Tuesday, October 18, 2011

FBM KLCI: Headlines Driven Market

Bursa Recap: KLCI drops 25 points, in line with sluggish regional peers
Asian markets plunged after Germany's finance minister said that a solution to Europe's debt crisis may not come fast enough. Investor sentiment was also dampened by lower-than-expected China 3Q GDP of 9.1% (slowest in two years) and Moody’s downgrade of France’s credit rating.

KLCI also tumbled 25.4 pts or 1.7% to 1439.9, driven by major selldown in SIME (-25 sen to RM8.65), CIMB (-18 sen to RM7.19), TENAGA (-22 sen to RM5.35), IOICORP (-14 sen to RM5.00) and MAYBANK (-12 sen to RM8.21).

FBM KLCI Outlook: KLCI: Headlines driven market
We believe global markets will remain volatile for a while, taking cue from headlines mainly from the Euro-zones debt crisis development. Hence, we continue to advocate risk-averse investors to sell into strength or trim positions on weakening
daily indicators. From the weekly chart, tough resistance levels are 1469 (15-w SMA) and 1494 (20-w SMA) while supports are 1433 (10-w SMA and uptrend line) and 1413 (30-d SMA – daily chart).

If history is a guide, we noted that there are similarities between the bear market rally in March 2008 and current rebound from September trough. Assuming a similar 12-13% rebound from the bottom, the KLCI may encounter stiff resistance zones near 1467 and 1480 points (please refer to weekly KLCI chart).

Daily KLCI: Upward Momentum To Remain Intact Until Uptrend Line Is violated
FBM KLCI 19-10-2011

Weekly KLCI: Facing Tough Resistance Within The 15-Days & 20-Days SMAs
FBM KLCI 19-10-2011a

Source: HLIB Research

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