Holding out for a rebound
Looking for opportunities to cut holdings
In the last 4 days, the KLCI has turned downwards and lost 3.1%, catching local traders who were optimistic about our nation’s stimulus package by surprise. Should traders hold on for a rebound or cut holdings regardless of a rebound?
10th March : Announcement of Mini Budget
In 6 days time, the Malaysian Government will table a “Mini Budget” in Parliament which will contain details about a stimulus plan to jumpstart the economy. The Institute of Strategic and International Studies (ISIS) estimates the size of the stimulus package to be around RM16 - RM23 billion or 2%-3% of GDP.
The anticipation of the Mini Budget might cap the downside of the KLCI for these few days. What’s more, the KLCI has already regressed 3.1% in the last 4 days. The combination of these two factors might increase the likelihood of a rebound in the KLCI to provide opportunities for traders to sell in strength.
As of now, the KLCI’s 867 support is still holding. With a bit of fortune and the two positive factors mentioned above, we might see a small rebound in the KLCI for traders to trim their positions in strength.
Mini white hammer in KLCI
A mini hammer candlestick pattern also appeared in the charts yesterday. Though the
minuscule size of the hammer lacks strength, nevertheless it does sprinkle a tiny bit of hope for the possibility of a rebound.
Strategy : Trim stock holdings
We are hopeful for a rebound in these two days. However, we still advice traders to continue trimming stock holdings, regardless of whether a rebound occurs or not.
What’s next :
• 06 Mar : Msia Exports
• 06 Mar : US Unemployment
We await two major pieces of
economic data this Friday. Malaysian
Exports have been weakening over
the last 3 months while US
Unemployment has been rising for the
last 10 months.