There is no sign yet that KLSE's bull market from 1/9/98 at about 260 has ended. Longterm upward trendline is still not broken to the downside yet. For information, STI (Singapore's Straits Times Index) has broken its longterm upward trendline to the downside. STI is much bearish in longterm view, but in medium and short term view it could still be attractive enough for long position players. In view of the fact that KLSE market had in these few years always lagged behind leading Asian markets like Singapore, Hong Kong and Japan markets, it is worrying that KLSE may one day follow STI. This is warranted by fundamentals as the momentum of interest rates now is upward.

Internet stocks may be not join this possible bearishness because firstly, internet stocks rely on capital market to raise fund more than bank loans or anything else, secondly world's number of internet users could be increasing at an accelerating rate and so are the level of innovativeness. More and more companies see e-commerce as a neccessity rather than a choice and they just can't wait to jump into it.

While major index had been a good reference for general market's movement, recently there had been a great divergence of movement direction between technology/internet stocks and conventional stocks, e.g. Dow Jones had been showing weaknesses for more than a month but Nasdaq kept on recording new high.

No rally is confirmed yet, but could be near. The trendline (greenline, see charts below) currently stands at around 980-990 and if broken to the upside then this would confirm a rally. Then cut loss points would be when the KLSE CI dips back below the trendline and other cut loss points are 954 and 920. How much would this rally be rising (from low of 920)? See the statistics of past KLSE CI's rallies. If this is going to be a rally, then buy-on-strength short term play is risky at the beginning of rally, this strategy works best at the middle of a rally and calamatic at the ending stage of rally. But buy and hold medium term strategy would work best at early rally.

From past experience, not all ralles will be truely broad-based, i.e. some categories of stocks might outperform others greatly. In fact the previous rally of 680-1013 is the worst of its kind in terms of market breadth. Only categories of stocks like technology and internet stocks greatly outperform the others while political stocks and property stocks had little or no rise.

Since the end of economic crisis, in riding on the bull market, timing itself is not enough, because the market rised on rotational play, ability to catch the right category of stocks was crucial. It started from blue chips, then finance stocks, gaming stocks, then stocks undergoing restructuring, second board (brief), political stocks, technology stocks, internet stocks and now it seems interest is back into blue chips.

Download auto-calculation spreadsheet programme incorporated with these indicators (about 950KB)

Theoretical discussion on these indicators

For this pattern to be confirmed, neckline of 922 has to be broken to the downside, otherwise it would remain as an academic observation. If KLSE CI breaks previous high of 1013 to the upside, then this pattern will be cancelled altogether. In any case, remote or not, if 922 is broken to the downside which confirms this pattern, its downside target is about 830.