Saturday, March 05, 2011

Bursa Malaysia Weekly Summary

KLCI Weekly Chart

KLCI seems to have stabilized within the uptrend line. It did broke briefly which scares everyone, but now is up above the line again. As I said in my last post (3 weeks ago), there is no sign of a bear market yet. Based on yesterday's closing, KLCI should oscillate between 1500 - 1540 before making its next move. I don't know whether this is a bullish or a bearish move yet. If you need a prediction, then I will say to the upside because:
1. Do not underestimate the power of money printing.
2. MYR is still appreciating against USD.
3. Non-professional investors are all bearish about the market.

Point 3 is interesting because I heard of stories about people switching from equity unit trust to bond or investors liquidating because they read it somewhere that the market is failing. This is a sign, in my opinion, that the top has not been reach for the simple reason is that there is no euphoria. When the majority agrees on the same thing, the market will do the opposite because the power to move markets is controlled by the professionals hedge fund manager (not the typical unit trust manager).

So, I think that after the market has stabilized, KLCI will challenge 1600 again, this will suck in the innocents before the real selldown.

Sector summary:
Malaysia Monthly Weekly Daily
FBM KLCI Up Neutral Neutral (+)
Finance Up Neutral Neutral (+)
Construction Up Neutral Down
Plantation Up Neutral Neutral (+)
Property Up Neutral Down (-)

For the next few months, concentrate your money in inflation theme. Buy precious metals, O&G, agriculture because the USD is experiencing a slow crash (news has not reported it yet - no panic yet). The commodity play will enter into an euphoria state before we hit a recession/depression.

Good luck!

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