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What lies ahead for the KLCI?


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Apr 28, 2008 (Forum: My Say)

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What lies ahead for KLCI?
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The Return of the KLCI megatrend Jan. 12, 2004 (Right Timing Special)
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Getting out of the woods
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Breaking out of the Bermuda Triangle 
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In and out of the Bermuda Triangle
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In Search of the Three Buddhas
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Spot-on prognosis
Feb 14, 2000 (Capital)

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

>> Forum: What lies ahead for the KLCI?; Jan 8, 2007
 Business and Professional Networking

>>   Global Malaysians Forum : Business and Professional Networking
>> Subject Topic: KLCI 2007 - 1200, 1330 or Beyond?

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

 The Chart....  >

Chart 1:  The KLCI Megatrend ~ What lies ahead in2-007?
8 Jan 2007: My Say: What lies ahead for the KLCI?

What a start to 2007! The Kuala Lumpur Composite Index (KLCI) finished strongly at 1,117.1 points on Bursa Malaysia on the first trading day of the year last Wednesday. That's four aces — watch out Le Chiffre and you too, Mr Bond. And speaking of Casino Royale, we could start this new year with a bang and present this article with the theme, "Into (in2)-007".
I will be brief in this commentary and much of it will be said in the chart. In fact, news coverage over the long weekend and last Wednesday was pretty rosy and smells like one.
Last Tuesday, I posted a new thread in Global Malaysians Forum: Business and Professional Networking (Topic: KLCI 2007 — 1,200, 1,330 or beyond?), accessible at . This was what I said:
"Happy New Year to all fellow Malaysians, everywhere!
"With a good roti canai/nasi lemak and teh tarik and glancing through the newspapers… I can't help but say that the local press has spiced up with nice storylines this morning! Is it too good to be true? KLCI at 1,200 is the common theme, 1,330 the big resistance, and/but why not pass that barrier? I'll be doing my own study tonite to meet tomorrow's dateline for a story in The Edge's first issue of the year!
"Well the journalists and expert panelists have had their say… what about you guys/gals out there? Surely we have our own perceptions — don't fret spill it out… who knows perhaps some of our prognoses could very well be on target far better than what the experts are thinking. Let end-2007 be the judge — come on share your thoughts.
"Remember that the people-in-the-streets can't be all wrong, and the experts were not always right in their prognoses. Perhaps the Securities Commission should come up with some kind of award to recognise the unsung heros… some may turn out to be more heroic than the experts.
"Mark my words! All d best!"
My message is clear, I think. All I wish for the investing public is for them to be given a chance to make their views known and in a way, challenge the experts out there. Yes, it's kind of pitting the man in the street (the majority of retail players, I presume) with the investment advisories issued by the fund managers, analysts and so on. Let us all see who will ultimately make the most accurate forecast for the KLCI come end-2007. Are you all game for that? Unfortunately, not many stockbroking firms care to initiate that kind of competition and award the "unlicensed experts" — the last one I came across was from Avenue Securities (I only managed to qualify for the grand final round — you see even I am not that good).
Let me share with with you what one of them has forecast: "1st 1,331, then 1,557 and end with 2,012 [e wave]." Too good to be true? You see, in forecasting, one is not wrong until proved otherwise — you may laugh at his/her prognosis today but if it really comes close to those numbers, then who will have the last laugh? I believe many small players out there have their own views — why not share them?

KLCI's possible direction
Having said all that, here's my quick analysis of the KLCI's possible direction this year. "A picture paints a thousand words", said the Greeks. But what I have here is not a portrait of Helen of Troy, definitely not one that will launch a thousand ships. Well, at least the KLCI has already penetrated the thousand mark quite strongly, and is still going strong into 2007.
The analysis is a bit complicated (with so many lines, circles, squares and so on) but I have tried my best to make it as simple as possible for our dear readers to digest, and as a bonus, introduce some of the studies/indicators (Pitchfork analysis, Elliot Wave analysis, Gann analysis and so on) known to most professional chartists/technical analysts. So here goes.
Firstly, how far can the KLCI climb before the year's end? Can it breach the 1,200 mark, or go even further up to the 1,330 level to beat the all-time high registered during the 1993/94 superbull run? My friend Fred Tam has been very bullish in the last couple of months. The current spate of bullishness in the waves began on May 2, 2001, with the "epicentre" at point "C" soon after the last KLCI megatrend completed its trail from 1977 to 2001 in a major 1-2-3-4-5-A-B-C wave pattern.
Refering to the chart, here are some of my conclusions for the moment. The KLCI's intermediate term trend (by Elliot Wave analysis) has just traced a beautiful 1-2-3 impulsive wave sequence — with wave 3 very much still unsettled. It has still got stamina to last the distance until mid-2007 (pinpointed on June 25 on the chart).
So, for the next two quarters of 2007, it's going to be generally bullish with intermittent minor corrections along the way. With that premise in mind, I am looking at these numbers: 1,287.15 by mid-2007 (June 25); and 1,2811.11 by August (Aug 24).
If and only if this current bullish phase absorbs the spirit (and schizophrenia) of the last superbull run, then expect the KLCI to scale towards the 4.25X Fibonacci level by yearend, that is, flirting with levels above 1,750 (at 1,752.44). Beyond that, 2,058.73 and 2,493.69 are levels marked from the Fibonacci studies — all of which may materialise as we enter 2011 (Jan 24), that is, after the Ninth Malaysia Plan is complete. That's the only proviso I am prepared to give at the moment. Don't get me wrong, charting plays with market sentiment and fire (el fuego!).
If the mood prevails in that direction, then don't go against it, or your back may break! Lastly, observe that the trend pattern that is shaping up looks pretty similar to the period during the last superbull run.

Arifin Abdul Latif is an economic chartist based in Kuala Lumpur

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