Tuesday, November 29, 2011

KLCI Outlook: Optimism Returns But Still a Trading Oriented Market

Bursa Recap: KLCI drops 16 points to record its 4th weekly declines
Major Asian markets gained on 28 Nov amid hopes that euro zone leaders would unveil fresh measures to resolve their debt crisis. However, trading volume was thin as most investors remained sidelines after the IMF denied an Italian media report
of it having talks with Italy about a bailout package worth up to €600 billion.

Ahead of the extended Awal Muharram weekend break on 28 November, KLCI dropped 16.4 points to 1431.6 on November 25. Wow, the KLCI corrected nearly 23 points for a 4th consecutive weekly losses amid persistent worries over euro crisis, the sluggish US 3rd GDP of 2%, weakening China factory output coupled with disappointing German bond auction.

FBM KLCI Outlook: Optimism returns but a still trading oriented market
Despite the overnight jump on Wall Street, we remain cautious on our market and still advocate investors to capitalize any rebounds to trim their positions or maintain a short-term trading oriented approach, given the external headwinds. We expect central banks and governments to intervene even more aggressively as credit market conditions deteriorate, and hence, volatility is likely to remain extraordinarily high.

Unless the KLCI is able to reclaim the 50% FR barrier (i.e. 1453), downside risks will remain with immediate supports at 1420 (38.2% FR) and 1400 points. Further resistance levels are 1465 (mid Bollinger band) and 1478 (100-d SMA).

Daily KLCI Is Building Its Base Near 1420 Levels
FBM KLCI 29-11-2011

Source: HLIB Research

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