Tuesday, July 26, 2011

Volatility Persists Until More Clarity On US Debt Deal

Bursa Recap: KLCI up 2.2 points on regional bounce
Most Asian markets climbed, overcoming the day’s choppy trading on optimism of the US debt deal resolution coupled with positive earnings from Canon, BHP Billiton and Baidu. However, SENSEX lost 1.9% after the Reserve Bank of India increased the repurchase rate to 8% from 7.5% (consensus: 7.5%-7.75%).

The KLCI gained 2.2 points to 1561.8, driven by selective buying on FBM 30 stocks.

FBM KLCI Outlook: Volatility to continue ahead of US debt deal
Jitters over the US debt deal should dampen market tone and trading momentum in the near-term despite consensus view that the deadlock is temporary and expectations that lawmakers will eventually approve it.

With the violation of 10-d (1567) and 30-d (1571) SMAs, there is greater pressure that KLCI may retest last week’s low of 1552 pts. A breach below 1552 points will exert more selling force towards 1543 points (100-d SMA) and 1536 (50% FR from 1474-1597) pts. Upside resistance levels are 1567, 1571 and 1576 (mid Bollinger band). A breakout above these levels will likely to spur index re-test all time high of 1597 points (upper Bollinger band).

Daily KLCI Is Building Base Above The Lower Bollinger Band
FBM KLCI 27-07-2011

Source: HLeBroking

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