Kuala Lumpur Composite Index heading 900 to 950 points

If you have followed my analysis on the Kuala Lumpur Composite Index (KLCI), I have adjusted my bearish forecast for the KLCI from 1,100 points to 850 - 950 points. The 850 points forecast is based on the long term head and shoulders pattern target. and the 900-950 points level is based on a cluster of Fibonacci levels.

The political scene in Malaysia is as hot as the financial markets as it takes off into the next level, with Malaysia's premier and his deputy swapping the ministerial portfolio. More drama unfolded yesterday. Leaders intend to contest for top party posts, including "caught in the act" Chua Soi Lek, The Son-in-Law Khairy Jamaludin, Chew Mei Fun. Yesterday also witnessed the pullout from one of Ruling Party Barisan Nasional component party SAPP from Sabah.

Anwar Ibrahim to announce list of MPs who will be crossing over today? I do not find any news in the local media except for Straits Times Singapore.

Another blogger arrested under sedition act (ISA) after the earlier arrests of influential blogger Raja Petra Kamaruddin from Malaysia-today, Opposition MP Theresa Kok and a Chinese daily news reporter who was later released. All are arrested because of a suspected threat to national security. The PM has already announced that Anuar Ibrahim is a threat to national security and economic stability. It's just a matter of time before he is arrested. I wonder if I am going to be arrested because I pose a threat to the financial markets/economy by giving a bearish view. ISA allows detention without trial. De-facto law minister resigned after the ISA arrests.

The KLCI fell another 36 points (3.6%) today as at 11.27am to close at 966.96 points. We may expect to see some support when it goes into the 900 to 950 points zone. Is the market bottom going to be at this level and will there be a rebound?


Monthly KLCI chart as at 11.27am 18 September 2008 using NextVIEW Advisor. Click on chart to view enlarged chart.

Although I am expecting market to bottom out at this level, we will have to look at further developments on the chart to confirm the bottom. Keep reading my analysis on this blog as I will update when there are any development.

Analysis and Commentary by Benny Lee