Saturday, March 07, 2009

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.

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