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
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."
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
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
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.
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
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
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.