Another hiking day for KLCI ... seems like it will last till CNY.

Hiked 10.9 and settled at 1236.63

Seems like 1500 points is not that far anymore

Market Outlook as at February 6, 2007

I've written earlier that we need to look out for signs of an overheated market to reduce our position. These signs include the CI persistently testing the upper Bollinger Band & an unsustainable surge in volume traded. Well, we have seen the former & today, we could be seeing the latter. As at 4.00 p.m. today, the volume traded in the market was 1.65 billion units. For the whole day, the volume traded could amount to 2.0 billion units. The last time we had a 2.0-billion units day was on Dec 6 (actual volume: 2.2 billion units) and then the market peaked on Dec 12 (3 trading days later).



The other thing to note is that the CI has been "gapping up" for the past 2 days as well as today. A gap is formed when opening price movements create a blank spot on the chart. A "gap up" occurs when the low of the day is above the high of the previous day. Gaps are especially significant when accompanied by an increase in volume.

There are 3 types of gap i.e. common gap, continuation gap & exhaustion gap. For now, the big question is whether we are facing continuation gaps & exhaustion gaps. From Stockcharts.com, we have the definitions of these types of gap:


A continuation gap forms in the middle of a move and in the same direction as the current move. These gaps signal a continuation of the preceding trend and can mark good entry points. After a short or intermediate advance, a continuation up gap is usually considered bullish and signals a renewal of the uptrend. After a short or intermediate decline, a continuation down gap is usually considered bearish and signals a renewal of the downtrend. This gap is also called a measuring or runaway gap.

After an extended or long move, a gap in the direction of the current move is called an exhaustion gap. For an exhaustion gap to be considered valid, prices should reverse soon after the gap and close the gap. After an extended decline, a gap down could signal that the downtrend is about to exhaust itself. An exhaustion gap is confirmed when prices reverse soon afterwards and move above (or "close") the gap. After an extended advance, an exhaustion gap would be confirmed when prices reverse soon afterwards and move below the gap.


If you feel that the market has had an extended run-up and the current gaps up is likely to be exhaustion gaps, the better course of action is to reduce your position.
On the other hand, if you feel that the current gaps up is a renewal of the uptrend (maybe due to new buyers coming into the market such as foreign funds), then your course of action would be totally different. You would be buying into the current rally. Personally, I think that it is likely to be exhaustion gaps and would choose a prudent course of action.

it could breach new peak before CNY

already start to see investors pumping stock 1 by 1 gradually. shares that stagnant for few weeks can jump up suddenly within a day without reason, then drop to original price in the second day. strange pattern

my prediction...by year end...800 pts....write that down in a book..or somewhere..

most of the hike r generated by foreign investor targeting composite link companies. If they pull out, the CI will drop, but very unlikely situation due to the strengthening ringgit. Probably will reach 1400 by year end, below 1000 is not possible.

Everthing is possible is stock market. I also has the same taught prior 97 think that CI won't go back to 800 level after it hit 1200 during 1997. But crisis suddenly unfold, CI drop as low as 300 only at one time.

To be fair, it should be said as it is unlikely to go back to 1000 level for this year but it is not totally impossible. If US mis-managed the economy situation, if might drag the whole world into recession or China bubbling burst in big way then if might affect the stock market as well.

1987 (Oil Crisis)
1997 (Financial Crisis)
2007 (???)

The mysterious recession oman.

This post has been edited by deadalus: Feb 7 2007, 11:33 AM

yup, what i mean is its unlikely to go down below 1000 point this year. .

UEM Builder has a breakout

UEM Builder has been range-bounced between RM0.40 & RM1.80 since 1998. It appears to have broken above this range today when it reached RM1.90 at 3.05 p.m. If this breakout can sustain, the stock may go to the RM2.50-3.00 level. Its immediate resistance after the breakout will be the psychological RM2.00.

This is a trading call. If the share dropped back below RM1.80 in the next day or two, it would be advisable to dispose it, especially if the market were to weaken noticeably.

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Added on February 7, 2007, 10:21 pmDRB Hicom has a breakout

DRB Hicom has been trending down in a channel fashion since making a high of RM3.02 in 2002. It appears to have made a breakout above the upper channel at the RM2.00 level.

This is a trading call. If the share dropped back below RM2.00 in the next day or two, it would be advisable to dispose it, especially if the market were to weaken noticeably.

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Added on February 8, 2007, 10:22 pmCommerce-CB, Magnum-CB & KLK-CB- new CWs issued

Tomorrow, 3 new CWs will be traded. They are Commerce-CB, Magnum-CB & KLK-CB.

The 2 important things to note are as follows:

their price-fixing date was on January 25 (i.e. 9 days prior to their listing), and

their exercise ratio are higher than their existing counterpart.

Since the price-fixing date of January 25, the underlying shares have gained between 7 to 13% (7% for Magnum, 11% for Commerce & 13% for KLK). Obviously, those who subscribed for these CWs earlier would reap the reward of the improvement in the underlying share.

The high exercise ratio of these CWs would improve affordability but an 10-for-1 exercise ratio for a share trading in the RM10-20 bracket and an 4-for-1 exercise ratio for a share trading below RM5.00 is really pushing the limit. Are we likely to see a CW issued one day for Genting with an exercise ratio of 25-for-1? If you cannot afford to buy too many a high priced CW, then you should buy less. After all, one can buy in multiples of 100 units. This lowering of the price of CWs would only induce retail players to throw caution into the wind; the result of which is only too predictable.

I expect the new CWs to trade at premium of about 20%. At that premium and assuming the underlying share prices remained unchanged, Commerce-CA, Magnum-CB & KLK-CB would trade at about RM0.30, RM0.23 & RM0.55, respectively. See Table 2 below, for other possible value for these CWs.

This post has been edited by investmentlink: Feb 8 2007, 10:22 PM

Down day for KLCI.

Lost 7.96 and settled at 1240.87

2007(Water crisis)
Thus, water-related company stock prices fly sky.

KLCI dropped 9 points and settled at 1231.87

Normal correction & need more confirmation but some speculation counter start falling down like SANBUMI!!!

This post has been edited by investmentlink: Feb 12 2007, 10:32 PM

KLCI up 2.44 today and closed at 1234.31

It picked up so much in the second half. A great fall in the first fall.

goin to b great tomorrow...if not, need to pickup ton of shares including maybulk (in the money)

Gainers 805
Losers 188
Unchanged 185
Volume 28207552 lots

seems that retail investor has finally get into the picture??

already long time never seen the Gainers outclass Losers by such a big margin

Oh well, my puncak going to have holiday till March...

Tomorrow no PUNCAK anymore...

Retailers become itchy already, start to bank on those penny stocks or so called 'tips' stocks with huge volume traded for the last 2-3 days while big cap a a bit subdue.

Now all fundamental issues are being thrown into rubbish bin, shares can go whatever level as long as the 'hot money' keep on 'goreng'. You can see plenty of stock some even without decent background and good financial result, its share can jump and rise without any reason or so.

Be cautious.

This post has been edited by cherroy: Feb 14 2007, 05:50 PM