History of KLSE Composite Index
1999

20th December: Volume built up nicely over the last two weeks. A short term pattern points to 830. With a bit more volume, we could see a nice rally to 880 or 890, the next long term resistance.

Current prediction

Short term: a double bottom points to 830

Medium term: none

Long term: 1. reverse head and shoulders pointing to 1,000.
                    2. A double bottom points to 1,120.

29th November: A good turn on long term support is encouraging, even though the index is still giving no short term signs. Last chance to sign up for my seminar this week. See on the 4th.

Current prediction

Short term: none

Medium term: none

Long term: 1. reverse head and shoulders pointing to 1,000 now has sufficient volume to have a chance.
                    2. A double bottom points to 1,120 now confirmed by good volume.

22nd November: More sideways movement last week. Not much to go on in the short term other than a few supports and resistances.

15th November: The index is still clinging to long term support and our medium term triangle is still forming.

Current prediction

Short term: none

Medium term: none

Long term: 1. reverse head and shoulders pointing to 1,000 now has sufficient volume to have a chance.
                    2. A double bottom points to 1,120 now confirmed by good volume.

8th November: Not much happening. The index is making a triangle in the short term. But it is not a good pattern and might not have predictive value on breakout. The long term chart shows the index supported. The best hope is simply a turn on support and an increase in volume to take the index to long term target of 1,100. Attaining this target would entail a breakout from a pattern pointing to 1,450.

Current prediction

Short term: none

Medium term: none

Long term: 1. reverse head and shoulders pointing to 1,000 now has sufficient volume to have a chance.
                    2. A double bottom points to 1,120 now confirmed by good volume.

25th October: Two scenarios for the index. But the greater probability is that the index is merely pulling back to one of our long term reversal patterns.

Current prediction

Short term: none

Medium term: none

Long term: 1. reverse head and shoulders pointing to 1,000 now has sufficient volume to have a chance.
                    2. A double bottom points to 1,120 now confirmed by good volume.

11th October: A double bottom points to 800.

Current prediction

Short term: a double bottom points to 800 in the short term

Medium term: none

Long term: 1. reverse head and shoulders pointing to 1,000 now has sufficient volume to have a chance.
                    2. A double bottom points to 1,120 now confirmed by good volume.

4th October: The index is close to our short term target of 670. A double top could take the index below 500. But there is good support at 640 on the long term neckline of our reverse head and shoulders.

Current prediction

Short term: triangle points to 670

Medium term: none

Long term: 1. reverse head and shoulders pointing to 1,000 now has sufficient volume to have a chance.
                    2. A double bottom points to 1,120 now confirmed by good volume

27th September: The week ended with the index slightly lower than the previous week's close. Not much has changed from a technical perspective. On the long term charts, the index is well supported. A fall below the current level would break our long term channel support. But 640 is the more important support. If this level fails, there is a strong chance that the index could fall to 500 and below.

Current prediction

Short term: none

Medium term: none

Long term: 1. reverse head and shoulders pointing to 1,000 now has sufficient volume to have a chance.
                    2. A double bottom points to 1,120 now confirmed by good volume.

20th September: The market is well supported on the long term ascending channel support. But volume is still tiny. We need to see a good surge of activity in order to see the market resume its bullish track.

13th September: If the index falls below 730, a short term target will be valid and we could see a fall to 670. This could give a nice double bottom opportunity.

But there is good long term support at 720. Thus we have a conflict between long term and short term charts. This presents a nice example of the conflict between patterns of different trend significance, which is what technical analysis is all about. Come to my seminar and learn how to deal with such phenomena. See the link below.

Current prediction

Short term: none

Medium term: none

Long term: 1. reverse head and shoulders pointing to 1,000 now has sufficient volume to have a chance.
                    2. A double bottom points to 1,120 now confirmed by good volume.

30th August: The short term is ambiguous. But the long term targets look good. The index has been seeing low volume in recent days. But this may explained in terms of a pennant. If the pennant breaks, we could see a rapid move to 850.

23rd August: The short term picture is not clear. But the long term charts suggest a good upside of around 1,000 to 1,120 this year.

16th August: The index formed a wedge, broke upside and cancelled our target of 620. Our long term targets thus look safe.

9th August: The index is well supported at the current level. But if it falls much further, the long term reversal will be in jeopardy. A small pattern points to 620. If the medium term support fails, we should expect this target.

Even at 620, slightly below the neckline of our long term pattern, there is still a good chance that our reversal will hold, given the good volume in recent months.

Current prediction

Short term: head and shoulders points to 620.

Medium term: none

Long term: 1. reverse head and shoulders pointing to 1,000 now has sufficient volume to have a chance.
2. A double bottom points to 1,180 now confirmed by good volume.

2nd August: The index broke out of a head and shoulders top today. Target is 620. But there's a good chance that the index will not fall below 720, the neckline of our double top. If it does, there is good support at 700.

Current prediction

Short term: head and shoulders points to 620. But good support at 720, or 700, and the possible formation of a wedge could interrupt that target.

Medium term: none

Long term: 1. reverse head and shoulders pointing to 1,000 now has sufficient volume to have a chance.
2. A double bottom points to 1,180 now confirmed by good volume.


19th July: Average volume is now at a healthy 1.5 billion ringgits per day. Therefore, the chance of the index hitting our highest target of 1,180 is good. Weekly resistance at 1,250 may be expected if the volume keeps up.

Current prediction

Short term: none

Medium term: none

Long term: 1. reverse head and shoulders pointing to 1,000 now has sufficient volume to have a chance.
2. A double bottom points to 1,180 now confirmed by good volume.

12th July: The last two weeks saw a good accumulation of volume, increasing chances that the index will reach 1,180 as early as August or September this year.

28th June: A chart plotting the average daily volume shows a level higher than that of the rally of early 1998. That's an encouraging sign. It suggests higher probability that our targets of 1,200 will be met.

Current prediction

Short term: none

Medium term: none

Long term: 1. reverse head and shoulders pointing to 1,000 now has sufficient volume to have a chance.
2. A double bottom points to 1,200 - neckline confirmed by the turn at 730 - but to be sure, a break above 830 would add comfort.

21st June: A small turn on resistance last week gives rise to the possibility of a short term double top. But support at 720 is good in the long term chart. The short term triangle prediction of 820 is still valid. Chances of the double top are therefore not great.

Current prediction

Short term: triangle points to 820

Long term: 1. reverse head and shoulders pointing to 1,000 now has sufficient volume to have a chance.
2. A double bottom points to 1,200 - neckline confirmed by the turn at 730 - but to be sure, a break above 830 would add comfort.

14th June: Short term gives a little more upside. But the index is struggling on a long term weekly resistance. This resistance coincides with the  neckline in our "correction to 640" scenario. On the other hand, a double bottom can be seen on the same chart, giving a target of 1,200. Both of these scenarios are shown below. The double bottom scenario would be confirmed if the index passes the resistance at 800 (830 to be safe) without first correcting to 640. If the support at 720 fails, the probability of a fall to 640, or thereabouts, will increase.

Current prediction

Short term: triangle points to 820

Long term: 1. reverse head and shoulders pointing to 1,000 now has sufficient volume to have a chance.
2. A double bottom points to 1,200 - neckline confirmed by the turn at 730 - but to be sure, a break above 830 would add comfort.

7th June: The index looks like it is set for a correction. If this occurs, I would guess that the index would not fall below 640. Scenarios are set out below. But remember that a scenario is just a guess. The target of 1,000 is still valid and the bull cycle could continue without notice.

However, I would give the pullback scenario a good probability. Markets have a tendency to make patterns with necklines approaching the horizontal. Our current long term reversal pattern is more diagonal than horizontal. A pullback would fix that and, on the weekly chart, give a new pattern pointing to 1,200, the last weekly resistance. It all makes symmetrical sense!

Current prediction

Short term: none

Long term: reverse head and shoulders pointing to 1,000 now has sufficient volume to have a chance. But volume is still not what I would like to see to confirm the target.

31st May: The index has hit a couple of long term resistances that could portend the beginning of a medium term correction to around 650. However, there is no pattern confirming this scenario. It's just a hunch. The medium term trend is still up. It could be a couple of weeks more before my hunch is confirmed.

Current prediction

Short term: none

Long term: reverse head and shoulders pointing to 1,000 now has sufficient volume to have a chance. But volume is still not what I would like to see to confirm the target.

24th May: The index is continuing to build volume, increasing chances of reaching the target of 1,000 this year. However, a strong resistance has turned the index on the daily charts and the index has reached a strong resistance on the weekly chart. Therefore, there is a good chance of a pullback to somewhere around 650. A new rally at that level will give a chance at 1,200 within 12 months.

However, if we do not see the correction to 650, there is a chance that the index could touch 850 in a few weeks. If so, correction at that level would be highly probable.

Current prediction

Short term: none

Long term: reverse head and shoulders pointing to 1,000 now has sufficient volume to have a chance. But volume is still not what I would like to see to confirm the target.

10th May: The index hasn't reached 750. But there's good resistance at the current level. Could be consolidation at the current level which could form a larger pattern pointing to 1,200.

Current prediction

Short term: none

Long term: reverse head and shoulders pointing to 1,000 now has sufficient volume to have a chance. But volume is still not what I would like to see to confirm the target.

3rd May: The index is on course for 750 or slightly higher. The drop in volume last week could be explained by the formation of a pennant, which would signal the continuation of the rally if we get a breakout upside on good volume.

Current prediction

Short term: channel points to 750 by May if volume continues to build.

26th April: The index is following a channel the points to 750 as early as the middle of next month. At that point one would expect a correction and a possible larger pattern that would make a long term reversal pattern.

Current prediction

Short term: channel points to 750 by May if volume continues to build.

Long term: none

19th April: The index has broken a long term resistance and a short term pattern pointing to 680. Resistance is at 620. However volume is still tiny compared to the average volume of pre-1997, when the 50 day average volume did not fall below 1.5 billion Ringgits per day. On the other hand, capital controls change the market landscape and add a degree of uncertainty to calculations based on comparison with those days. We might have to keep to short and medium term predictions.

Current prediction

Short term: A short term reverse head and shoulders, with good volume points to 680.

Long term: none

14th April: The double support at 500 turned the index above the neckline of our head and shoulders top, cancelling the pattern. The index is now touching a long term resistance.

26th March: The index fell below a second neckline this week, giving a further prediction of 400. There is still some hope that the long term daily support at 500 might intervene. But this would have to happen soon.

Current prediction

Medium term: head and shoulders top points to 400. But there are good supports at 500 and 460 (weekly).

Long term: none

22nd March: A new shoulder gives a lower target of 400. But there is hope that the support at 500 might hold the market and rebound above the neckline of the patterns, cancelling them. Let's hope.

Current prediction

Medium term: head and shoulders top points to 420. But there are good supports at 500 and 460 (weekly).

Long term: none

15th March: The index almost broke above the neckline of the head and shoulders top. But it is still just pulling back to the neckline. The prediction of 420 still stands.

Current prediction

Medium term: head and shoulders top points to 420. But there are good supports at 500 and 460 (weekly).

Long term: none

8th March: Bear's back - unless we see a rally taking the index over 540 this week.

Current prediction

Medium term: head and shoulders top points to 420. But there are good supports at 500 and 460 (weekly).

Long term: none

1st March: The target of 660 is still valid. But long term resistance and weakening volume diminish the chances of the target being reached. A fall below 500 will give a new target of 420 or lower (380).

Current prediction

Medium term: reverse head and shoulders points to 660. But I am sceptical of the chances of the index reaching this target, due to long term resistance and weakening volume. The pattern is also of dubious quality. But it has until the end of March to prove itself.

Long term: none

15th February: As the title says, the target of 500 (small head and shoulders top) is cancelled due to the rebound last Friday. But increasingly lower volume does not persuade that the target of 660 will be reached. I would not be surprised if a new head and shoulders top forms with lower target.

Current prediction

Medium term: reverse head and shoulders points to 660. But I am sceptical of the chances of the index reaching this target, due to long term resistance and weakening volume. The pattern is also of dubious quality.

Long term: none

8th February: The index could correct to 390 if a set of head and shoulders tops is set into motion. However, the long term weekly chart still gives hope of further rallying. It has not yet reached long term resistance. But volume is falling off, suggesting that the chances of further rallies are slim.

Current prediction

Medium term: reverse head and shoulders points to 660, or perhaps 620 (passed), due to the long term resistance. Medium term support has broken.

Long term: log target of 187 for head and shoulders top is cancelled.

1st February: The index has broken medium term supports after hitting long term resistance on the daily chart. However, the long term weekly chart shows no resistance, allowing for the possibility of further advances.

Current prediction

Medium term: reverse head and shoulders points to 660, or perhaps 620 (passed), due to the long term resistance. Medium term support has broken.

Long term: log target of 187 for head and shoulders top is cancelled.

25th January: What can I say? Slow and steady wins the race. Never have I seen such an orderly progression towards a target. No change from last weeks comments.

18th January: Slow and steady wins the race. But the market faces its biggest test on the long term resistance in the long term daily chart. This should occur somewhere between 600 and 620.

Current prediction

Medium term: reverse head and shoulders points to 660. Volume so far is good. High chance of reaching target.

Long term: log target of 187 for head and shoulders top is cancelled.

11th January: Our bull is feeding peacefully. A bit more volume will assist the market in reaching target.

Current prediction

Medium term: reverse head and shoulders points to 660. Volume so far is good. High chance of reaching target.

Long term: log target of 187 for head and shoulders top is cancelled.



1998

21st December: The index is still in its rising channel that points to 660, perhaps by February.

Current prediction

Medium term: reverse head and shoulders points to 660. Volume so far is good. High chance of reaching target.

Long term: log target of 187 for head and shoulders top is cancelled.

14th December: What, me worry? The market is proceeding in an orderly fashion, the index moving towards target of 660 in a well defined channel.

Current prediction

Medium term: reverse head and shoulders points to 660. Volume so far is good. High chance of reaching target.

Long term: log target of 187 for head and shoulders top is cancelled.

7th December: The index is rising on high volume - text book classic case. Very high probability that the index will reach 660 in the short term.

Current prediction

Medium term: reverse head and shoulders points to 660. Volume so far is good. High chance of reaching target.

Long term: log target of 187 for head and shoulders top is cancelled.

18th November: The index broke out of the strange-looking reverse head and shoulders pattern on good volume, giving a good chance that the market will hit 660.

Current prediction

Short term: none

Medium term: reverse head and shoulders points to 660. Volume so far is good.

Long term: log target of 187 for head and shoulders top - still valid. But could be cancelled soon.

23rd October: The index closed very near our short term target of 430. But there are strong medium and long term resistances that will reduce the chance of further rallies.

Current prediction

Short term: a  triangle gives a target of 430

Medium term: 130 arithmetic target

Long term: log target of 187 for head and shoulders top - still valid.

Currency: none

19th October: The market is not participating in the regional rally with much exuberance. It could drift up to 430. But there are no signs of anything else on the horizon.

Current prediction

Short term: a  triangle gives a target of 430

Medium term: 130 arithmetic target

Long term: log target of 187 for head and shoulders top - still valid.

Currency: none

19th October: Malaysia appears to have been side-stepped in the current regional rally, ASEAN cousins taking the benefit. Without capital controls and a prescribed exchange rate, the Ringgit would probably have risen to its current level of 38. The KLSE would almost certainly have rallied last week.

Today the market appears to have broken out of a triangle pointing to 425. That's a modest start. There's hope for a larger reversal scenario if volume exists. However, foreign money will be severely restricted. The fund that I usually follow, for example, is suspended. Customers of that fund therefore cannot put money into Malaysia. There would be other funds in a similar position. Thus Malaysia seems unlikely to benefit from the current rally to the extent of other markets.

Current prediction

Short term: a breakout upside from the triangle will give a target of 425

Medium term: 130 arithmetic target

Long term: log target of 187 for head and shoulders top - still valid.

Currency: none

28th September: The index moved quietly last week. Two possible scenarios prevail. One is bullish, the other bearish. The long term trend is still down.

21st September: Nothing clear this week. A pennant points down to the previous low. But it hasn't broken yet. There is also a possible bullish scenario.

14th September: The exuberant rally of last week has amounted to little. The head and shoulders top pointing to 130 is reinstated.

Current prediction

Short term: none

Medium term: 130 arithmetic target

Long term: log target of 187 for head and shoulders top - still valid.

7th September: The index rallied above the neckline of our head and shoulders top, cancelling the pattern. But beware! The long term target of 187 is still valid.

Current prediction

Short term: none

Medium term: 130 arithmetic target - cancelled.

Long term: log target of 187 for head and shoulders top - still valid

Currency: none

21st August: A small head and shoulders points to 240. The current support could allow the market to arrive at target around 16th September.

24th August:. A medium term pattern points to 130. The fund chart also suggests more falls.

Current prediction

Medium term: 130 arithmetic target

Long term: log target of 187 for head and shoulders top

Currency: none

12th August: The long term still looks bleak. The index could well fall to 187, according to a long term pattern. Possible support in the medium term chart at 320. Possible support in the fund. But there is nothing to suggest a rally in the near term.

Current prediction

Short term: supports at 320, after that 250 - 270

Long term: log target of 187 for head and shoulders top

Currency: none

3rd August: The index has reached log target. But the arithmetic target of my head and shoulders top is still outstanding at 336. No evidence of a rally.

Current prediction

Short term: Head and shoulders with an arithmetic target of 336, logarithmic target is 396.

Long term: double top pointing to 400 arithmetic and 560 logarithmic, the latter being passed.

Currency: none

6th July: The index might rebound to 540. But only a move above 560 on strong volume would cancel the short term target shown below. It is conceivable that a short rally could occur, then a fall back to 396, or even 336. The ringgit is close to its target of 4.3

Current prediction

Short term: Head and shoulders with an arithmetic target of 336, logarithmic target is 396.

Long term: double top pointing to 400 arithmetic and 560 logarithmic, the latter being passed.

Currency: the Ringgit is head to 4.3, at least, but perhaps not until late July.

29th June: There is still clear indication that the index has some more falling to do. The currency is also in a short term down trend and the medium term support for the Ringgit will be tested this week. The fund echoes the bearish sentiment.

Current prediction

Short term: Head and shoulders with an arithmetic target of 336, logarithmic target is 396.

Long term: double top pointing to 400 arithmetic and 560 logarithmic, the latter being passed.

Currency: the Ringgit is head to 4.3, at least, but perhaps not until late July.

22nd June: Despite the chances for a regional rally, the charts still point down for this market, at least a little bit and at most, to 320 by September or October. The equivalent logarithmic target is 412. Only a rally above 560 would remove this threat.

Even the more conservative logarithmic targets have not been met, as is the case for other Asian markets. The currency is reasonably stable. But it could still head for 4.3

Current prediction

Short term: Head and shoulders with an arithmetic target of 336, logarithmic target is 396.

Long term: double top pointing to 400 arithmetic and 560 logarithmic, the latter being passed.

Currency: the Ringgit is head to 4.3, at least.

1st June: As expected, the index fell through the support at 550. I expect that the index will not reverse until the other ASEAN countries, and possibly Hong Kong, have hit their targets.

If Hong Kong is factored into the equation, it could be the end of July until we see a rally. By this time, the index could have fallen to 400, the long term target.

But there is small chance of a reversal this week with a triangle that is forming. Read on.

25th May: The fund suggests that further falls are awaiting the stock and currency markets. The rally last week on low volume suggests a mere consolidation before further falls. A possible triangle is forming, but it is not a perfect pattern. The long term target of 400 looks increasingly ominous. Currency looks set to fall to 4.5.

The long term fund chart shows the current pause in activity as the price is caught between strong resistance and support. Something should give this week.

Current prediction

Short term: double top pointing to 550 hit last week

Medium term: none

Long term: double top pointing to 400 is valid again and in the context of the current weakness, raises a warning signal

18th May: The index and fund hit short term targets last Wednesday. The fund has a further bearish implication. Possible double bottom support at 500.

Current prediction

Short term: double top pointing to 550 hit last week

Medium term: none

Long term: double top pointing to 400 is valid again and in the context of the current weakness, raises a warning signal

11th May: The market looks to be weakening. Our double top points to 550. But that might not be the bottom. This suggestion is based on the fact that the ASEAN markets are sinking in tandem and other markets, notably Singapore, have a lot further to fall, indicating regional weakness for about five or six more weeks. I expect the KLSE to reach 550 in a week or two.

There are supports at 520 and 500. If 500 fails, I expect the index to go to 400, which is the long term target on the long term weekly chart.

The ringgit has a good chance of weakening to 4.5. But it is resting on a crucial support at the moment. That needs to break before the prediction can be confirmed.

Current prediction

Short term: double top pointing to 550.

Medium term: none

Long term: double top pointing to 400 is valid again and in the context of the current weakness, raises a warning signal

4th May: The double top looks as though it is set to take the index to 550, possibly 500 ( the last bottom) and even below, to 400. But the currency now appears to be strengthening. If the Ringgit strengthens beyond 3.6, we could see 2.9.

Current prediction

Short term: double top pointing to 550.

Medium term: none

Long term: double top pointing to 400 is valid again and in the context of the current weakness, raises a warning signal

27th April: The index is well supported in the medium term chart. But the short term chart points inexorably to 550. Ringgit could get to 2.9, otherwise 4.3.

Current prediction

Short term: double top pointing to 550.

Medium term: none

Long term: double top pointing to 400 is valid again and in the context of the current weakness, raises a warning signal

20th April: The index is heading to 550 and the Ringgit could fall to 4.3.

Current prediction

Short term: double top pointing to 550.

Medium term: none

Long term: double top pointing to 400 is valid again and in the context of the current weakness, raises a warning signal

11th April: The stock market looks set to fall to 550. But the currency could go to 2.8 in the medium term, if it can overcome the 3.5 level.

As for the prospects for a reversal - I mean a sustainable rally in the near term - it appears unlikely, given the low recent volume.

Current prediction

Short term: triangle pointing to 590 which will set off a double top pointing to 550.

Medium term: none

Long term: double top pointing to 400 is valid again and in the context of the current weakness, raises a warning signal

20th March: The index broke a strong resistance in the medium term chart and the currency broke a major resistance. The index has still not confirmed its short term direction.

Current prediction

Short term: none. I have cancelled the double bottom prediction due to dubious volume. The triangle brewing in the short term will give a clearer indication of direction when it breaks.

Medium term: weekly chart shows a reverse head and shoulders and points to 960

Long term: double top pointing to 400 is valid again.

16th March: A peaceful week last week. Not much to report. But the index made the fourth turn of a nice little triangle that will soon indicate short term direction.

Current prediction

Short term: double bottom or reverse head and shoulders pointing to 850. A triangle now confirms the probability of this target being reached.

Medium term: weekly chart shows a reverse head and shoulders and points to 960

Long term: double top pointing to 400 is valid again.

9th March: The index and the currency are delicately balanced for a recovery. But the balance could easily be tipped and we could see a failure with the index falling to previous lows, or further, and the currency falling 4.4. The previously cancelled target of 400 is now valid again. This simply means that we are in another period of confusion and uncertainty. Patience and we will soon see which way the wind is blowing.

Current prediction

Short term: double bottom or reverse head and shoulders pointing to 850. A triangle now confirms the probability of this target being reached.

Medium term: weekly chart shows a reverse head and shoulders and points to 960

Long term: double top pointing to 400 is valid again.

2nd March: The weekly index chart broke out of a small pattern pointing to 960. This target will break other necklines pointing to 1,060. The fund chart has also broken out of a reversal pattern. The currency looks good; it could strengthen to 3.1 within a week or two.

Current prediction

Short term: double bottom or reverse head and shoulders pointing to 850. A triangle now confirms the probability of this target being reached.

Medium term: weekly chart shows a reverse head and shoulders and points to 960

Long term: double top pointing to 400 is now on hold; could be cancelled in a week or two

23rd February: 760 is now the major resistance. If this level is breached on high volume, we can expect the index to keep going to 1,050.

Current prediction

Short term: double bottom or reverse head and shoulders pointing to 850. The pattern has defects. But breakout volume is persuasive. Cancelled if the index falls below 630.

Medium term: trend is still down

16th February: There is still a chance that the KLSE will recover to the 1,000 level in the short to medium term. But the long and medium term trends are still down. So we could see the recovery fizzle and the index continue on its way to the 400 target.

Both scenarios are equally possible at the moment: either could happen, or both could happen. Some visitors to this site have expressed a little difficulty understanding these scenarios. So let me make it clear:

1. The index could reach 1,000 and then fall back to 400; or
2. The current rally could fail and the index could fall back to 400 without reaching 1,000 first; or
3. The current rally could continue to 1,000 and close one Friday (end of the week for the weekly chart) above 850, thereby cancelling the 400 prediction.

At the moment, we will have to contend with these three scenarios. The picture will become clearer in the days and weeks to come.

Current prediction

Short term: double bottom or reverse head and shoulders pointing to 850. The pattern has defects. But breakout volume is persuasive. Cancelled if the index falls below 630.

Medium term: trend is still down
10th February: The index and the currency have made strong gains. More appear to be on the cards. But it would be less risky to wait for the 750 level to break.

31st January: The index faces tough resistance this week in all charts. If the short term chart overcomes the 580 level, there is a good chance of a reversal that could take the index to 720.

Current prediction

Short term: none.

Long term: double top pointing to 400. No volume figures (if you have them, please send weekly volume figures for the KLSE to barton@usa.net .)

26th January: The short term chart is making a reversal pattern. It hasn't broken yet. But a break above 600 on good volume could see 725. On the other hand, the long term chart shows a pattern pointing to 400 by mid year. So we could have a brief rally with disappointment.

19th January: The rally today cancelled our target of 300. But there is no reversal pattern in the index yet; ie, there is no indication of further gains. A possible reverse head and shoulder would give us an indication.

The fund chart, on the other hand, will probably break out of a falling wedge today. That could be a good indication of reversal and further gains ahead.

12th January: A head and shoulders now points clearly to 375. A triangle points to 300. The ringgit could fall to 5.3 by the end of the month.

Current prediction

Short term: head and shoulders points to 375. Triangle points to 300, perhaps as early as second week of Feb., this year.

Long term: none

5th January: Triangle brewing again. It points either to 900 or 300. Take your pick. I wouldn't be surprised if the first reversal pattern comes from Malaysia. But I would be surprised if it happened soon.



1997

22nd December: Triangle brewing again. It points either to 900 or 300. Take your pick. I wouldn't be surprised if the first reversal pattern comes from Malaysia.

8th December: The KLSE has made a small reversal pattern: a breakout from a tiny symmetrical triangle. It's only a tiny pattern and it could be fulfilled in a day, amounting to nothing more than a mere blip on the path downward. With the Dow and Hong Kong showing positive signs, there might be hope for a more substantial rise. But with Japan still looking ominous, we must temper our optimism

Current prediction

Short term: Symmetrical triangle with target of 620.

Long term: none

1st December: I was a bit trepidatious predicting 580. Now I throw in my lot. If Japan does its thing, as I suggest, this index will keep falling to who knows where. 450 is the 1990 support. This is not a prediction, merely a statement of the obvious.

27th October: The index could fall to 580. But there is good support at 680 and 620. The ringgit looks as though it could be strengthening.

20th October: The new Ringgit chart could be making a reversal pattern. Considering the link between currency and stock markets this might be good news for the stock market.

Otherwise no news to report other than the fact that Mahatir is in bed with the flu. If he stays put for a while he might recover - and so might the market. Let us wish for both.

13th October: Possible rebound. The fund chart looks hopeful. But the long term index chart still has not broken out of the descending channel.

6th October: The fund charts point down another 30% in dollar terms. But the long term gives hope for a rebound, having touched a good support.

26th September: The descending channels that were formed during the index's recent plunge are in tact. That means that no sign of a reversal is apparent.

22nd September: The weekly chart suggests that the index will close at 770 one Friday soon. Note the short term chart, wherein we are fishing for a triangle. The index usually reverses with such patterns.

15th September: The index held above the long term support last week. But it has not given any signs of a reversal. The fund chart is also still trapped in its down channel.

8th September: The index touched 675 last week, sparking a massive rebound and closing the week comfortably above the long term support and, in fact, above the previous week's close. There are now no more negative indications for this market. It has turned on long term support. This looks good. But there is no reversal pattern.

1st September: What else can one say? Long term target of 800 happened last week with a few swipes of the chopper. Looks like a bit more falling to be done.

Current prediction:

Short term: Pennant to 720

Long term: Head and shoulders top with target at 800, met. Support at 770.

25th August: The index turned on resistance last week. The weekly chart is a pinch away from its support at 870. And the fund chart has almost hit its target. If all of these targets were to meet during the coming week, it would be a compelling sign of a reversal. But the long term support must hold. That will take a week or two to confirm. Meanwhile, the medium term target of 800, attainment of which would mean that the weekly support should fail, is still valid.

Current prediction:

Short term: The weekly chart shows support at 870.

Long term: Head and shoulders top with target at 800. Long term support might intervene.

18th August: The short term channel prevented the index from closing the week at 870. The weekly chart has a chance of intervening and cancelling the head and shoulders pattern at that level. Otherwise, our head and shoulders top points to 800.

Current prediction:

Short term: The weekly chart shows support at 870.

Long term: Head and shoulders top with target at 800. Long term support might intervene.

11th August: The bear is back with a vengeance. Falls last week tend to corroborate our prediction of 800. But there is one last chance that the long term support will hold.

4th August: The falls of last week show a mere pullback from the head and shoulders top outlined in pink in the chart below; a most ominous occurrence, pointing to 800. Disaster may be averted if the index manages to hold on the long term support, shown in the weekly charts, where the index closed for the second time.

28th July: Some positive things to report:

As hoped, but not predicted, the index turned on its long term support last week.

The medium term chart has recovered above the neckline of the head and shoulders. If the index rises higher this week, we will be able to cancel our head and shoulders prediction and we could have a very good long term buying opportunity.

Current prediction:

Short term: the long term support appears to be holding. We had a turn on the support last week. A slightly higher close this week will take us out of the descending channel and into a possible long term bull.

Long term: we can put the head and shoulders top prediction on hold.

20th July: The index is poised on a long term support that has saved the day twice in the past three years. If this support fails to hold, we will have to wave good bye to the KLSE as it follows the head and shoulders to the next support at 860.

14th July: The bear has crept out for a growl! The index broke down through the neckline of our head and shoulders last week, giving us a target of 800. The fund also broke out of a nasty head and shoulders pattern. The only hope is the long term support shown in the weekly chart.

8th July: The index is still caught in a hefty resistance as shown by the blue descending channel. But there is hope for a symmetrical right shoulder for our reverse head and shoulders, shown in green.

Current prediction: None at the moment. Just a hope that a reverse head and shoulders is forming.

Short term: Possible reverse head and shoulders with target of 1,250. Not valid yet.

Long term: None.

29th June: I said that last week, but this week, it's "Sydney or the bush". Any further falls will take the index back to 1,020. At that point we can only hope for a double bottom. Chances of a reverse head and shoulders are still good. The green pattern traces the possible course. The week needs to finish above 1,100 to put us back on the rising track.

Current prediction: None at the moment. Just a hope that a reverse head and shoulders is forming..

Short term: Possible reverse head and shoulders with target of 1,250. Not valid yet.

Long term: None.

23rd June: Isn't that nice of the index to follow the green path that I traced for it. Just keep going a few more percent and we're out of the woods. But, lo! Look at the long term picture. There's a nasty resistance from a descending channel. I'd say this is critical. If the index breaks out of this resistance this week, we can expect our reverse head and shoulders to be completed and sunny days ahead. Otherwise, no... too terrible to contemplate.

Current prediction: None at the moment. Just a hope that a reverse head and shoulders is forming..

Short term: Possible reverse head and shoulders with target of 1,250. Not valid yet.

Long term: None.

16th June: The green line in the chart below shows the comfort zone for the KLSE. We are betting on a reverse head and shoulders that will take the index out of its current depressed state. A break above 1,100 will take the index out of its current down-channel and pave the way for a nice right shoulder, then a break above 1,150 will confirm clear skies ahead.

9th June: A reverse head and shoulders could be forming. If it does, and if the index breaks 1,140, we will have a reverse head and shoulders with a short term target of 1,250. This target would suggest that our long term target of 1,300 is quite possible. See the long term picture. Nice turn on support.

2nd June: It seems as though this market is out of the danger zone. The 820 scare is cautiously cancelled. The green arrow shows the target of 1,200, if we get a little shoulder at current levels. Huge volume shown on Friday would be very encouraging (I want to confirm the accuracy of the figure first).

26th May: Nice long term support could save the day. But all depends on the index breaking out of its nasty down-channel. A close at or above 1,100 this Friday would be an encouraging signal to re-enter the market. Otherwise we must fear the worst.

20th May: I hope not, but it might. It all depends on whether the little price formation covering the last few weeks makes a right shoulder. It might be too small. But small shoulders have worked in the past. We'll have to wait and see. At the moment we have a pullback to a head and shoulders.

12th May: Nothing much going on; a bit of consolidation on the neckline. The index is out of the channel.

5th May: The weekly chart shows a turn on a long term support, corresponding to the neckline of our double bottom, shown by the red broken line. It also touches a rising channel support (broken pink line in the weekly chart). These are good omens. But there is a danger of the formation of the right shoulder of a head and shoulders top. See the weekly chart.

28th April: The long term picture shows the index making a second pullback to 1,080. My feeling is that it will turn either on the pink ascending channel or on the neckline shown by the red broken line. This would follow the behavior of Hongkong, Jakarta, and even the Dow, which have all turned on good supporting channels.

Why? A second pullback to the neckline of 1,080 is quite within theoretical limits.

The short term chart shows the danger of a fall to 980: This is the result of one of those "invalid head and shoulders" that has been operating in recent weeks. However, Hong Kong appears to have recovered from "invalid head and shoulder" fever. Perhaps this scourge has passed from Malaysia as well? If so, we can look at the support on the long term chart as the dominant influence.

On the other hand, the index has fallen through its one year channel support. Also, its closest bedfellow, the Straits Times Index in Singapore, is faltering in nasty weather. Hence the head and shoulders, outlined below in pink, may drag the index down to 980. Take a look at the long term chart for further discussion.

8th April: Ho ho ho! Which of you took my advice and abandoned that sinking ship? I couldn't imagine that it would have met the target with such celerity.

28th March: Testing times: we have head and shoulders patterns in HK, Malaysia and Singapore which all have too much volume on the right shoulder. So they shouldn't be working. But they are. And now, after last week's little rebound, Malaysia is in danger of making a bigger head and shoulders that, heaven forbid, will take the index down to 1140. (See the fund chart where I drew a possible outline of the same pattern.)

24th March: The minimum objective of the head and shoulders, 1210, has nearly been met, notwithstanding the invalid volume pattern (right shoulder volume higher than left).

The long term chart, below, showing 1,300, is still valid. However, we could reach 1180 before hitting the long term support, shown in the chart below.

17th March: The index is hovering at its lower support point in the ascending channel shown in the chart by the red lines. This position is still close enough to the neckline of our ascending triangle to keep the prediction valid.

The possible head and shoulders that appears above the neckline is not supported by lower volume patterns on the right shoulder compared with the left shoulder.

10th March: A nasty little head and shoulders appears to be likely to drag the index down to 1220. The volume in early February (left shoulder) is higher than that in early March (right shoulder). This spells short term weakness. It also casts doubt on our ascending triangle (which, note, was not valid, due to rising volume throughout). The picture is small and not clear. So it may not happen. (However, today, 10th March, at lunch time the index was down 12 points. Looks a bit grim.)

3rd March: Look at that lovely surge in volume! That should help us reach our target of 1,300.

14th February: I think I'll settle with the ascending triangle pattern. And just in time. The index broke out of the 1245 resistance level on the 12th. The index is now set to rise until 1300, or thereabouts.

10th February: The KL market is trying our patience. I now turn full circle again and return to my ascending triangle hypothesis. (The one I dismissed last week). This equivocation is inspired by the nice turn last week, (and the use of thicker lines to hide the inaccuracies of the pattern).

Nonetheless, there is nothing revealing in this ascending triangle: a breakout would only take us to the target of 1,300, which is our long term prediction.

The double-top scenario, mentioned in previous weeks is still a possibility, with the second top being a triple top. Falling volume supports this possibility just as it supports the ascending triangle hypothesis. So we'll have to be patient.

3rd February: Nothing exciting last week.

I have abandoned the ascending triangle scenario. The new peaks are progressively higher, whereas for an ascending triangle, they should be roughly the same level. The best I can offer is a new set of trend lines, showing a consolidation on good support for last week.

27th January: The index broke out of our neckline last week. But it was not convincing. Nevertheless, we expect a more decisive breakout imminently as volume is building up nicely and our previous reverse head and shoulders (red line and arrow) point to 1255, at least. Fingers crossed.

A break out will take the index to around 1,300, which is our long term minimum target.

20th January: Volume picked up further last week. However, it is still lower than the volume accompanying the previous top. Accordingly, the double top scenario is not ruled out until the index breaks 1250.

On the positive side, we have a possible ascending triangle in the making (shown by the two black lines). Falling volume supports this interpretation. A breakout this week, on strong volume, would give us an objective of 1,300 (coinciding with the long term picture in the chart above).

13th January: The index did nothing exciting last week. However, volume picked up nicely, supporting our bullish scenario. Double top scenario still looms.

4th January: The index broke out of a symmetrical triangle mid week. The breakout was accompanied with a large gap. This is usually a bullish sign. But this occurred on low volume. Very strange. We would expect high volume to accompany a breakout with a gap. The silly season at work no doubt!

The next week should tell. Subject to the comment below, the breakout should take us, in the near term to around 1280. This surpasses our previous near term target of around 1260. It takes us near our long term target of 1300. These latter two targets are shown below.

Possible cloud on the horizon: All of this optimism should be qualified by the observation that a double is forming. The falling volume would lend credence to this hypothesis. Volume has been falling steadily since mid-November. We are currently at May 1996 volume levels. Not a propitious omen. Let's see if it picks up now that the silly season is behind us.



1996

23rd December: The index turned and is consolidating on a trend channel. The fund confirms this hypothesis. 1260 target is valid.

16th December: Three short term bearish omens:

1. The 14 day moving average (grey line) has crossed below the 45 day (green line). See the consequences of such a fall in mid-May this year.

2. The index has fallen below the support of 1190, closing last week at 1189.

3. Volume is falling off sharply.

A fall to 1160 would be a second pull back for our reverse head and shoulders shown by the red line. (See the discussion in the Hong Kong section of this week's commentary.)

10th December: The index is on course for a target of 1260. The long term picture, below, shows a slightly higher target.

25th November: Both the index and the fund chart below show key resistances broken. The index is on course for its target of 1260. The fund chart, which covers a longer period, suggests a higher target, perhaps around 1,400.

16th November: The index inched higher last week. Volume is still good. Our target is still intact.

9th November: The KLSE is moving along steadily in its ascending channel. Volume is still good.

25th October: The KLSE turned in the 1170 range last week. It briefly hit 1180. It will probably pull back to the low 1150's. Targets listed below are still valid.

18th October: A lovely set of reverse head and shoulders formations. There are two necklines:

1. At around 1140. This one has broken, although not on strong volume. With luck it will take us to around 1230.

2. Neckline at 1150-60. Clearly broken last week with good volume, the minimum objective is now around 1260.


History from 2000 to current year

 Home . US   Europe, Japan & Australia   Emerging Markets   Commodities and Currencies   China & Hongkong   Thailand.

Malaysia & Singapore    Korea & Taiwan  .India, Indoneisa & Philippines   Contact us

©2010 Copyright Gregory Barton