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".
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.
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
"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?
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
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
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
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