10:55 am : KLSE Market Outlook by Bill Wermine.

Dear Traders,

It is not how things really are. It is how the crowd perceives that causes prices to move.

I found an article by Carl Delfeld of UBS Bank who is an ETF Specialist and he wrote about EWM- the Malaysia ETF fund which is traded on the NYSE. He also is a columinist with Forbes magazine a premier business magazine which is read by businessmen, fund managers and wealthy investors.

"... Mr. Abdullah has led reforms that have helped Malaysia become a stellar performer. Capital controls and corruption have come down. Capital structures and costs are more transparent and efficient. Part of this is due to the 2004 reorganization of the state investment agency.
Some leading companies have also be restructured. Telekom Malaysia spun off its dynamic cellular assets and Malaysian Airline System cut bloated staff and unprofitable routes. The result is that the market is up 60% in dollar terms over the past two years, comfortably besting the MSCI Asia ex-Japan index, and the dividend yield has improved from 1.9% in 2003 to an estimated 3.9% last year, according to Credit Suisse, while foreign ownership has almost doubled to 25% over the same period. Well done...."
This article will definitely increase positive perception about Malaysia and may influence smart money as well as foreign funds to invest in the KLSE. True or not is not the point- it is perception that counts. When an analist of Mr Delfelds reputation writes something like this movers and shakers take notice.
Technically, price and volume spread confirms his analysis.

KLSE Weekly chart (no chart attached)

The weekly chart of the KLSE shows a major bottom reversal on 11 March. Green trend diamonds turned up 11 April. Volume and price spread confirmed the trend turn. Expect more upside this week and focus on quality shares with high dividends that foreign funds and smart money would buy. There is swing freedom to 1500 so those futures traders who wish to participate in the move call Martin. Long futures at this point is not an easy trade. There will be extreme volatility as the bull does not like too many riders. Insiders will use the news to manipulate the crowd emotions. I personally will take a small position and use a very wide stop- perhaps 90 points with the goal of making 200 points profit. I will also be buying some quality shares for myself and clients. This is a less volatile trade than CI Futures.
Have a good week
Bill