I don’t know a single money manager who dares to short the market right now, but I’m going to stick my neck out and say that the KLCI is about to run into some serious headwinds. If you take a look at the below picture and study the volume you will see that when the previous high was broken back in October, the big money literally piled in and propelled the market to its current high. After new year a huge drop off in volumes ensued, producing a higher high on weaker volume which is red flag in my book (note also that RSIs have also demonstrated another negative divergence). The good news is that volume has returned in the last couple of days, but the question is will it be sufficient to drive the market up another leg? I am standing aside for now and waiting for it to come back to some vague support levels I have drawn in before adding on to more positions…
Don’t things always look so clear in your rear view mirror….
