This August and September will stage a series of dramatic events for Malaysia. With the upcoming by-election battle in Permatang Pauh featuring Datuk Seri Anwar Ibrahim and Datuk Arif Shah Omar Shah and the sodomy charges against Datuk Seri Anwar Ibrahim, we are expecting restlessness among Malaysian and foreign investors. If Barisan Nasional (National Front) represented by Datuk Arif Shah win in this upcoming battle, then the hope for the opposition coalition party Pakatan Rakyat to overthrow the ruling government will drop tremendously. If the Pakatan Rakyat wins in this upcoming by-election, then the possibility of further dumping of shares by the investors will rise substantially. But what are the possibilities and the probabilities? Don’t care. Just ask the charts for trading ideas.
I am seeing this few possibilities for Malaysia forward from here. This is only my guessing work and it might not happen as mentioned below.
- High possibilities of party defection from Barisan Nasional to Pakatan Rakyat.
- Government or top political leaders overthrown or "assassinated".
- Fire disasters.
My personal view for KLCI outlook will be 1038 points as a strong support level. This level at 1038 points will be right at the 50% and 38.2% Fibonacci retracement levels. From the perspective of Elliot Wave, this level at 1000 points is very crucial to determine the next wave movement. If this level is breach, then we are looking at the first round of major recession for the coming years. Looking at the chart above, the possibility of KLCI crashing down to 922 which is 61.8% Fibonacci retracement level is also very high. Can’t tell which one will be the right one. Just take short position from here to the support line and see how the market reacts at those levels. If the political turmoil worsens, then the possibility of KLCI crashing to the 745 points level might become a reality.
From the FKLI spot month daily chart it is very clear that if the futures for KLCI break and close below 1083 points, we could safely take some short position from here. Of course the better level to initiate short position will be around 1160 points which is the 61.8% Fibonacci retracement level. As position traders, we should initiate some position at the trend reversal point and add to the existing position as we are proven correct in our analysis. Good luck making money shorting FKLI. Just watch out at the crucial levels mentioned above.
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September 5th, 2008 at 10:31 am
Datuk Seri Anwar Ibrahim won the Pematang Pauh by-election and are heading towards taking over the government by this Sept 16 with his claim of more than 30 MPs from the ruling party to defect over.
Right at today KLCI Sept futures contract lowest point today was 1039 which is right at the forecasted level in this post. However, please bear in mind that this low will be temporary as I am seeing worst things coming for Malaysia stock market. KLCI to dropped to 1038 will be just the beginning of the story.
September 8th, 2008 at 5:25 pm
Last Friday and today was a remarkable day. I am very amazed of the market and its behaviour. Look at Friday, FKLI Sept made a low of 1036 which around my forecasted rebound area for KLCI and today opened higher and closed at 1070. A sharp rebound at Gann critical reversal day. We will be witnessing very interesting and dramatic events coming up in this week and next. Volatile week.