Malaysia Stock Market Outlook Year 2018: Off to a great start!

Correction_bear_cartoon_01.26.2017

Greetings fellow readers!

After 6 months of undergoing a big market correction, the Malaysia stock market has finally made its way back on track, tracing the global market performance. Have you been riding on this bull market after the long wait?

From our previous post, we mentioned on how low is low can the Malaysia stock market index head to;

2017Nov-FBMKLCI-1300x600 (2)

As eventually the Malaysia stock market need to come back on to it’s right track, let us take a look at this market bigger picture using the weekly chart of FBMKLCI. 

Year 2011 – EU Debt Crisis had brought the index down from 1,597 to 1,310 pts supported at its weekly EMA200weeks.

Year 2012/13/14 – Bull Market Rallies

Year 2015 – Crude Oil Crisis had brought the index down from 1,867 to 1,500 pts breaking down support at its weekly EMA200weeks 1, 700 pts. 

Year 2016 – Bearish to sideways market 

Year 2017 – The index broke up of its weekly EMA200weeks 1,685 and rallied towards 1,796 highest on May 2017. 

Year 2017 – 2018 – Since June 2017, the index has been in a big cycle of correction up till today closing at 1,719 pts. 

As a result, the index did not violate its technical support of 1,700 pts weekly EMA200weeks. The FBMKLCI rallied from 1,708pts -> 1,840pts on the 9th January 2018. That’s a good +7.7% gain for the start. 

How does the FBMKLCI weekly chart looks like now?

2018Jan-FBMKLCI-800x600

The historical high for the FBMKLCI stands at 1,896pts from the Year 2014 high.

Will the index test its historical high or even create another historical high above 2,000pts?

Yes it will! But the market does not move up on a straight line but consist of multiple ups (rallies) and downs (corrections). At the current stage the index is in the down (correction) comfortably looking at the support of 1,813pts for a quick correction leading to further rally. Else a longer one will be looking at the support of 1,795pts support. GENERALLY the overall trend on the FBMKLCI for year 2018 = Bull market (Uptrend market).

FBMKLCI performance DOES not judge the performance of your stocks!

To simplify everyone as usual, click to read and learn below:

https://trendfollowingmalaysia.com/2015/06/18/how-does-ema200-days-works/

2018Jan-SAPNRG-1000x600

VERSUS

2018Jan-AIRASIA-1000x600

As a constant reminder to all of us as a guide, a stock price above EMA200days Versus a stock price below EMA200days sums up how you should pick up stocks in your portfolio to make your Year 2018 fruitful!

There will be a lot of stocks as below. Look for them!

2018Jan-UMWOG-1000x600

**IMPORTANTLY**

This serve just one part of the guide to us all as a constant reminder. What’s next is to do your part of follow up analysis to set up your trading plan. As again a stock’s prices does not move up on a straight line but consist of ups (rallies) and downs (corrections). Hence if timing your entry into the market is not important, think again. How to look for timing in the market/stock? Think…..

t6

Founder of http://www.trendfollowingmalaysia.com

Author of http://www.trendfollowingmalaysia.com

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The 4 market cycles we should know

Stage one

Stage 1 is the stage right after a prolonged downtrend. This stock has been going down but now it is starting to trade sideways forming a base. The sellers who once had the upper hand are now beginning to lose their power because of the buyers starting to get more aggressive. The stock just drifts sideways without a clear trend. Everyone hates this stock!

Stage two

Finally stocks break out into Stage 2 and begins the uptrend. Oh, the glory of stage 2!! Sometimes I have dreams of stocks in Stage 2! This is where the majority of the money is made in the stock market. But here is the funny thing: No one believes the rally! That’s right, everyone still hates the stock. The fundamentals are bad, the outlook is negative, etc. But professional traders know better. They are accumulating shares and getting ready to dump it off to those getting in late. This sets up stage 3.

Stage three

Finally, after the glorious advance of stage 2, the stock begins to trade sideways again and starts to “churn”. Novice traders are just now getting in! This stage is very similar to stage 1. Buyers and sellers move into equilibrium again and the stock just drifts along. It is now ready to begin the next stage.

Stage four

This is the dreaded downtrend for those that are long this stock. But, you know what the funny thing is? You guessed it. Nobody believes the downtrend! The fundamentals are probably still very good and everyone still loves this stock. They think the downtrend is just a “correction”. Wrong! They hold and hold and hold, hoping it will reverse back up again. They probably bought at the end of Stage 2 or during Stage 3. Sorry, you lose. Checkmate!

Here is an example

Are we stage 1 or stage 4?

Pure credits and reference from:

http://www.swing-trade-stocks.com