Monday, October 3, 2011

FBM KLCI: Fear Of Contagion Overwhelmed Positive Economic Data

Bursa Recap: KLCI down on Euro debt crisis and post window dressing
The plunge in Dow last Friday and deepening concerns that the Euro zone’s debt crisis will dampen global growth coupled with a 4% plunge in Hong Kong (while markets in Korea and China were closed for trading) push share prices lower across Asia.

Similarly, the FBM KLCI also suffered from the external concerns as well as post window dressing to tumble 19.6 points lower to 1367.5 points. Losers thumbed gainers by 3.35 to one. Only savings grace was the sharp fall in trading activities whereby volume almost halved to 631 million shares worth RM1.1 billion against Last Friday’s 1.1 billion shares worth RM1.85 billion.

FBM KLCI Outlook: Sentiment likely to remain weak
Despite positive economic data from the US and a rise in China non-manufacturing PMI, the overnight plunge in Dow Jones (during the second half session) indicate that investors are overwhelmed by fear of the contagion effect from the Euro debt crisis. Given that the latter is expected to drag on and would take time to resolve, sentiment is likely to remain weak.

Technically, indicators are still turning south. The FBM KLCI also failed to hold above the 5-d SMA at 1376, which also indicates that the market is likely to remain weak. Immediate resistance levels are the 5-d SMA, 1400, 1414 (mid Bollinger band) and 1434 (30-d SMA). Supports are situated at 1336 (lower Bollinger band), 1310 (26 September pivot low) and the psychological 1300 level.

KLCI Failed To Hold Above The 5-Days SMA At 1376, Which Also Indicates That The Market Is Likely To Remain Weak
FBM KLCI 04-10-2011



Source: HLeBroking
Bloomberg

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