Since the announcement of the dissolution of Parliament, our market has performed like a man transformed. The fear of a messy election that hung over our head like the Sword of Damoncles, causing the market to drop to the 1600 psychological level in late January & February. Why did the market react so positively on the announcement of the dissolution of Parliament when the outcome of the election is still unknown? If investors were so wrong in January & February by being so negative, could they be wring again now by being so positive?
Looking at the chart, I am inclined to believe that FBMKLCI will have a difficult time breaking above the 1700 psychological level. The blue ships that led the market higher are now coming under selling pressure. While I am anticipate an immediate correction, I believe taking some chips off the table would be a prudent move for now.
Chart: FBMKLCI's daily chart as at April 9, 2013 (Source: Quickcharts)
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