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Is FTSE Bursa Malaysia KLCI Headed For A Big Fall? Weekly Outlook May 22-26 2017

With global market volatility increasing and the roller coaster ride in US market, is Bursa Malaysia KLCI heading for a big correction or is the bull market still young? You never do know what the stock market really brings until you experience a big big fall in your portfolio. The recent quick crash and recovery in the US market in just a few days left many in Malaysia wondering if KLCI is heading for a big big fall in the coming weeks.

In times like this we look at Warren Buffett the source of all calm and peace and wonder how we can ever be like him. Warren Buffett also claims he drinks 5 cans of Coca Cola a day and I wonder why he is still so healthy.

I feel like trying to figure out where the market is really heading is pure entertainment. But somehow people are still eager to read and learn about the direction of the market. I have long ago given up in trying to figure out where the stock market is heading. But instead, I try to see where support and resistance areas are in the KLCI because:

  • When the KLCI drops, 99% of lousy stocks will fall
  • When the KLCI drops there are some stocks (the 1%) that forms a consolidation or nice pattern. They show relative strength
  • When the KLCI hits some support and bounces up, the 1% shoots up even higher

So the trick is not to know where the general market is heading in the short term but to figure where it is in the long term and try to find stocks showing relative strength when the market has some correction. I have listed some stocks that show relative strength or some interesting pattern at Malaysian Stocks To Take Note Of May 22 - May 26 2017.

In conclusion, do I really care where KLCI is going? Yes and no. Yes because if we are in a long term downtrend, buy and hold is going to be hit like crazy. But in a long term uptrend, every dip is an opportunity to separate the wheat from the chaff and pick up some gems to trade for 1-3 days or buy some stocks cheaper for longer term investing.

I have been really blessed to be able to know many Malaysian friends who are interested in the market through a group in telegram started by an uncle who is a distant relative. To me he is like the Warren Buffett of Malaysia. Slow and steady win the race. Anyway I digress, lets take a look at what the KLCI chart is telling us about its future.

In times of volatility and uncertainty, looking at charts and being objective is the key. Why worry so much about the short term direction of the market? As long as Bursa Malaysia KLCI is in a long term uptrend, people who play the 1% stocks showing relative strength will come out ahead. We leave the other 99% of stocks to other smart people to figure out how to trade or play with. We admit we are not good at market timing, but at least we know which stocks to pick. Pick the ones that are showing relative strength.

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