Sunday, August 7, 2011

FBM KLCI: Volatility To Continue Despite Anticipating Mild Rebound

Bursa Recap: KLCI sinks 22.5 points, tracking Dow Jones and regional routs
Asian markets tumbled in the wake of a contagion effect from an overnight 4.3% plunge on Dow, due to the fears of U.S. recession, stalling global economic recovery and worsening Europe’s debt crisis.

Tracking the gloomy regional markets, the FBM KLCI plunged as much as 37.5 points before paring its losses to 22.5 points or 1.5% 1524.4. Wow, the KLCI lost 1.6%. Market breadth was negative with 60 gainers as compared to 934 losers.

FBM KLCI Outlook: Volatility to continue
Although we may witness another negative performance regionally today, the magnitude is expected to be less significant vs. last Friday as the rating cut was well telegraphed and should not take investors by surprise. Moreover, news that ECB would "actively implement" its controversial bond-buying program to fight the euro zone's debt crisis contagion should bode well.

Technically, short term KLCI outlook has turned more negative as the index is now trading below the 200-d SMA (near 1531 points). Nonetheless, the Hammer formation does suggests potential technical rebound and for the medium to longer-term, we remain positive unless the YTD low of 1470 pts solid base is taken out. Initial support is seen at the 1500 points.

Technical rebound targets are 1531, 1547 (100-d SMA), 1550 (38.2% FR) and 1561 (mid Bollinger band) points.

Daily KLCI: A Technical Rebound Is Likely Amid A Hammer Candlestick Formation
FBM KLCI 08-08-2011



Source: HLeBroking

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