FBMKLCI Slump, Who Chase Away Bull?

Who chased away bull?  KLCI index 11 July (Monday) dropped 6.56 points or 0.41 percent, today it dropped another 9.59 points and close at 1578.1.  Within two days, it drop 16.15 points....Wow look scary...Some of my stock maniac friends sold off the outstanding shares just to convert into cash as they are afraid of another round of bearish is coming.  How true it is? Let's find out togather.

World stocks slump on renewed EU debt concerns.  Most of the investors concern that the eurozone's debt crisis could infect Italy and Spain and subsequently it sent global stocks spiraling downward recently while markets were still reeling from last week's dismal jobs report in the U.S.  As the market tensions grew, eurozone officials were meeting Monday to figure out how to get banks to participate in the next rescue of Greece. Those negotiations have been plagued by threats from ratings agencies that they would consider a bank rollover of Greek debt a default.  To be on the save side, the big players are cash out from the stock market and invest in gold.  This is the reason gold price rose sharply to $1549.2 per ounce.

When markets are at their bottom, they don't listen to bad news. But because our KLCI index is at the top end, they listen.  Besides, markets don't like when they don't know what's going on.  Dilemma in Europe recently causing world share market to slump is a very obvious example.

 

Let's us investigate what actually happen to our KLCI, who cause it to crunch?  As we all know, the sellers and buyers are constitute of local retailers, local institutions and foreign investors.  The big players in KLSE are local institutions and foreign investors, whereas we're small player in local retailers category.  We've no choice but to follow the big players trend.

Let me have some explanations on the KLSE cumulative chart shown above.  The Y-axis: Negative value mean net sell whereas positive value mean net buy.  As you can observe from the chart, the foreign investor net buy increase tremendously from 3rd-8th July, this explain why KLCI rose vigorously and hit historical high.  Our local institution (EPF?) start to sell off silently and make profit from it.  On the 11th July, the net buy from foreign investor reduced indicating new downtrend begin.  The downtrend is continue on 12 July.  This is good indicator to trace the big player footprint so that we're aware of what is happening in the share market and cash out accordingly to save our hard earn money.
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*Special thanks to Jessprince for sharing the KLSE Trade cumulative chart :)