Market Outlook as at January 15, 2009 (a second take)

I like to revise a bit of my earlier post on the same subject as my Quickcharts program has just been upgraded. On closer scrutiny, it appears that KLCI has tested its immediate short-term uptrend line support at 895 (not 880 as previously stated) over the last 2 days. This support is still holding up the index presently. Its next short-term uptrend line support will be at 860. We can also expect psychological support at 850 & thereafter horizontal support at 835.


Chart 1: KLCI's daily chart as at Jan 15, 2009 (source: Quickcharts)

I have appended below the monthly chart of the KLCI. The upgraded Quickcharts program includes data as far back as 1988. If I were to draw an uptrend line connecting the 'low' recorded in Dec 1987, but skipping the extreme plunge suffered in the final months of the Asian Crisis, then our KLCI long-term uptrend line support is at 730-40 level. Looking at the 3 indicators (MACD, Williams %R & DMI), it is too early to call a bottom for this market.


Chart 2: KLCI's monthly chart as at Jan 15, 2009 (source: Quickcharts)

The recommendation applies, i.e. we should avoid taking new or large trading positions in the market until the outlook has improved.

Note: The DMI indicator is similar to the Average Directional Index given by Tradesignum.com. The 2 black lines plotted to represent +DMI & -DMI make for hard reading (not the fault of the program).