high inflation. In the US, unemployment just rose and the word stagflation has begun spreading. However, it is still too early to confirm that the US is indeed in stagflation. Regionally, everyhting is also looking bleak. China's monetary tightening could squeeze the tight market even more. Coming back to our shores, Malaysia is now facing high political risk and 'possibly' high inflation. Everything and I mean Everything!!! are pointing to more bearishness ahead.

But wait, if everyone is hyper bearish, should we be contrarians and trade the other direction? There are still the element of risk if one should trade against the trend. Nevertheless, the returns do outweigh the risks, in my opinion. I believe that the KLCI index will find support around the 1,200-1,213 levels. The Hang Seng Index to find support around the 22,000-22,400 level. STI to find support at 2,945-3,006. Shanghai should hold around the 3,000 level, or slightly below. I still believe that the bull will be back sooner rather than later.. Will update again when the regional indices start to move upwards again.