At what stage are we ?

As predicted yesterday, FBMKLCI market do stage a rebound following the strong guide from DAX & Dow , I would say a good rebound one indeed. And if history repeats, this CI rebound would be gaining around 60% of the recent loss. Lets see how it goes, one more last chance to clear all position, or really those G20 leaders or those European , American politician really come out with something good can last us some good rally.

Below is a good graphical representation of the market emotions, where are we ? I think we are still very high up at the stage of "Anxiety".

FBMKLCI crash crash crash

That day , I was mentioning whether the big boys will let our CI crash toward 16% (1348) from the peak, they only takes 2 weeks to decide and let us go southward at super speed.... WOW ! nowadays intraday > 50pts negative is quite common, we see it now and then.  And today, she crash below the 78.6% Fibonacci support (1319) before decided to retrace upward back and stay above this support, closing at 1331.8. . Hmmm.. given today DAX at 3%++ at the time I'm writing and if Dow close positive, there will be a good rebound for us, again is not to buy stocks but maybe to clear some of the losing long position. Well, those who interested in  long the FKLI, may able to give you some quick bucks (to me, I will not long futures , too risky and you will not able to get a good sleep at night worrying Dow will have a big crash or not while you are sleeping. 

My post on 13/Sept.
http://reiccs.blogspot.com/search?updated-max=2011-09-23T23%3A45%3A00%2B08%3A00&max-results=8

Today chart .

Pure Fundamentalist may say CHEAP CHEAP CHEAP &  BUY BUY BUY to average down, well, lets see how one think, if we are to buy now and setting a target to complete all the buying, my questions is what IF after finish up ALL your fund to buy a particular good stock but she is still dropping for another 30% , then how, see other people can buy lower than you by 30%, the feeling not good , right ? Ha, then, by using some TA to help you judge the SELECTED Good Fundamental stocks, when we can start accumulating would be better, I would say at least the WAITING would be much shorter. Hmmm, I will be on a look up for this. Again, I still use some of my money to do dollar cost average for the GOOD stocks that give HIGH dividend like those REITS.

Simple analysis of Bull & Bear months

Bulls and Bears KLCI
		High	Date	Low	Date	Chg	Chg %	Duration (months)
Bears	1	540.33	30/8/81	220.74	12/8/82	(319.59)	-59.1%	11
	2	426.79	8/2/84	169.83	2/5/86	(256.96)	-60.2%	15
	3	470.16	10/8/87	223.12	7/12/87	(247.04)	-52.5%	4
	4	632.22	1/8/90	459.08	28/9/90	(173.14)	-27.4%	2
	5	635.02	29/5/91	505.47	19/8/91	(129.55)	-20.4%	2.5
	6	1,314.46	5/1/94	840.87	24/1/95	(473.59)	-36.0%	13
	7	1,085.04	5/6/95	883.96	14/11/95	(201.08)	-18.5%	6
	8	1,271.57	25/2/97	262.70	1/9/98	(1,008.87)	-79.3%	18
	9	1,013.27	18/2/00	553.34	9/4/01	(459.93)	-45.4%	13.5
	10	808.07	23/4/02	616.46	3/12/02	(191.61)	-23.7%	7
	11	1,516.22	11/1/08	829.41	29/10/2008	(686.81)	-45.3%	10
					Simple Avg	(377.11)	-42.5%	9.3
					Avg (ex-1990)			10
		Low	Date	High	Date	Chg	Chg %	Duration (months)
Bulls	1	220.74	12/8/82	426.79	8/2/84	206.05	93.3%	18
	2	169.83	2/5/86	470.16	10/8/87	300.33	176.8%	15
	3	223.12	7/12/87	632.22	1/8/90	409.10	183.4%	32
	4	459.08	28/9/90	635.02	29/5/91	175.94	38.3%	8
	5	505.47	19/8/91	1,314.46	5/1/94	808.99	160.0%	28
	6	840.87	24/1/95	1,085.04	5/6/95	244.17	29.0%	5
	7	883.96	14/11/95	1,271.57	25/2/97	387.61	43.8%	16
	8	262.70	1/9/98	1,013.27	18/2/00	750.57	285.7%	17
	9	553.34	9/4/01	808.07	23/4/02	254.73	46.0%	13
	10	616.46	3/12/02	1,516.22	11/1/08	899.76	146.0%	61
	11	829.41	29/10/08	1,594.74	8/7/11	765.33	92.3%	32
					simple avg	443.73	120.3%	22.3
					Avg (ex 95 and 02)			19.9
Current Scenario
		High	Date	Current	Date	Chg	Chg %	Duration
		1594.74	8/7/11	1,387.81	22/9/2011	-206.93	-13.0%	2

As can be seen, our Bear market lasts an average of 10 months with an average decline of 43% with the previous 2008 decline falling 45% from peak to trough. Assuming a similar decline this time round, CI is potentially looking at 920 points. Before one falls off the chair, let me remind that this is a very simplistic way of looking at the downside. Other factors that need to be accounted for include economic conditions and more importantly, the intensity of the fall. We are in fact “happy” to note that the recent sell down is significant which could help the bearish condition end sooner rather than later.

Besides the bear markets during 87, 90 and 91 which had fallen an average rate of 8% - 13.7% per month, normal bears that KL had experienced usually drop at a rate of 3%-4% per month. At the current moment, we are averaging some 6.5% per month (we have dropped 13% from peak within a mere 2 months). While it sounds bad but it does help bear markets end sooner rather than letting it drag.

Above Information from ECMLibra.

REI : The above is an interesting data,  my take will be 2 scenerio
Scenerio 1: Taking an average data of 10 months of bear, then there will be another 8 months of bear to go before we see any bottoms till May2012.
Scenerio 2: Then again, if the rate is 13% for 2 months and KLCI is to decline say 42.5%, there will be rough another 5 months to go, by then will be around Mar2012.
So, either one, no long term play (except dollar cost averaging strategy) but we can still punt for sharp drop rebounds . Haha, this is for those itch finger type and punting is punting , it will not lead to financial freedom, so only can play small small, like the saying goes, drink a mug of beer everyday is good for you health but if more than that will be quite bad for your health.