The KLCI plunged last night, as persistent foreign selling activities outweighed any local buying power. For once, the “last-minute Calvary” did not emerge to “falsely prop-up” just a handful of KLCI counters for the previous few days. The market breadth was negative.The support zone at 1,338 and 1,354 will be much weaker, whilst some very heavy liquidation at the resistance areas of 1,368 and 1,390 will cap any KLCI’s rebound. The March 2008 KLCI Future contract is now dealing at a larger 11.27-points discount against the KLCI cash index.
Investors will dispose on rallies. The KLCI made a key all-time high at 1,524.69 (a Bearish Engulfing Monthly Candlestick pattern) on 14 January 2008 and is the final Wave 5 high of a Flat-pattern that rose from the 547.72 low (April 2001). As a result, selling on rallies will be the best strategy for investors.
Due to the DJIA’s plunge of 314-points last night, the KLCI will remainvery weak. Most sensible fund-managers will trim their portfolios ahead of any imminent “pre/post-election2008” downturn. I expect the market to plunge below the key 1,338-1,340 neckline supportof the obvious “Head & Shoulder” pattern. A sustained break below this level (whether on a pre or post-election basis) would open up great and vast possibilities (85% chance) of my preferred downside target areas of 1,251, 1,155 and 1,137. It is time to move to cash and remain ultra-cautious. Looks like the outcome of the election is less than desirable! - Makkal Sakhti ! ("power to the rakyat!")
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Today THE STAR (21/3/08) posted the global measures to stem credit crisis from 10 August last year til 3 days ago where fed cuts 75 basis point.
Question: is there any effect of any "help" given by any central bank or goverment institution on us slowdown?
From stock market point of view, the answer is certainly no! here are some of the main indices of the world performance from 10 August 07 to 21 march 08:
Dow -6.6%
Nasdaq -11.27%
S/P 500 -8.54%
FTSE -9%
CAC -16.79%
DAX -13.9%
KLCI -7.8%
FSSTI -14.33%
HSI -3.14%
NKY -26.25%
TWSE -5.14%
KOSPI -10.54%
S/P ASX -13.62%
SHG COMP -19.5%
SENSEX +0.85%
SET -0.836%
However, the US Dollar index traded on ICE futures drop heavily from 80.59 on 10 August 07 to 72.8 on 20 March 08. Thats more than 9.6% drop on USD against 6 major currency in the world.
That's mean if anybody longs all the futures of all indiaces in the world, and also longs the USD to hedge against the risk of indices long,then this person will lose big in USD and all indices except SENSEX.
So after all the aid given by central banks of major countries, after FED cut 300 basis point, after numerous talk by so called 'big gun' like george bush, ben bernanke,donald kohn,warren buffet,jim cramer,henry paulson etc,
wat there able to do is weaken the USD and drag down the major indices of the world (except for Mumbai,of course).
So.........
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