Last week we witnessed spectacular volume in the market that's reminiscent of the Super Bull Run of 1993. This is especially true on Friday when volume touched an all-time record of 26.65 billion units- a staggering volume which caused the trading to stall on Bursa Malaysia in the last hour of trading (see Chart 1). It will be interesting to see how the market will absorb the volume over the next 2 days.
Chart 1: FBMKLCI's daily chart as at August 7, 2020 (Source: Malaysiastock.biz)
At the same time, the market saw fearless buying which led to multibagger stocks born in a matters of 2-3 months- truly a sight to behold. Few will surpass the spectacular rallies achieved by Topglov and Supermx (see Chart 2).
Chart 2: Topglov and Supermx's daily chart as at August 7, 2020 (Source: Malaysiastock.biz)
Many may recall the bull market that followed the aftermath of a crisis - AFC 1998 and GFC 2008 (see Chart 3). We are again at the cusp of a bull market as the crisis from Covid-19 pandemic subsides.
Chart 3: FBMKLCI's monthly chart as at August 7, 2020 (Source: Yahoo Finance)
Those who had experienced the Super Bull Run 1993 will remember what it's like to be in the vortex of a market mania. Last few weeks of market activities has all the hallmarks of a Super Bull Run. Away from the charts and the trading volume, you will find punters placing huge buy orders on contra basis which breached trading limits again and again. These players would easily humble the fearless men from the British SAS unit whose motto is: Who Dares Wins!
A quick glance at the major indices revealed that the bull market is still very selective. Blue chip stocks are hardly charging (see Chart 4) while small-cap stocks are only getting into the act of going up. (See Chart 5). The medium-cap stocks and fledgling stocks have extended their gain last week (see Chart 6 & 7) but the real action can be seen among tech-laden ACE Market stocks (see Chart 8). As mentioned in previous posts, the rallies in our market started with tech stocks in early April and blown apart by the pandemic stocks in early May. Now it is spreading out to the low priced fledgling stocks.
Chart 5: FBMKLCI's weekly chart as at August 10, 2020 (Source: Malaysiastock.biz)
Chart 5: FBMSCAP's weekly chart as at August 10, 2020 (Source: Malaysiastock.biz)
Chart 6: FBM70's weekly chart as at August 10, 2020 (Source: Malaysiastock.biz)
Chart 7: FBMFLEDGLING's weekly chart as at August 10, 2020 (Source: Malaysiastock.biz)
Chart 8: FBMACE's weekly chart as at August 10, 2020 (Source: Malaysiastock.biz)
In this extremely bullish environment, a remisier can only say so much. To preach about investing in stocks with good fundamentals and reasonable valuation will be like casting pearls before swine. So the only thing to do is to stand back and let the party continues....