Last week our KLSE went through a volatile week with the CI gone through a big swing, where it opened at 1436 on Monday, plunged to a low of 1340 on Tuesday, and swing back up to close the week near the high of week at 1405.40. Daily volume traded was active, generally above 1 billion shares.
The question on everyone's mind now, is the correction over? Based on chart, the KLCI has completed a 50% correction for the up run which started on 17/8/2007. Now the CI may go through a technical rebound phase where we may see the CI swinging between 1340 and 1435. For the short term, a strong support for the CI may be found at 1363, and resistance at 1423. On the longer term, the uptrend of our CI is still very much intact. From the chart, one can see that the 240 days MA is providing a strong support for the CI, and it is still trending up, the mid term 120 days MA has gone sideway and the short term 30 days MA is pointing downward indicating short term correction.
Technically, one of the characteristics of a long term bull market is that the downward correction is rapid and the rise is gradual. One can see the same patterns occuring in February 2007 and August 2007, after a rapid downward correction, the market goes yo-yo up and down and later make new high.
The DJI is still very much in the correction phase, and the index may swing up and down between 11630 and 12500, while trying to settle above the 12000 mark to build a base.
Opportunities are always found during crisis, for those who have master the art of entry well, opportunities to pick up long term bullish stocks are plenty.