Tuesday, March 13, 2012

KLCI: More Profit Taking Consolidation With Short Term Support At 1549-1558 Levels

Bursa Recap: KLCI skids 14.3 points or 0.9%, worse than regional peers
Asian shares ended lower on Monday after China recorded its biggest trade deficit in 12 years as exports grew at a slower rate than expected in February, overshadowing a rebound in Japan’s machinery orders and a resilient U.S. jobs data.

Tracking the weak regional performances, sluggish Jan IPI report (+0.2% yoy and -3.1% mom) and fears of a possible dissolution of Parliament (when it resumed yesterday) that would pave the way for a general election in May/June triggered the sharp profit taking correction to KLCI.

FBM KLCI Outlook: More profit taking consolidation with short term supports at 1549-1558 levels
Following the KLCI’s sharp drop yesterday and its failure to hold above the mid Bollinger band support, we are changing our positive view on the market to cautious now as the 1.9% retracement from 5 March’s pivot high of 1594.7 (shy of its historical peak of 1,597) could be a trend reversal arising from a double-top formation.

Moving forward, the bears look stronger now as the KLCI is poised to retest lower key supports i.e. the uptrend line (UTL) or 30-d SMA near 1558 and 16 February’s low of 1549 amid weakening technical readings.

Further supports are lower Bollinger band (1545) and 50-d SMA (1541). If these levels are breached, it would eliminate all bullish potential.

Daily KLCI - More Downside Towards 50-Days SMA If The Crucial Uptrend Line Support Near 30-Days SMA Is Broken

FBM KLCI 13-03-2012

Source: HLIB Research

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