Tuesday, August 16, 2011

KLCI's Major Hurdles Remain At 1510-1530 Points

Bursa Recap: KLCI eases 1.5 points
After climbing as high as 10.8 points to 1510.5 (near 50% FR resistance), the FBM KLCI ended 1.5 points lower to 1498.2, in line with the profit taking activities at most key regional markets. To recap, since plunging to Aug’s lows (i.e. 10-27% correction from 52-wk high), profit taking activities is not unusual as Dow Jones and
key regional markets had rebounded 2-10% from their recent troughs.

Overall, global stock markets are still swinging widely as concerns of the global economic conditions overshadowed the overnight Google deal with Motorola that had lifted the markets in early sessions.

Stagnant growth in Europe's powerhouse Germany of 0.1% in April-June (consensus: 0.5%) hit the euro, adding to investor fears that the world economy is slowing more than expected as well as ahead of French-German talks on the euro zone's worsening debt crisis.

FBM KLCI Outlook: Major resistance at 1510-1530 levels
Following last week’s massive selldown, Dow Jones and most of the key regional bourses are trapped in bearish territory after falling below the long term support of 200-d SMA (within -2% to -15%), except Indonesia and Thailand (please refer to Table A). We believe most of the key bourses are likely to stay below the 200-d SMA for a while given current sluggish economic outlook.

For KLCI, the 200-d SMA remains a tough resistance during this Aug reporting season, as well as ahead of a long holiday week in end Aug and first week of September (due to Hari Raya and Merdeka day).

Overall, we remain cautious and will only turn bullish if the KLCI is able to penetrate the 200-d SMA (1531 points now) level on high volume. Relief rally targets are 1510 (50% FR), 1531 and 1535 (strong downtrend line resistance). Support levels are 1470, 1464 (76.4% FR) and 1450 points.

Daily KLCI Upside Heavy With The Formation Of Shooting Star Candle And A Breakdown Below 10-D SMA
FBM KLCI 17-08-2011

Source: HLeBroking

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