The Next Week...

The trend has been bullish and many people are speculating that the trend will persist through the CNY. I also had been bullish and i am also speculating that my work to be done will be carry forward even after CNY.

More and more unprofitable stocks have been found starting to make a new high and traders are jumping in. Many stocks start looking damn tantalizing and attractive. Technically, at this particular point of time, buy anything that you found it technically relevant. It is the best of the time, and it is also the worst of the time. Volume increases and volatility set in, and in this period of time, you could make money as fast as how you could lost it when the market turn. Players in the market, particularly MESDAW and second board, should be well prepared with a gambler mentality, that are willing to make or die. The main concern is still the divergence of volume in KLCI chart. The second concern would be the boom of plantation stocks, seems to me, is already an overreaction of investors and speculators.

From a fundamental perspective, the index is now fairly priced. And without new dramatic change in the economic environment in Malaysia, any rise in the index could be speculative and dangerous. With an aggregate market PE of 18.4, investors should question if the expected growth rate of the Malaysia GDP (so-called around 6%) able to justify this ratio.

It is indeed very hard, if not impossible to predict the market direction in the future. Technically, a reverse correction should happen (well, this is very subjective). Fundamentally, the index should price at a trading range around 1100 to 1150 (well, this is truly subjective also). Experience wise (which could means that i am seriously suffer from psychological disease such as heuristic representativeness), high volume in MESDAQ and second board means danger and a storm in these market is just around the corner.

There is a need for us to be cautious and start taking profit for these moments, and be safe. Be patient.

Ultimately, it is not the thinking, it is the sitting that earn the money (Livermore). It is now a test for you to sit over the volatile period and patiently wait for the bear to set in...