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Friday, November 30, 2012

s NOW the best time to long the KLCI Spot (Stocks) and Futures?


Is NOW the best time to long the KLCI Spot (Stocks) and Futures?
For the past year the KLCI had been what I should say mostly on the uptrend except for the months of August and September. However the market started to lose ground since the beginning of November. It had been quite a big retracement and shaving off more than 100 points from the index. What should we do next?
From the point of view of an amateur, the response will be either one of the following:
1. I am not touching it with a 10 foot pole
2. It will go down lower next week
3. Better run first before others
4. Better not to look, the more you look the more you lose
As for the professional traders their views are different. The recent downleg will represent one of the best oppurtunity to accumulate stocks and also time to enter some long contracts in the KLCI Futures. Why do we say this?
The following are the few facts to back up our short term view on the Kuala Lumpur Composite Index.
1. Selling is overdone already. Slope of the decline is levelling off.
2. Most indicators like RSI and MACD are already in oversold territory.
3. Price and Indicator Divergence. Best buy signal ever.
4. Although the recent low of 1595 had been breach but manage to rebound off lows.
5. 18 down days in a row. Stuff like this down happen every now and then.
6. This will be the last BIG PUSH before the elections. This is how the BIG Money operates. Scares the shit out of the weak holders and when they are shaken out then they will begin to push it up again. Our view is that the next target for the coming rebound will be in the vicinity of 1635. If this is taken out then the KLCI shall resume its uptrend to break the all time high of 1679 on 29/10/2012.
7. This is the time where the saying ‘the most dangerous place is the safest place’ will be valid.
The above view is only a guide and represents our view on the market and it shall not be solely used as a buy signal for your investments.

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