Market Outlook as at October 20, 2008

As at 10.30 am today, KLCI has dropped about 13 points to 892. This is exactly the 50% retracement of the 1263 points gained by the KLCI when it rose form the low of 261 recorded in September 1998 to the high of 1524 recorded in January 2008. This also coincides with the strong horizontal support of 880-890.


Chart: KLCI's monthly chart as at October 17, 2008 (source: Quickcharts)

From the chart above, we can see that the monthly MACD has yet to hook up. The William %R has just entered into the oversold territory- thus the bottoming phase has yet to commence. This observation does not preclude the possibility that some stocks could be making significant low or the market may enjoy a significant rally very soon. So, long-term investors may like to use the current low prices to accumulate some stocks and nimble traders may position themselves for some profitable trades.