Saturday, July 28, 2007

Next Week KLSE and Global Market Sell-Off

My prediction is this, we are going to see another deep drop next week.

As of yesterday, KLSE reduced by 26.12points. The day before, Dow Jones dropped by 311.50 points and this morning I saw closed lower by another 207.53.

Both combined, the total drop is more than this year 416points February sell-off.

So expect another global sell-off next Monday.

It seems that US stocks sell-off came after a mix of bad news from Commerce Department's report that new home sales fell 6.6 percent last month and a weak result from two of the largest US homebuilders including the delay of a leveraged buyout of Chrysler from DaimlerChrysler AG's for US$7.4bil by Cerberus Capital Management due to difficulty in getting financing.

So the next big negative trigger can also be anything that comes with the word "failure to issue" + "bond" or "loan" or "debts".

Well for KLSE in Malaysia, I would say select the companies to be bought carefully and you will come out as a winner.

What is your strategy? Is it long-term, and what investment technique you have learned and used, I hope it is based on fundamental studies and not something related to Technical Analysis.

So, lets wait at the sideline next week or for the next few weeks and see any bargain, buy if you see one and stash the stock for a few years.

I'm sure you won't regret it.

But a letter of caution, check first how much those company are exporting their goods to US, and be wary when buying electronics based companies shares, they usually have substantial export to the US which will eventually effect their revenue.

But there could still be bargain in those export oriented companies if you know how to find it.

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