Be cautious in bullish market
A lot of my friends have been very excited lately with the current developments in the local KLSE. The KLSE is enjoying an unprecedented bull run with volumes above RM3 000 000 000 repeatedly. The composite index has also stayed above 1200 level comfortably and some quarters I wouldn’t expect to invest are rushing to open investment accounts and CDS accounts.
My fundamental principle in investment is to buy when every one is moaning and sell when everyone is clapping. It is impossible to reach the highest level to sell because the market is a volatile place. Sell when you earn and don’t look back. Statistically the build-up began in June 2006 and investors should see an average return of 25% of their investments since then. It closed at 1283.47 on February 23.
The market underwent a sharp correction this morning as investors locked in profits. It was also the D-day for some short-term investors.
At 10.35am, the KLCI fell 15.98 points to 1,256.89, the FBMEmas Index retreated 111.98 points to 8,398.21 and the Second Board Index eased 1.46 points to 106.75.
Volume was an impressive 797.39 million shares. Losers overwhelmed gainers 824 to 130 while another 150 counters were traded unchanged.
Analysts said the sharp correction was overdue but believed it was not a turning point for the market to turn bearish.
“The immediate support level is 1,250 and if that is breached the next level would be 1,225,†SJ Securities research head Cheah King Yoong said. A local share analyst Dr Gregory Hii Sui Cheng reminded investors to liquidate some positions as the index heads north and not be caught in a difficult position if a strong correction occurs as in 1997 and to be cautious in the current bullish market.
The major losers are Genting with 75 sen to RM38.75, BAT 50 sen to RM45.50 while IOI Corp, Public Bank-foreign and Resorts dropped 30 sen each to RM19.90, RM9.50 and RM15.70 respectively.
Heavyweights Maybank and Tenaga dropped 20 sen each.
KL shares to see a steady trend
Thestar.com/marketwatch
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