KLCI Update

US market managed to stage a rally on Friday. The Dow Industrial Average closed at 8280, up 217 points on Friday. Market look past the bad job numbers and are hoping that the Obama Administration is able to come up with a stimulus package that will save the financial sector which in turn will support the stock market.


Our own KLCI index is also making a comeback. The index closed above its 20 day moving average on Friday. The MACD indicator is looking to cross above its signal line, another positive scenario.

Note that the 13 day force index has just turned positive. If the index is able to hold above 867 points, there is a potential for the index to test its upper Bollinger Band limit.

Stochastic indicator is also turning up, indicating short term strength.

KLCI Update

KLCI should see some strength today. The question is whether we will see a more sustain move or just a one day wonder.

MACD is still showing a bullish sign with the indicator above its 9 day signal line.

RSI is ticking up but is still below the 50 level. If it is able to get above 50 level, it will be bullish. The RSI indicator has not been above to clear the 50 level in all previous attempts and the last time the indicator was above 50 was in July 08.

The –DI is still above +DI which indicates a weak market. However, the ADX has come down as well. This means that we are not likely to experience the severe down move that we saw in the past 2 months.

The index was able to hold on to the 61.8% Fibonacci retracement level last week. If this support holds, there will be chance for the index to test 926.

KLCI Update

The market turmoil continues.

KLCI is now at 859 levels. It looks likely for the index to test the next support at 817.


The technical charts for KCLI are not looking good. The MACD line is still below its 9 day signal line showing a bearish bias. There is no divergence in the MACD with respect to price movement, so it is not logical to expect a sustainable a rebound at this point.

ADX is at value of 55 and with –DI above +DI, it indicates a continuation of the down trend.

RSI is oversold at this level but in a downward trending market, oversold market tends to become more oversold.

KLCI Update

US market tried to overcome from market weakness on Friday. However at the close, it succumbed to market forces and Dow was down 127 points.

At one point, the Dow index managed to put on a gain of nearly 300 points. The optimism could not hold and the index gave back all the gains plus some extra losses to end at 8852.

The KLCI index dropped 14 points on Friday in anticipation of further weakness in the US market. The index gave up all the gains made on the first 2 days of the week.

The index has broken through the 62% re-tracement level and is now heading towards the low of 615 set in March 2003.

The support level is at 860 and 817.

KLCI Sep Performance

Historical results from 1994 to 2008 have shown that September is not a very good month to have a long position.

Entry Date	Entry Price	Exit Date	Exit Price	% Change
1-Sep-94	1,135.20	30-Sep-94	1,131.08	-0.36
1-Sep-95	1,014.96	29-Sep-95	992.16	-2.25
2-Sep-96	1,117.21	30-Sep-96	1,130.76	1.21
2-Sep-97	811.15	30-Sep-97	806.79	-0.54
1-Sep-98	294.76	30-Sep-98	376.61	27.77
1-Sep-99	766.01	30-Sep-99	683.18	-10.81
1-Sep-00	795.26	29-Sep-00	721.85	-9.23
3-Sep-01	686.35	28-Sep-01	614.57	-10.46
2-Sep-02	710.75	30-Sep-02	644.61	-9.31
2-Sep-03	743.17	30-Sep-03	736.37	-0.92
1-Sep-04	828.96	30-Sep-04	846.76	2.15
1-Sep-05	913.08	30-Sep-05	925.03	1.31
1-Sep-06	959.04	29-Sep-06	967.74	0.91
3-Sep-07	1,283.93	28-Sep-07	1,339.43	4.32
2-Sep-08	1,097.08	Open	Open	-0.92

In total there were 6 winning September months, about 42% that your position will be higher compared to the beginning of September. Let’s cross our fingers and hope that there will not be a double digit percentage losses this month. Do trade with care.

KLCI Update

KLCI index is painting a “Bearish” picture.

The ADX is increasing and is above 20 level which shows a strong trend is developing. The –DI is greater than the +DI by a great margin, indicating a Bearish trend.

The MACD is below its signal line, another evidence of a Bearish market.

RSI is less than 30 indicating that the market is oversold. However an oversold market doesn’t mean that market will rebound strongly.

It is not advisable to trade the market from the long side given the bearish picture.

KLCI July Performance

June is coming to an end. This is the historical performance of the KLCI index from 1994 onwards.

Entry Date	Entry Price	Exit Date	Exit Price	% Change	Draw Down %	Max Gain %	Bars Held
7/1/1994	1008.43	8/1/1994	1029.58	2.1	-3.2446	2.0973	21
7/3/1995	1025.85	8/1/1995	1059.91	3.32	-1.0391	4.9647	21
7/1/1996	1135.81	8/1/1996	1067.39	-6.02	-7.6404	0.4543	22
7/1/1997	1077.30	8/1/1997	1012.78	-5.99	-8.2456	0.7537	22
7/1/1998	454.73	8/3/1998	403.41	-11.29	-15.1211	6.8634	22
7/1/1999	819.70	8/2/1999	768.92	-6.19	-8.6605	6.184	22
7/3/2000	830.13	8/1/2000	799.59	-3.68	-5.4425	4.2198	21
7/2/2001	591.66	8/1/2001	660.06	11.56	-1.1814	12.7523	22
7/1/2002	727.73	8/1/2002	721.33	-0.88	-2.0365	3.1056	23
7/1/2003	691.93	8/1/2003	721.06	4.21	-0.1431	6.6466	23
7/1/2004	820.47	8/2/2004	832.69	1.49	-0.0073	4.6181	22
7/1/2005	888.18	8/1/2005	938.30	5.64	0	6.0427	21
7/3/2006	914.61	8/1/2006	935.41	2.27	-1.6816	2.717	21
7/2/2007	1357.78	8/1/2007	1367.29	0.7	-1.0348	2.5335	22

There is a total of 8 profitable and 6 losing "July" months.

KLCI June Performance

This is the performance of KLCI for month of June from 1994 onwards.

Entry Date	Entry Price	Exit Date	Exit Price	% Change	Draw Down %	Max Gain %	Bars Held
6/1/1994	991.60	6/30/1994	1011.58	2.01	-4.36	5.08	21
6/1/1995	1058.13	6/30/1995	1026.62	-2.98	-3.32	3.13	21
6/3/1996	1139.78	6/28/1996	1136.31	-0.3	-2.08	1.37	19
6/2/1997	1107.55	6/30/1997	1077.30	-2.73	-4.13	2.77	20
6/1/1998	537.60	6/30/1998	455.64	-15.25	-19.03	0.18	21
6/1/1999	742.70	6/30/1999	811.10	9.21	-1.81	12.07	21
6/1/2000	914.12	6/30/2000	833.37	-8.83	-12.82	0.25	18
6/1/2001	573.30	6/29/2001	592.99	3.43	-1.84	5.88	19
6/3/2002	741.90	6/28/2002	725.44	-2.22	-5.12	1.94	19
6/2/2003	672.92	6/30/2003	691.96	2.83	-0.42	3.41	20
6/1/2004	811.66	6/30/2004	819.86	1.01	-2.31	2.04	21
6/1/2005	861.05	6/30/2005	888.32	3.17	-0.26	5.22	21
6/1/2006	927.65	6/30/2006	914.69	-1.4	-4.78	0.83	21
6/1/2007	1348.36	6/29/2007	1354.38	0.45	-0.16	3.20	20

The records are pretty even with 7 winners and 7 losers. However, the average winning size is less than the average losing size.

KLSE Update

The KLSE index closed at 1286.54 yesterday. The 20 day moving average is showing a positive gradient and is rising since the beginning of Apr. This is a bullish sign.

The Bollinger is showing a slightly upward channel and the index looks to be moving towards the upper part of the Bollinger bands. If the index can break out of 1305 level, the uptrend will resume and the most likely target will be the Fibonacci Projection level of 1359.

The RSI has retraced back to the 50 level so that market is currently not in overbought situation.

The ADX is turning up and the +DI is greater than –DI. This implies that uptrend will most likely continue.

KLSE Update

KLSE index closed at 1288 points, gaining 20 points for the week. The ADX chart is looking strong with the +DI being above the -DI. ADX value is now at 21 and is turning up. This shows that the market is gaining momentum.





RSI is turning down and is now at 60 level. There may be a slight pull back to the Fibonacci Retracement level of 1266, 1257 and 1247 respectively. These three levels correspond to the 38.2%, 50% and 61.8% retracement of the upmove from 7 Apr to 24 Apr 08.

KLSE May Performance

There is a saying that you should sell in may and go away. How through is this statement? If you look at past performance from 1994 to 2007, there is no concrete evidence that KLSE will do badly in May.

Entry Date	Entry Price	Exit Date	Exit Price	% Change
5/3/1994	1054.13	6/1/1994	991.6	-5.93
5/2/1995	950.38	6/1/1995	1058.13	11.34
5/2/1997	1080.17	6/2/1997	1107.55	2.53
5/4/1998	625.24	6/1/1998	537.6	-14.02
5/3/1999	675.78	6/1/1999	742.7	9.9
5/2/2000	898.66	6/1/2000	914.12	1.72
5/2/2002	795.07	6/3/2002	741.9	-6.69
5/2/2003	631.16	6/2/2003	672.92	6.62
5/5/2004	840.42	6/1/2004	811.66	-3.42
5/3/2005	878.79	6/1/2005	861.05	-2.02
5/2/2006	947.8	6/1/2006	927.65	-2.13
5/3/2007	1329.13	6/1/2007	1348.36	1.45

So keep investing but you will need to be selective on the stock to invest in.

KLSE Update

KLSE managed to break through its 50 day moving average yesterday.



The recovery that began on 18 Mar 08 has brought the index from a low of 1166 to 1280. The index has also broken through the down trend line which is another positive sign of a recovery.

If the index can stay above 1264, the Fibonacci objective will be at 1314.

KLSE Apr Performance

We are in the month of Apr. Global market has been trying to recover from the sell down since the beginning of the year. US market started the week with a narrowly mixed performance Monday, with many investors moving to the sidelines as they wait for quarterly profit reports.

Looking at the historical data from 1994 to 2008, there were 8 Apr months that showed a profit and 6 Apr months that ended with a loss for the KLSE index.

Entry Date	Entry Price	Exit Date	Exit Price	% Change
4/4/1994	958.68	5/4/1994	1040.44	8.53
4/4/1995	966.49	5/3/1995	944.55	-2.27
4/2/1996	1158.6	5/3/1996	1184.97	2.28
4/2/1997	1187.76	5/5/1997	1099.39	-7.44
4/2/1998	700.44	5/5/1998	627.56	-10.4
4/2/1999	529.09	5/4/1999	681.75	28.85
4/4/2000	966.65	5/3/2000	900.14	-6.88
4/3/2001	650.65	5/3/2001	615.98	-5.33
4/2/2002	756.91	5/3/2002	795.12	5.05
4/2/2003	626.69	5/5/2003	627.62	0.15
4/2/2004	886.94	5/6/2004	845.74	-4.65
4/4/2005	874.34	5/4/2005	895.5	2.42
4/4/2006	927.9	5/3/2006	950.99	2.49
4/3/2007	1247.41	5/4/2007	1346.37	7.93

So if you buy the KLSE index in the beginning of Apr and sell in the beginning of May, you will be able to win with a probability of 57%.

KLSE Turtle Trading

Dow closed at 12609.42 on Friday trading session. For the week ending 4 Apr 08, Dow was up 393 points.

KLSE did not perform as well. It closed at 1221 down 36 points for the week.

Let’s take a look at a simple breakout system called Turtle Trading System. This system was popularized by Richard Donchian. It uses 20 day breakout as an entry rule for both long and short trades. The duration of the test is from Apr 1998 to 4 Apr 2008.

Let’s assume the following breakout rules:

Entry

1. Today’s Close must be greater than the High of the previous 20 trading day
2. If condition 1 is true, buy at the opening price on the next trading day.

Exit

1. Today’s Close must be less than the Low of the previous 20 trading day
2. If condition 1 is true, sell at the opening price on the next trading day.

The trading result is shown below:

Winning trades:

Entry Date	Entry Price	Exit Date	Exit Price	% Change	Bars Held
9/8/1998	457.44	2/9/1999	525.13	14.8	103
4/7/1999	557.07	7/27/1999	772.04	38.59	79
12/14/1999	771.57	4/18/2000	888.89	15.21	82
6/12/2001	584.75	9/18/2001	612.79	4.8	68
11/16/2001	633.86	5/22/2002	782.11	23.39	120
12/27/2002	646	2/25/2003	651.46	0.85	37
4/8/2003	640.03	11/20/2003	766.4	19.74	157
1/8/2004	805.18	4/15/2004	866.81	7.65	64
6/11/2004	823.99	8/3/2004	828.03	0.49	37
9/3/2004	844.64	2/22/2005	903.8	7	112
6/14/2005	894.82	8/29/2005	916.02	2.37	54
1/6/2006	906.6	3/7/2006	915.96	1.03	37
7/13/2006	928.46	3/6/2007	1,117.51	20.36	158
4/4/2007	1,263.19	8/2/2007	1,349.20	6.81	83
9/21/2007	1,305.06	11/23/2007	1,346.45	3.17	43
			Average	11.084	82.266667

Losing trades:

Entry Date	Entry Price	Exit Date	Exit Price	% Change	Bars Held
5/22/2000	949.63	5/29/2000	884.08	-6.9	5
10/17/2000	766.51	11/17/2000	728.81	-4.92	22
1/30/2001	720.99	3/2/2001	702.5	-2.56	22
8/19/2002	736.6	8/30/2002	715.08	-2.92	9
10/25/2002	655.91	11/20/2002	636.94	-2.89	17
5/4/2005	895.5	5/26/2005	868.94	-2.97	15
9/27/2005	925.33	10/20/2005	914.8	-1.14	17
3/29/2006	932.59	5/23/2006	924.69	-0.85	37
12/4/2007	1,415.45	1/24/2008	1,401.25	-1	32
			Average	-2.90556	19.55556

There were a total of 24 trades with 15 winners and 9 losers. The average win is 11% and average loss is 2.9%.