Market Outlook as at December 27

Ten days after the market has made a temporary top, there are tentative signs that the worst is now behind us. You can see from the 3 charts below- the daily charts for CI, Mesdaq & Second Board- that their short-term downtrend lines (marked as 'BB') have now been overcome. These indices have tested their medium-term uptrend lines and survived, except for the Mesdaq index.

The breaking of the short-term downtrend lines should turn the prevailing bearish mode to a neutral mode as the market begin to find its footing. We are likely to see the formation of a pattern (such as a triangle) and then we shall await the upside breakout of this pattern (thus turning it into a continuing pattern). Thereafter, the market would continue with its prior trend, which was an uptrend. That's the idea... but we all know that the market seldom behave as you expect. We must take the market as it comes.

With that scenario in mind, the next course of action is to "lose our cash". In another word, let's put our cash into stocks.


Chart 1: CI's daily chart as at Dec 27


Chart 2: Mesdaq's daily chart as at Dec 27


Chart 3: Second Board's daily chart as at Dec 27