2 weeks had passed since I last express my bearishness (on the night of 16th June, in the private group where all my students are in). I hope none of you get caught in the recent market volatility. Here’s a quick update.
I mentioned on the June 21st that there should be a technical rebound following a 3-days dip and true enough it happened. I taught you guys before on how to judge the sustainability of a downtrend. If there’s no strength in the technical rebound, it is highly likely that the market will fall further. The technical rebound happened on the 22nd and 23rd of June (2 days) barely recover 21st June’s losses (1 day). That shows extreme weakness – not much bargain hunting.
28th of June was interesting. The index went from +8 at the opening to -8 at the closing. The major shift in sentiment for the day (or the black candlestick alone) is enough to tell you that the market will definitely fall further (big boys are selling on strength aggressively, knowing that its going to fall further). This sort of day will only trap very short-term traders who might jump in at the opening, believing that he’s wrong on his bearishness. For the majority of you whom I encourage only swing and trend trading, you should not get emotional on a strong opening.
The market continued to drift lower and on Friday it tested the previous high of 1757-1760. Again, I believe this should be a temporary support and not the major turning point as by now it should be quite clear to you that the market is in a downtrend (lower high lower low). A technical rebound should happen again early next week and I shall watch the strength of this technical rebound closely. I strongly believe that this is just the beginning of more sell-down as the index just broke below the 50dMA line for the first time in 6 months. Also, global indices are experiencing huge volatility in the last 2 weeks (trending downward), further strengthening my view. Foreigners are starting to sell heavily as well – last friday was the first time in 6 months foreigners sold more than RM200million worth of shares in a single day (net). As such, I’m maintaining my short-term bearish, long-term bullish view of the market. Expect the market to stay sideway above 1760 throughout July, at best, or down towards the 1730 area, at worst. I will be staying extra conservative as the notorious months of August and September are just around the corner. If you are still an amateur, I strongly suggest that you stay conservative as well.
–If you remember what I taught in the conference, an important low should be formed next week and most likely to be at the end of the week.–