Corrections coming?

If we look at the volume traded at KLSE, it has more than 1 billion shares change hand for most of the trading days since September 2010. KLCI keeps making new highs with sustained volume may be able to convince a few newbies to believe there is a strong underlying demands. Can the wind direction change? The sectors rotation are getting narrower with exception of Finance and Plantation. Most other "hot" sectors like property, trading and services, small-cap, construction are getting a little bit cooler -- declining volume. Cyclical stocks like technology have been in very bearish territory.

This rally is driven by liquidity. The foreign fund flows have been strong since September.



That has to do with US $ investors selling dollar and buy emerging markets. Malaysia is one of the beneficiaries. They need some reasons to buy something, the story like Economic Transformation Program, etc are just to fall into the right place.



But US $ tide can turn, at least for the short-term. When the tide turns, rally can quickly fizzle out and you can see penny stocks will suffer the same sympathy selling.

If you visit prominent and savvy blogs -- all of them are turning cautious. Many of them are in wait-and-see mode. Some of them are calling for smaller bets and waiting for corrections. With most people are cautious, that means they have a lot dry powder left, therefore I don't think the bull market is over but I am anticipating corrections before the markets are ready to move higher.