Chart 1: KLCI chart from 28/7/2009 to 25/11/2009.
As shown on chart 1, the L1 uptrend line is the new uptrend line for the KLCI since August, 2009. This is also the uptrend dynamic support for the KLCI. As indicated by A, B, and C, whenever the KLCI rebounded from the L1 uptrend line, the uptrend resumed. Therefore, a rebound near the L1 uptrend provide the best entry timing.
Meanwhile, the current L1 support level is also over-lapping with the 1270 WinChart Automatic Fibonacci Retracement, and therefore, it will be an important support. If the external factors shall remains unchanged, the KLCI might rebound from the L1 line and resume its uptrend.
However, there are two sides to every scenario. When the KLCI is testing the L1 line, it is also a crucial moment, for if the KLCI should break below the L1 line, it would be an end to the current uptrend, and a risk of a downtrend formation.
As indicated by A, on chart 2, when the KLCI form a downtrend, no one would know how long would the downtrend last. In other words, all downtrends started with the KLCI breaking below an existing uptrend line, and every technical correction during an uptrend could be the beginning of a new downtrend. Therefore, it is crucial to only enter the market when the broad market rebound above the uptrend line, not during a correction.
Chart 2: FBM KLCI chart from 11/6//1996 to 12/1/1998.
Case Studies:
Chart 3: AMMB – 1015, chart from 25/3/2009 to 25/11/2009.
Since March this year, AMMB has been staying in its uptrend. As shown on chart 3, despite many technical corrections, price of AMMB remained in its uptrend while supported by the L1 uptrend line, gaining over 180%. Although price has risen almost two times, it is still too early to judge if it has reached its peak. Nonetheless, price of AMMB is now testing the L1 uptrend line, and if price should rebound from the L1 line again, it would be a signal that the uptrend is resuming.
If price should break below the L1 uptrend line, like the one shown in chart 2, then it would be an end to the uptrend and a beginning of a possible downtrend. In other words, it is a signal to take profit or cut-loss. No matter what the out come is, it is important to have both sided scenarios mentally prepared by investors, to construct a sound trading plan.
| 4 Q Rolling PER | 14.68 times | Dividend Yield | 1.63% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/3/2009 | 8 sen | 2.55% | 14.69% |
| 31/3/2008 | 6 sen | 1.56% | 11.13% |
| 31/3/2007 | 5 sen | 1.33% | -3.38% |
| 31/3/2006 | 5 sen | 1.77% | 7.34% |
| 31/3/2005 | 4 sen | 1.42% | 4.35% |
Table 1: Financial Summary of AMMB.
Table 2: Quarterly Financial Summary of AMMB.
Chart 4: KFIMA – 6491, chart from 8/4/2009 to 25/11/2009.
Price of KFIMA has risen over 130% while supported by the L1 uptrend line, as shown on chart 3, despite many corrections, thus forming an uptrend, and the L1 line is the dynamic support. Currently, price of KFIMA is about to test the L1 line again. If it price should rebound from the L1 line together with the KLCI rebounding above its L1 line, it would be a signal suggesting a resume of its uptrend, thus a good timing for buy. However, if price should break below L1 line, it would be a signal suggesting an end to the uptrend, thus a signal to take profit, or to cut loss.
| 4 Q Rolling PER | 4.51 times | Dividend Yield | 3.33% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/3/2009 | 3 sen | 4.65% | 12.65% |
| 31/3/2008 | 2.5 sen | 5.32% | 9.59% |
| 31/3/2007 | 0 sen | 0.00% | 10.06% |
| 31/3/2006 | 2 sen | 3.96% | 11.48% |
| 31/3/2005 | 1 sen | 2.04% | 29.85% |
Table 3: KFIMA Financial Summary.
Table 4: KFIMA Quarterly Financial Summary.
Conclusion:
It is always important to include the analysis of the broad market together with the analysis of individual counters. The above examples should both upside and downside scenarios, so that traders and investors are well-prepared for the outcome, and get ready with a sound trading place.
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