Saturday, March 24, 2007

Signs of hope (2)

In the earlier entry on March 11 one had indicated to investors of Malaysian shares to watch out for higher liquidity in the KLSE which will invariably increase the prices of shares. Confidence in the KLSE was generated with last week’s policy announcements by the Government and the Prime Minister to provide various incentives among others to real property investors (the abolition of Real Property Gains Tax), foreign investors (faster approvals, no quotas in some types of investments) and further easing of controls on the Ringgit. The good news was made public at the investment conference for 1,000 fund managers (mostly foreign) specially invited for the event.

No, one was not privy to a sneak preview. Neither did the earlier indication of higher liquidity come from reliable sources. It came directly from the annual Yi chart for 2007 read together with past events and the awareness of time compression in a bull market.

Since March 11, one received feedback about how the market will perform over the past fortnight – some people predicted that the KLSE will rise one week and fall in the next, while others say it was time to sell and get out of the market. Many stale bulls did exactly that, selling into rebounds either cutting losses or make do with smaller profits.

More and more of these so-called ‘ShenXian’ will come out of the closets as the KLSE recovers further lost ground (what with the huge losses incurred in the plunges on Feb 27 and on Mar 5) and eventually climbs higher than its all time high reached way back in 1993. Some have even predicted the timing of general elections, as if they have read the thoughts of our Prime Minister. So please be careful and be wary of such predictions. You may miss the boat or lose your shirt listening to these human ‘ShenXian’.

The prices of shares one bought back from Mar 6 onwards, with a rebound of 30 to 40%, have climbed back up to the levels last seen on Mar 1. The momentum and high liquidity of last week, if carried forward, can probably send some counters in the KLSE to new twelve months highs this coming week. Second board counters have also shown signs of activity, in case Malaysian investors have not noticed. Therefore the expected rally can be really broad based.

Based on the Yi chart, the stock market will continue the rebound and rally for some time. No, no hints will be given on when this new rally will end, until it is time to do so.

Go out and create your own luck. Without plenty of luck generated, you may not get to keep any of the capital gains from the stock market, even if you have followed my lead to make much money like in 2006, unless you are somehow destined to become a millionaire or a multimillionaire from shares trading - which reverts to fate.

No comments: