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How pyschological is this 1,000 mark?

2008

Price of crude may go higher
Apr 28, 2008 (Forum: My Say)

2007
Mini-superbull run in the offing?
Feb 12,
2007 (Forum: My Say)
What lies ahead for KLCI?
Jan 8,
2007 (Forum: My Say)
2006
How psychological is this 1,000 mark?
Nov 13
, 2006 (Forum: My Say)
In search of the Da Vinci Code
May 1, 2006 (Forum: My Say)
An Effective January Effect?
Jan. 31, 2006 (Forum: My Say)
2005
Is US$60 a barrel here to stay?
Jul. 5, 2005 (Forum: My Say)
AgriBazaar a growing success
June 3, 2005 (NetV@lue2.0: My Bit)
Oil for Thought
Apr. 11, 2005 (Forum: My Say)
2004
Flirting with the US$60 barrier?
Aug. 30, 2004 (Special Report: RTS)
What has happened to the post-election rally?
May
24, 2004 (Special Report: RTS)
The Return of the KLCI megatrend Jan. 12, 2004 (Right Timing Special)
2003
Emerging from the Bermuda Triangle
Oct. 27
, 2003 (Right Timing Special)
The oil and gas stocks rally: How will it pan out?  
Oct. 20, 2003 (Right Timing Special)
Impact of Iraq war on KLCI 
Apr 28, 2003 (Right Timing Special)
What ails the KLCI?
Jan 06, 2003 (Right Timing Special)
2002

Getting out of the woods
Aug 26, 2002 (
Right Timing Special)

2001
Breaking out of the Bermuda Triangle 
Sep 03, 2001 (
Right Timing Special)
In and out of the Bermuda Triangle
Apr 30, 2001 (Capital: Right Timing Special)
2000
In Search of the Three Buddhas
Oct 02, 2000 (Capital)
Spot-on prognosis
Feb 14, 2000 (Capital)
1999

Brighter days ahead?
Feb 01, 1999 (Capital: Focus)

 Forum...My Say  

>> My Say: How pyschological is this 1,000 mark?; Nov 13, 2006
 
 Business and Professional Networking

>>   Global Malaysians Forum : Business and Professional Networking
>> Subject Topic: Forecasting Economic/Stock Market Trends

 Feedback/Reply from/to Fellow Economists, Professionals, Friends  
>>
page  1  2  3...

 Rejoinder....  >> Daily KLCI trend over Week of 13-17 Nov 2005 => CLICK HERE
 

 
My Say: How psychological is the 1,000 mark?

I first read about the Kuala Lumpur Composite Index (KLCI) crossing the magical 1,000 mark while having teh tarik on Nov 4. I did not realise it had happened although I had entered the market to buy some stocks, based purely on my reading of its state, which is "rosy for now".
As a chartist, I did make a forecast on Sept 6 this year on the "1,000 mark" in response to queries over Global Malaysian Network (GMN) via a thread I initiated under "Global Malaysians Forum: Business and Professional Networking (topic: Forecasting Economic/Stock Market Trends)". This thread is easily accessible at www.globalmalaysians.com/forum/forum_posts.asp?TID=260&PN=1.
This is what I said then: "Guys, the elusive 1,000 mark? Let me look into my crystal ball for a second… not so soon, but watch out for as 'early' as Oct 30, 2006, most likely by Nov 17, 2006, or latest Jan 23, 2007. This is purely my prognosis from my charts.... you can believe it or not, but just be alert. That's my advice."
As a rejoinder to that statement, here's what I posted on the GMN Forum on Nov 4, 2006: "In fact, I have made a somewhat 'pinpoint forecast' there... I have said that the earliest KLCI may touch 1,000 is by Oct 30, 2006... it seems I have missed by a few days there. But on second look, I made a small mistake in counting the days... I forgot about the DeepaRaya holidays (you see, American charting software does not take care of Malaysian holidays). Add on three or four days and hey presto! the 1,000 level as forecast was indeed (reached) on Nov 2 or 3. Well, I'm a bit of a Nostradamus now, I guess. What happens after this 'first attempt' at penetration (over 1,000) is another matter."
The point here is, not many analysts dare to make such a bold forecast and stick with it. Over the past few days, we have seen the positive newspaper headlines and stockbrokers painting rosy pictures in the print media and online. And they will not stop at that. The chances are there will be more bullish commentaries. Well, I don't blame them. It's what market players are looking (and hoping) for.
I'll not attempt to repeat what the others are saying now. The fundamentals are out there for all to see — there is no doubt about that. Things are getting much better in the economy, with the government proposing more mega projects under the Ninth Malaysia Plan. Still, there is a limit to what the government can (and should) do. It is now more a question of whether the private sector can (and is willing to) come up with the funding, either via private finance initiatives (PFIs) or any other feasible means.
I think the private sector will be able to fulfil "its end of the deal", which explains the rosy picture for business in the Malaysian economy. How the equities market responds is another ball game. Bear in mind that when the KLCI breached the 1,000 psychological barrier on Nov 3, it was doing so after several failed attempts over the years. In technical terms, the KLCI has emerged strongly. This bodes well for the market as a whole, not just the blue chips.

What's next for KLCI?
Now that the psychological barrier is broken, the chances are that the 1,000 point will in due course become the next support level, which is a strong technical analysis that is worth noting.
For the longer term, I had painted a rosy picture of the KLCI in my April 25, 2006, analysis that appeared in this publication under the headline "In Search of the Da Vinci Code". I applied the Da Vinci Code's so-called "pentacle" geometry to my own Bermuda triangle analysis on the KLCI megatrend — KLCI monthly chart with database stretching from January 1970.
Those who missed that article can take a look at Chart 1. Observe that I have marked Wave 3 with an arrow pointing upwards to a question mark. This trend points towards the KLCI going slightly over the 1,000 level by yearend. That was my longer-term benchmark for the KLCI. I was confident about my analysis and have stuck with it ever since. I believe "statistics don't lie, but one can lie with statistics".
So, how far can the KLCI climb before yearend? Chart 2 illustrates some of my conclusions for now. The KLCI's short-term trend (by Elliot Wave Analysis) has just completed a 1-2-3-4-5 impulsive wave sequence — with Wave 5 right on the dot on Nov 7. This may mark an important change in trend downwards for a brief A-B-C correction.
Or, if sentiments are still strong (the KLCI closed at 1019.93 points last Thursday), then the uptrend will continue for quite a while to around 1,035.32 by Nov 22, 2006. When that happens, the waves may require a recount. As it is now, the bulls are not eager to surrender just yet. Hopefully, it will not turn out to be wishful thinking for them.

Chart 1:  The Da Vinci Code, the Bermuda Triangle and the KLCI.
 
Chart 2:  KL Composite Index’s Short Term Elliot Wave Count (daily basis).
 

Arifin Abdul Latif is an economic chartist based in Kuala Lumpur

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