KLCI: An Up Thursday Maybe?


While the short-term trend is still bearish, as indicated by the downward slopping trendline that connects all recent highs, KLCI may rebound slightly tomorrow and the day after. This prediction is not without a basis since a hammer with high volume is formed and risk-taking activities can be seen in a number of shares (I shall share some of the shares with bullish signal in another post). From a market anomalies perspective, Wednesday has proven to be a day with high possibility of reversal, especially if the direction of the price movement are the same from Monday to Wednesday. A green bar is not impossible since 20th of February is also one of the reversal dates according to Gann’s wheel.

Despite the bullishness in the immediate term, we have to be wary of the announcement of the dissolution of parliament as it could potentially send our market down towards the 15xx region. The continuation of the downtrend of our major telcos (Axiata, Maxis, Digi) could also offset any gains in other KLCI constituents, thereby dragging the CI down as they are among the top 7 companies by index sensitivity.

To conclude, its a 2-days GO for day-trader but a WAIT for others. If you are planning to take a position, make sure you keep your stop loss tight.

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