I came into the office today and saw the headlines that losses on Shanghai market had trigger panic selling throughout the world. Last week I mentioned that Shanghai market would be a leading indicator for the first sell signal. Since market throughout the world had corrected, then I suspect the next signal from Shanghai market would be monitored with huge interest.
On KLCI, although I had put the 5 waves for KLCI since last month, there is no way that I can confirm whether the 3 waves correction would be the next step for our market. As always, we need to combine with other indicators. From my experience with Bollinger Bands on KLCI, it is exhibiting strong potential that a major movement is around the corner. If you were familiar with my usage of Bollinger Bands, you would know that the next movement would be violent indeed. The only thing that we have to do is judge whether the violent movement is up or down.
For now, it seems that the path of least resistant for the short term is down. Shanghai market being a leading indicator, had already trigger MACD Sell Signal on weekly basis. Other major markets HAS NOT trigger MACD sell on weekly basis yet. However, the concern is that it markets throughout the world DO NOT recover this week, it WILL trigger sell. Weekly MACD would be the most appropriate method since market was in strong uptrend.
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