Watch out for the volume

(click chart for larger version)

It has been a while since our market's daily volume exceeds 1 billion shares. As I checked back, the 1 billion mark was last recorded sometime back in January 2008, almost 9 months ago. Some of the brave hearted investors/traders would have already gone into the sea since the last few trading sessions braving stormy and violent waves. For the brave, they were rewarded handsomely(so far), for the less brave, they were contemplating to joining in the fun. Is it really safe going into the water and continue to swim, hopefully without encountering hugh and violent waves or sharks? This is probably the question in many people's mind these days.

Fundamentally, nothing really change except investors' confidence came back stronger and there are some improvement in the bankers' lending activities. Concerted effort by countries(eg interest rate cuts) together with their financial stimulus plans and financial aids from IMF do help to alleviate the worries of market participants. There is a general consensus that the markets have probably seen its worst in the last 2 weeks and markets have bottomed. The world's economy however remains in the doldrums egs EU countries technically in recession and many countries like Malaysia cutting back its growth forecast ie from 5.4% to 3.5%. In fact some analysts like UBS are predicting zero growth for Malaysia next year in view of declining demand from G7 countries etc. In general, the prediction for the next year is very gloomy indeed and economies will at best register a small growth or a "stand still" growth.

So back to the question of whether it is safe to go back into the market?

In my opinion, the market right now is at best a trading market only. It is great to place your trades in early or low and square off the trades later and higher, if we are lucky enough! The daily MACD for the KLCI(and the rest of the world leading markets) are now slightly bullish(refer above charts) and it would be good if trend indicators eg ADX is to show such positive indications soon. This will reinforces the confidence of investors/traders to go into the markets in the short term. For the longer term, I am of the opinion the markets will not be better than now as we still have to ride through this long term bearish cycle first, probably another year from now? Volatility will be back and confidence will be at its low again. Meanwhile, while the sun is smiling at us again, let us all enjoy a break from "selling pressure" and make some money in the markets! Remember to look out for any decline in the volume as it may indicates "sell"! Good Luck!

* If Obama wins the US presidential election, will the bankers/insurers etc brace for more regulations in the industry? You bet.

* Bloomberg: Australia's Central Bank cuts key interest rate by 75 basis points to 5.25%(its third reductions in many months).

* BT: Credit Suisse: Malaysian banking stocks most expensive and will maintains its "UnderWeight" call on the banks.

* The Standard: South Korea's reserves fall by most since 1997. The reserves dropped to USD212.3b in October from USD239.7b in September. The reasons were due to selling of USD to aid banks struggling to access overseas funds and defending the Korean won.

* Rio Tinto admits China's demand slowing down.

* RM7b enough or not to stimulate Malaysia's economy? See details