Chart 1: KLCI's daily chart as at 6/4/2009 (Source: Quickcharts)
The correction in our market follows a small drop in DJIA yesterday. DJIA tested its 100-day SMA at 8030 before correcting. Is DJIA about to correct more meaningfully? Looking at Chart 2 below, we can see that DJIA has gained 1500 points or 23% since making a low of 6500 in March this year. If we expect a correction according to Fibonacci Retracement ratios (of 23.6%, 38.2%, 50%, 61.8% and 100%), then it is possible that DJIA may pullback to 7640, 7430, 7250, 7070 & 6500. In the present market, which exhibits fairly strong bullish undertone, I believe that DJIA is likely to find good support at the 7500 level.
Chart 2: DJIA's daily chart as at 6/4/2009 (Source: Stockcharts.com)
Since taking a cautiously bullish stance on the market, I believe that we should use any price weakness to accumulate stocks.
3 comments:
I think the curent mkt will consolidate downward a bit to cope with recently uptrend and the new bad factors that currently start flooding the market.
Hi AC,
I share your take on the market. If you have been observing the market, you would see intra-day corrections happening on daily basis, for the past few days. What most traders are fearful of is a few days of price drop and that has not happened yet. I believe this could happen soon. Let's wait & see how the market digest the huge volume of the past 4 days (of above 800 million units a day)!
hi alex,
what do you mean by 'intra day corrections happening on daily basis'?enjoy reading your blog n still in the learning curve..keep it up.thank you.
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