A wisp of smoke

The Kuala Lumpur Composite Index finally broke its all time high of 1,332 set in the first week of January 1994. The KLCI reached an intra day high of 1,334.44 yesterday. Hurray! Slow coach! Most of the Asian and South East Asian stock markets had already broken their all time highs a year or two ago. There is still a lot of catching up to do before the KLSE is at par with the other Asian markets. The big US funds have just started to take notice, which underpin my expectations of a super bull run in 2007.

As indicated last week, while the KLCI has broken its all time high, profit taking and stale bull selling have also taken place. Traders and retailers for whatever reasons who chose to wait for higher gains or had chased shares saw prices of their speculative (low and second liner) stocks fall 15 to 20% from their twelve months highs, some registered last week. The wisp of smoke had disappeared with some money forgone, if they had not taken profits. If they had not treaded with caution as advised, those who chased shares may now be caught at higher levels.

The battle between the bulls and the bears in the KLSE has just begun.

The dragon will just watch from the sidelines as always, waiting for the right time to join in the fray. For the Yi cautions in the third line of Qian :

“All day long the superior man is creatively active. At nightfall his mind is still beset with cares. Danger. No blame.”

Is there ever no concern that the shares sold will go sky high? Is there no temptation to buy back the shares at a lower price? Is there no necessity to do homework and watch the battles? Of course there is. It is proper conduct of a Junzi to be beset with cares. But since the annual Yi chart has been and is accurate, there is no reason not to follow its timing to ride the ups and downs of shares in the KLSE.

A word of advice to Malaysians who follow the annual chart(s) of a Buddhist monk based in the south of peninsular Malaysia. While his chart written in Chinese seems based on the Yi and other methods of divination, the predictions on market timing are usually accurate for the first few months of the calendar year. Do not rely too heavily on his predictions on good and bad trading days for the market. You can get burn. However his predictions on which sectors to buy can be worth looking at from time to time especially during a bull run, if you have run out of ideas on what stocks to invest in.

One also like this sentence from the analyst who writes for The Star on the KLCI Futures Market today after the spot month futures touched an all time high of 1,338.50 yesterday:
“The cautious bulls are usually nervous on a technically overbought ‘new-moon’ day.”

Does it not show that he knows a bit of Chinese culture? One wonders if he knows the significance of new moons and full moons that can at times affect markets, but he is definitely discerning. If we want to learn the Yi and the Tao, we need to know the timing for firmness and flexibility as they play an important part in major Chinese businesses; deals; trades; and cycles.

For those who had taken their profits and sitting on a huge pile of cash, the timing is entirely up to you on when you want to buyback or buy other low and second liner shares. You can start to buy if you think the shares are cheap enough. Do not look for me to tell you when it is the cheapest. I truly do not know. From my limited experience of thirty odd years in shares trading with the Yi, no one really knows the lowest or highest possible price of a share, unless they have seen it, or have a ‘third eye’.

But one can tell readers in a later entry, based on the Yi chart, when the low and second liners will start to rebound after the falls.

Cheerio!