Bearish sentiment

The market sentiment was bearish since entering June. The announcement of price hike in petrol on 040608 has caused a big fear in the market, and resulted in a sell down on last Thursday. The dumb money (panic sellers) was really irrational and push the CI all the way down to 1214, however, the smart money came in quietly to buy and manage to bring the CI up to close at 1223.56 (Thursday 050608). On Friday, the CI turned very bullish, moved by TENAGA,which saw the largest single day gain of Rm1.70, and closed the gap at 1248.57. On Monday, 090608, the CI again suffered another round of bashing due to DJIA closing down 394 points last Friday. However, the candlestick of CI actually shows an up day despite the fact that CI was down 17.59 points. This indicates that the big boys (smart money) was actually accumulating the blue chips at this level. Similar candlestick formations are seen in many of the blue chip counters.

The market sentiment is generally bearish, the moving averages of very short, short, medium and long term are all pointing south indicating down trend. Since CI had already broken all the key short term support at 1250, 1241 and 1233, the immediate support at 1215 is critical. If this is not defended, we may see CI revisiting 1180. For the immediate term, we expect CI to move in a narrow range of 1215 - 1250.

However, one don't need to be overly bearish, there are still counters such as KPS, Kencana and a few others that are moving in divergence to the down trend, if you do your home work, you'll be able to find them.


Disclaimer: The above is not a recommendation to buy or sell, all suggestions mentioned are purely for academic study purposes for our trend trader club members only, and the author may have personal interest and position in some of the examples mentioned. Any losses incurred if you were to trade base on the study examples above is solely your own responsibility. Do consult your dealer before taking any action.