Look Out 800!

KLCI Weekly Chart

Hmm...still no panic. US is going down each day, but the fear is still not like the October 2008 level. Will this be the case of the "boiling frog"? A bit by bit drop will not cause so much fear as to a sudden drop. Looking at the KLCI weekly chart, it looks like it will be revisiting the 800 level. Based on the broken rising wedge formation, I believe that the KLCI got the potential to go to 600! My friend just asked me whether he should buy Genting. My answer is "I will not buy anything." For me, if it ain't going up, why buy?

If you feel that your money is sitting idle in the bank earning a miserable interest, consider yourself lucky! At least you don't have to keep it under the mattress. Putting your money to "work" in the stock market is dangerous now. Nobody knows where is the bottom except after the fact. Those that make bottoms calls are just fools (of course, when you make so many bottom calls, eventually, the last one will be correct).

So, lets look at the various Malaysian sectors:

Malaysia	Longterm	Midterm	Shorterm
KLCI	Down	Down (-)	Down (-)
Finance	Down	Down (-)	Down (-)
Construction	Down	Down (-)	Down (-)
Plantation	Down	Neutral	Neutral
Property	Down	Down	Down
Mesdaq	Down	Down	Down
2nd Board	Down	Down	Down (-)

Every sector except plantation is now pointing downwards. For the rest of the world:

World	Longterm	Midterm	Shorterm
S&P500	Down	Down	Down
DJI	Down	Down	Down
NasdaqComp	Down	Down	Down
Nikkei 225	Down	Down	Down
Kospi	Down	Down	Down
SSECI	Down	Neutral	Neutral
HSI	Down	Down	Down
TWII	Down	Neutral (+)	Up (+)
STI	Down	Down	Down
SENSEX	Down	Down	Down
FTSE	Down	Down	Down
DAX	Down	Down	Down

We can see that only SSEC is now joined by TWII. Both are still holding up. But, any stimulus is like Viagra/Tongkat Ali/Kacip Fatimah. Its effect is only temporary. You just can't replace the disappering consumer demand overnight. This crisis takes years to develop, it will also take years to solve it. Every government has its limits to stimulate the economy. Eventually, it is the free market forces that will set the direction.