New Bear Frontiers

Traders’ Brief

New Bear Frontiers

New Low will drag KLCI down today
Last night, the KLCI charted a new low at 7,447.55, exceeding the November low by a mere 1.45 points. As a marginal 1.45 points cannot be considered a true break, we instead now have a new support band at the 7,447-7,449 level.

Dow may go places not gone before in 11 years
In yesterday’s report, we wrote about how the strength of the Dow bears are capped for now. However, hypothetically speaking, if the bears reign supreme, what are the next strong support levels after this 7,447-,449 support band? It appears the bears may bring the Dow to places where it has not gone before in 11 years.

Next Strong Support :
If the bears can break the 7,447-7,449 support band convincingly, the Dow may venture
towards the next strong support at 7,161.15 which was last reached 11 years ago in the month of October 1997.
If the 7,161.15 level can be breached by the bears, then the Dow’s next strong support level would be 769 points lower at the April 1997 low of 6,391.69.



Strategy : Dow’s new lows will be drag-down on KLCI
While we opine that the strength of the Dow is capped for now, we will be watching the Dow like a hawk tonight to validate the strength of the bears. If the Dow breaks the 7,447-7,449 support band convincingly, it will be revisiting the 7,161 level soon.

Meanwhile, the Dow’s charting of new lows will be a huge drag-down on the KLCI these few days. While we are bearish on the Dow, we however, still maintain our positive bias view of the KLCI in the short term as well as in the mid term as we are of the view that the correlation between the KLCI and the Dow is decreasing in the short term.