KLCI Supports

Global stocks took a bashing on Friday ours just as badly. I suppose the signs were there:
1) Mounting tensions in Israel/Middle East
2) This lead to record high oil prices
3) Rising Interest Rates in Japan
4) Uncertain economic conditions in the US
5) Which lead to a 2 day fall of over 200 points in the Dow by Thursday & by Friday it was almost 400 points
6) CI was reaching a peak at the 930 level
7) Syndicated stocks like Iris, Oilcorp & others was being pushed up again.
8) Aunties & Uncles were starting to crowd trading floors of the brokerages

You would have noticed that unlike the Dow & CI prices, these are fundamental issues that affect markets, so traders need to sometimes look beyond TA to other factors as well.

So whats the outlook for the CI?

Supports for the CI are at 906, 900 and 883. The double bottom at 883 should be a very strong support for the CI, so in my mind the only question is whether the CI will breach 906 & 900 or will these hold? The key would be oil prices. If tensions continue to mount in the Mid-East & oil prices rise above US$80 a barrel, then even 900 will not hold. If prices don't rise any further then it just might hold. We cannot be certain at this stage.

If you are out of the market, then hold on to your cash until we see better signs. If you are in the market and can hold on, then do so until we know better.

In a market that plunges badly like this, prices may rise up in small technical corrections before falling again. If you cannot or don't want to hold, sell on rebounds & then pick up stocks when prices stabilise or when the above supports convincingly hold.