Market Outlook as at October 8

The market began to correct as early as 9.15 am after the KLCI gained 10.39 points to record a high of 1382.78. At 3.30 pm, the KLCI hit a low of 1364.18, losing 8.21 points compared to Friday's close. Is this rally over?

From the chart below, we can see that the current upleg has been very steep, not unlike other markets around the region. With the steady rise in the volume traded in the past 2 weeks, the market appears to be in a hurry to test its recent high of 1392. Thus, a correction should not be unexpected & it could well bring the KLCI down to its short-term uptrend line support of 1350; or, its 10-day SMA support of 1347; or, even the support given by the gap-up on October 2 (at 1353-1359). So, as long as the 1350 level is not violated convincingly, I believe that this is merely a short-term correction from which the KLCI can then stage a strong re-bound.

Based on this, I believe that the current correction is an opportunity to accumulate stocks.


Chart : KLCI's daily chart as at October 8 (courtesy of Quickcharts)