Market speculated that it will go up to create feel-good effect for election this week

If you were to refer to the US market to trade, you probably dare not enter the market because the US market was down 315.79 to 12266.39 last Friday.

However, the market speculated that our market will be different this week. This week Malaysians will be going to the poll to elect their representatives to the new government. Therefore, it is believed that the market will pick up and allow the investors to make money in the market and to create the “feel-good” effect.

Last Friday, many stocks have started to rebound. However, external factors normally would affect the performance of our market.

How would the market react? Just wait for the opening bell on Monday and you will have the answer.

Why would the US market drop by 315 points?

There are three reasons for the fall:

No.1 Computer maker Dell posted a 6 % decline in its quarterly profit, falling below analysts’ expectations, and warned that its business could suffer from reduced customer spending.

Bill Schultz, chief investment officer at McQueen, Ball & Associates in Bethlehem, Pa., said AIG’s report left investors uneasy about the prospect of further sizable write-down of bad debt.

No. 2. Light, sweet crude jumped to a record of $103.05 in early electronic trading before settling down 75 cents at $101.84 a barrel on New York Mercantile Exchange.

No. 3. The Chicago Board Options Exchange’s volatility index, known as the VIX, and often referred to as the “fear index,” jumped 12.8 percent.

Technically speaking, our composite index has broken the 200-day moving average. This is an important signal, normally signaling that the market has entered into the bear phase.

Please refer to Guang Ming Daily, Penang edition Chung Guan Tao special column on Monday(March 3, 2008) for the full report.