Market Outlook as at May 28th, 2008

Since Monday (May 26th), the KLCI has recorded a lower 'low' and a lower 'high'. This satisfies the requirement for a short-term downtrend. However, one may have to be a bit flexible in making market call in the present listless market.


Chart: KLCI's daily chart as at May 28th, 2008 (source: Quickcharts)

While investors are concerned about macro factors, such as the high crude oil prices, the stalling global economy, the shaky financial system in America & a few OECD countries as well as our internal political uncertainties, they could also be affected by something smaller but closer to home- the school holidays.

From the chart below, we can see that the KLCI adjusted downward just before the November-December 2007 school holiday and it only begun to recover 4 days thereafter. The short mid-term break in March this year is not a reliable guide as it coincided with the General Election. If the current market correction were to mirror the correction in the November-December 2007 school holiday, then the market could begin to show some recovery in the next few days. Having said that, I still believe our market will be range-bound between 1250 and 1300 levels. A break above & below these levels would point the way ahead for our market.