Who is in control after the Truce?

The truce happend on 18 Aug 2011, where the dishonest Bear has taken the stage to attack by breaking the amicable arrangement. The Bull has fought back feriously gaining positive momentum until 2 Sep 2011 last Friday. The probably, the Bull feel betrayed and fought with strong spirit on loss shamefully or die of fighting. The results has shown that the Bull has been fought to his death...over exhausted and fought blind without applying and important strategy.

Now, the Bull has give up its defend. It has retreated almost half way in single day for the advancement made in the last two weeks. Significant sign of tireness and fatigue.

From techmical point of view, the Dow is making a flag. the flag appearence strengthen of the view of down trend continuation. This is a very potent signal. All needed is a day of two to break below 11,000 support level. the next level of new low will be in the making. MACD and RSI has pointed down. All factors is converging in the benefits of the Bear. It really worth betraying once in a while!!!

Lets take a look at local scene. Posted above is a weekly KLCI Chart. Market has been fell > 10% from the height achieved in July 2011. Typically, market observers will advice that any fall > 10% continuosly will lead to further falling in prices. The propencity to offload shall be still high. Malaysia has been reported lower GDP growth in Q2 2011 vs Q1 2011. Most of experts has indicated lower full year GDP growth despite BNM remain firm on its stand. The expectation of overall expert will continue to be priced in the market until Q1 2012 outlook is deemed positive.

So the next question is what will make Malaysia Q1 2012 outlook turn positive? Export? Obviouly is hopeless and Malaysia export is diminishing as a result of US and Europe imports are shrinking due their debts problem. Government spending? Also difficult as the Malaysia budget has been in deficit for the last ten years. If possible, the G will choose this route. Private spending? Yes this has been supporting the local economy since Global Economic Crisis in 2008 due to national high saving. Investment? Forget it, who is in the sound to put more investment in anticipation of slow down in economy couple with general election is just around the corner?

Is it really that bad, you may ask? i think yes if nothing changed. To me the only saving measure is the roll out succesful rolled out ETP. But who going to finance these project? Government? Obviously no with current high budget deficit. But no sure where you know the general public is rich? why do i say so? Look at the response on the high properties lauches. It was overwhelming? The demand is still strong with the anticipation of economic is slow down in the near future. Isn't it strange. Too me, there is only onc situation lead to this phenomenon, people too much money but do not know where to put them. Stock? big no from the 1997 and 2008 experiences. Another indication of general public is cash rich is the overwhelming responses when the PNB launched the Amanah Wawasan and other equallavent funds. People was queing up to subscribed. Its really out of mind.

Too me the projects under ETP has been identified, but mechanism is attracting the funds from general public is crucial. the implementaion and executive is important. It simpy means if projects under ETP are not carried out as planned, i m not sure where will the growth comes from and outlook for Q1 2012 will turn positive.