Sunday, October 2, 2011

FBM KLCI: Volatility Post Winding Dressing

Bursa Recap: KLCI flattish on late window dressing
In view of positive economic news from the US (lower weekly jobless claims and stronger-than-expected 2Q11 GDP report) Asian equities started mixed to stronger but fears of economic downturn and spiraling European debt crisis coupled with news that China’s manufacturing sector contracted for a third consecutive month in September saw investors exiting equity markets cross-the-region.

The FBM KLCI also started on positive note but succumbed to selling pressure and drifted lower, in line with regional bourses. However, late window dressing on selected index-linked stocks managed to recoup most of the losses to end the day less than 1 point lower. This was reflected in the mixed market breadth (gainers 387 vs. losers 377). The swings in the local bourse and late window dressing resulted in higher trading volume which increased to 1.1 billion shares worth RM1.85 billion against Thursday 921 million shares worth RM1.37 billion.

FBM KLCI Outlook: Volatility ahead
The plunge in Dow Jones could be partly offset by last Saturday’s report from China that its PMI increased for the second month in September (51.2 as compared with 50.9 in August and slightly ahead consensus’ 51.1). On the same day, China’s new export
orders climbed to 50.9 from 48.3 in August while input prices declined to 56.6 from 57.2. Coupled with post window dressing, the market is likely to remain volatile.

Technically, despite filling the 1377-87 gaps, formation of a star signals that investors are indecisive with downward bias given that the FBM KLCI failed to penetrate the psychological 1400 resistant level. Immediate resistance levels are 1400, 1420 (mid Bollinger band) and 1439 (30-d SMA). Supports are situated near 1368 (5-d SMA), 1337 (lower Bollinger band) and 1310 (26 September pivot low).

Daily KLCI: Upside Bias But Expect Strong Resistances Around 1423 (Mid Bollinger Band) And 1443 (30-Days SMA) Zones
FBM KLCI 03-10-2011

Source: HLeBroking

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