Chinese New Year Rally? Probably Not.

KLCI - 4.2.2013
4th of February is an up day for Malaysia!  So will there be a Chinese New Year rally? Let’s look deeper and see whether the rally is possible and if it is, whether it’s sustainable.

Despite rising 7 points with substantial volume, sentiment was actually quite weak. As you can see from the KLCI intraday chart below, the overall trend is bearish if we were to ignore the vertical rise that occurred during the last trading session of the day. If institutional investors did not jack-up the price of a few index constituents at the end of the day, we should be seeing a black candlestick, which is not a very good sign.

KLCI Intraday - 4th Feb
The weak sentiment can also be seen from the gradual increase in the ratio of losers to gainers as the gap between gainers (green line) and losers (red line) widen throughout the trading session.

gainers vs losers intraday - 4th February

Still thinking about a possible good trading day tomorrow? OK, how about telling you that the Dow Jones had shed 100+ points at mid-day after closing just above the psychological level of 14,000 points last Friday? Apparently, 4th of February is a down day for the US market. While the correlation between the price movement of the US market and ours had declined in recent years, US’ influence on our local market remains substantial. Thus, it would be reasonable to expect to a red market tomorrow.

Happy Observing ;)

One Response to Chinese New Year Rally? Probably Not.

  1. Thanks for the great article..

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