The Kuala Lumpur Composite Index hit its highest intra day level on Tuesday 8 May 2007 before closing off highs. The overall market drifted lower for the next few days because the year end financial accounts of an index linked stock appeared suspect to the external auditors. It was not really a major issue since the company is relatively small compared to the blue chips and the amount in question according to reports involved a couple of hundred millions. While the wary stayed away from the KLSE one bought some KLCI futures at depressed prices.
The KLCI rebounded on Monday 14 May 2007 after investors digested the news on the particular index linked stock and it was time to take profits on the futures for a 30+ point overnight gain.
However the overall market still showed no sign of a rebound until Wednesday 16 May 2007 after eight straight trading days of more losers than gainers – probably caused by a selling down of margin trades. Some active stocks were down 30% from their April highs.
Perhaps the Yi chart’s obstacles (Guan) proved a bit tougher this time around. A number of elderly persons including my father-in-law had succumbed to their illnesses during this period. I had earlier mentioned to my wife that it would be difficult for her ailing father to cross the major obstacles that lie ahead. He passed away a few days later. A close friend’s mother had also passed away recently and so did an acquaintance.
While the rebound came a bit later than expected, the KLSE seems ready to pick up steam. It is easier for a resilient market to rally after being quiet for a week or two – since there would not be much overhang of outstanding trades. Most weak holders and over geared margin players would have already pared down their investments.
Singapore had on Thursday indicated her support for the planned huge property development across the border in Johor Bahru. The announcement came immediately after the meeting in Langkawi between the Prime Ministers of Malaysia and Singapore. This would be good news for the Johor property market, and Singaporeans could also reinvest in the KLSE, if they have forgotten about the previous CLOB issue.
Therefore if the market moves up this coming week with more liquidity than the previous two weeks, expect the start of a good rally.
With the limit ups on two second board counters on Friday, perhaps others may follow suit. However, as always, remember to do proper home work on any counter you wish to invest in. Investment in a safe and sound stock can still make good money for you in a Bull Run.