Our present market remains me of the market in 2007. Despite bearish divergence in some indicators & the declining volume, the market in 2007 swung wildly with an upward bias. Today, we see the same signs- bearish divergence in indicators & declining volume- but the market also seems to defy all odd. To me, the present market is tracing out a rounding top in the same manner that had happened in 2007. The completion of this top would happen when the market suffers a severe drop which would trigger the death cross (when the 50-day SMA line crosses below the 200-day SMA line). Until then, we must remain cautious.


Chart: FBM-KLCI's weekly chart as at July 14, 2010 (Source: Tradesignum)

Let's take note that the mischievous bull of 2007 ended with a bang where it zoomed up to a new high before expiring. Would the current bull pull off a similar trick?