Wednesday, October 19, 2011

KLCI Is Range Bound Trade Ahead of EU Summit

Bursa Recap: KLCI up 10 points, with focus on lower liners
Regional bourses opened higher following Guardian reports of an agreement to strengthen the euro zone's rescue fund. However, the gains were pared down as investors remained cautious ahead of the EU Summit on 23 Oct and Moody’s cut on Spain’s sovereign credit rating.

After the 1.7% plunge on 18 October, KLCI rebounded 10.3 points yesterday to 1450, driven by selective buying on index-linked heavyweights. Daily volume jumped 24% to 1.7bn shares but value dropped 14% to RM1.2bn amid focus on lower liners.

FBM KLCI Outlook:Range bound trade ahead of EU Summit
Global markets will remain volatile ahead of the crucial 23 October EU Summit as well as 3-4 Nov, when the Group of 20 nations gather to consider additional steps to stabilize the global financial system. Based on the weekly chart’s strengthening indicators, the FBM KLCI could still test resistance levels of 1470 (15-w SMA) and 1495 (20-w SMA).

However, given the formation of a Doji in the weekly chart, we continue to advocate risk-averse investors to sell into strength or trim positions.

Immediate supports for pullbacks are 1434 (10-w SMA), 1413 (30-d SMA) and the 1400 psychological levels.

Daily KLCI Upward Momentum Remains Intact Until Uptrend Line Is Nullified
FBM KLCI 20-10-2011

Weekly KLCI Facing Stiff Resistance Within The 15-Week & 20-Week SMAs
FBM KLCI 20-10-2011a

Source: HLIB Research

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