Sunday, April 12, 2009

KLCI is Turning into Bull !!

According to the technical analysis for the previous week, it can be seen that our market is trending upward. It seems that the bull are getting stronger after a few months of rest.

Why I say that Bull is coming back?

It is based on some ideas in technical analysis. I will share with you some important ideas of technical analysis in the later part of this post.

Golden Rules of Technical Analysis:

1. When the price move above the moving average line (14MA, 25MA and 50MA). This means that market is trending upward.

Remember: Trend is Your Friend!!!

2. Don't buy stock during Good News but Buy a lot during Bad News. When the newspaper are reporting a lot of good news, please keep your mind clear because it might be a trap. You need to do analysis by using fundamental analysis and technical analysis to know the real idea of the market.

3. If you miss a chance during the start of bull run, don't worry. Market always move up and down no matter it is an uptrend, consolidation or downtrend. So, it is always good to buy when the market dip during a confirmed uptrend.

4. Technical analysis can show the phychology of traders. When there is a large increase in trading volume, it means that people are starting to flood the market. More and more people are coming into the market. Sometimes, this also means that the pro-investors, funds manager and corporate investors are coming into the market. So, it is almost time for us to join the trend.

5. Always buy stock at the peak of pessimism.

By following the Golden Rules above, you can look at the following charts. It shows the symptoms stated by the rules and it might signify the start of Bull.

Our most Recent KLCI Chart (By ChartNexus)

1. From the chart, you can see that there is a sudden increase n volume (Rule No. 4). This might mean a large group of people are going into the market.

2. From the chart, you can see the our KLCI is going up and cross the Moving Average (14MA, 25MA and 50MA) which is the Rule No.1.

3. Several bad news are reported few weeks ago and we are at the peak of pessimism.

From the above analysis, it can be said that our KLCI is going into a small bull run and might turn into strong bull in the near future.

History Always Repeat Itself:

Our KLCI at Mid of 2006 to Mid of 2008

Looking back at the historical chart of KLCI (2006-2008), we can clearly see the start of the bull run at mid of 2006 until it turns into bear at mid of 2008 from the chart above. You can see that the KLCI move up and crosses the Moving Average lines at around end of year of 2006 and start to go up but dip a bit then it turns into a large bull run until the bubble burst at year 2008.

The bull run is around 2 years time. How rich can you become in those 2 years? So, position yourself for the coming bull run and become rich for the years to come.

Remember that the history always repeat itself. Bear turns into Bull, Bull turns into Bear, Bear Turns into Bull and keep on repeating. So, we must have faith and believe that our market will be turning bull soon.

Take profit from the panic now. When people are panic and selling all those stocks at crazily low price, we should be happily buying in all those now "silver" stocks and wait for it to turn into "gold" stocks in near future.

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