Monday, April 16, 2012

Dow Jones Outlook: More Downward Consolidation

Wall Street Recap: Dow Jones tumbles 137 points and ends 1.6% lower wow
Following a two-day rally of 271 points, the Dow Jones stumbled 137 points to end the week 1.6% lower for a 2nd straight weekly decline. Sentiment was affected by a below-par 1Q12 China GDP growth and April’s slower consumer sentiment index coupled with escalating credit default swaps on Spain, overshadowed a batch of better-than-expected earnings results by JP Morgan and Wells Fargo.

Meanwhile, commodities and bond prices dropped, as investors sought the safety of government debts.

Dow Jones outlook: More downward consolidation
Wild swings will prevail on Wall St this week amid headwinds from higher gas prices, a European downturn and slower Chinese growth. Key economic announcements in focus are retail sales, empire state mfg survey, IPI, housing starts and Philly Fed index.

Meanwhile, investors will see whether last week’s 1Q12 positive earnings momentum will continue. Among the marquee names on this week's earnings calendar are Intel, Johnson & Johnson, Coca-Cola, DuPont, Microsoft, American Express, General Electric, Citigroup, Goldman Sachs and Morgan Stanley.

Technically, indicators are pointing towards more downward consolidation. If Dow falls below recent low of 12710, selling pressure could accelerate and take prices lower towards weekly mid Bollinger band of 12683 and 30-w SMA of 12310. Resistance levels are situated at 13000-13100.

Daily Dow Jones - Downside Bias Unless 50-Days SMA Resistance Is Violated

Daily Dow Jones - Downside Bias Amid Bearish Indicators


KLCI - External Woes To Exert Downward Pressures

Bursa Recap: KLCI ended higher on local funds support
Asian markets rose in the morning sessions following a strong overnight rally on Wall Street and European markets. Despite China announcing a lower-than-expectation 1Q12 GDP of 8.1% (consensus: 8.4%), Asian shares held steady as the discouraging data lifted hopes of fresh monetary easing by Beijing.

Amid strong buying support on Tenaga following its positive 1H12 results, KLCI gained 1.9 points at 1603.1. Despite clouded by mostly negative external developments, KLCI inched up by 4.3 points in a holiday-shortened week, mainly on local fund buying support with local institutionals accounted for average 56% of last week’s daily trading participation value.

FBM KLCI outlook: External woes to exert downward pressures
In the wake of negative external woes, KLCI’s upside potential is limited ahead of the looming general election. However, we see no immediate risk of significant reversal due to buying support from government-linked funds, driven by acceleration of the ETP announcements. Immediate resistance is historical high at 1609, followed by the weekly upper Bollinger band of 1624.

Immediate supports are 14-day SMA (1595) and mid Bollinger band (1590). A breakdown below 1590 will drive KLCI lower towards supports at the 30 and 50 day SMAs at 1586 and 1574 respectively. We reiterate that investors should take opportunity of a sideways market to top-slice and turn more defensive.

Daily KLCI - Sideways Consolidation.
FBM KLCI 16-04-2012

Weekly KLCI - Immediate Resistance Targets Near 1630 Points.
FBM KLCI 16-04-2012a

Source: HLIB Research

Wednesday, April 11, 2012

CPO Outlook: Short Term Getting Overbought

CPO outlook: Short term getting overbought
As indicated by our bullish CPO commentary on 27 March, Malaysian palm oil futures rallied 1.1% to RM3621/MT, a fresh 14-month high on Tuesday, as traders continued to make bullish bets on the edible oil after industry data showed healthy export demand and lower stocks.

MPOB said March’s inventory fell to 7-month low as export growth outpaced production whilst cargo surveyor data also pointed to higher exports for the first 10 days of April compared to a month ago as major importers including Europe, China and India ramped up buying.

According to monthly chart (FIG5), medium to long term outlook remain promising as indicated by bullish technical indicators. Nevertheless, we could see some pullback in the near term as daily and weekly technical indicators are getting overheated. Immediate resistance target is RM3760 (monthly upper Bollinger band and downtrend line) whilst long term targets are RM4000-4100. Short term retracement supports are 10-d SMA (RM3534) and mid Bollinger band (RM3467), followed by 10-w SMA (RM3375).

Uptrend will be disrupted if prices break below RM3400.

Daily CPO - Getting Overbought
CPO 12-04-2012

Weekly CPO - Resistance Near RM3750-3800 Zones

CPO 12-04-2012a

Source: HLIB Research

Daily Dow Jones: Technical Rebound May Continue As Indicators Are Bottoming Up

Wall Street Recap:Dow Jones halts a 5-day plunge
After a 5-d slump of 548 points, the Dow Jones jumped 90 points to 12805, as concerns about Europe eased and hopes for a better-than-expected earnings season rose. On late Tuesday, Alcoa reported a surprise 1Q12 profit, lifting hopes for corporate earnings as the quarterly reporting period gets underway. This week’s other key earnings announcements include Google, JP Morgan, Wells Fargo while key economic reports are consumer sentiment and CPI.

Meanwhile, European markets also recovered as investors welcomed declining yields on Spanish and Italian bonds after Spain’s prime minister said the country wouldn’t need a bailout.

Daily Dow Jones - Technical Rebound May Continue As Indicators Are Bottoming Up


KLCI - More Sideways Trading As Dow Rebounds

Bursa Recap: KLCI ends higher despite regional decline
Asian shares markets dropped as investor sentiment were weakened following a 1.7% plunge on Dow Jones over global growth prospects and persistent worries about debt restructuring in the euro zone amid spiking Spanish and Italian bond yields.

Prior to a public holiday on 11 Apr, KLCI closed 5.9 pts higher at 1597.2, spurred by active buying on blue chips such as GENTING (+24 sen to RM11.08), IOICORP (+11 sen to RM5.40), PBBANK (+4 sen to RM13.72), AXIATA (+2 sen to RM5.34) and MAYBANK (+2 sen to RM8.86) in anticipation of positive economic data in trade and manufacturing statistics.

FBM KLCI Outlook: More sideways trading after Dow Jones rebounds
The KLCI may retest 1600 today amid overnight rebound on Dow Jones and European markets. However, in the absence of local catalysts and weak buying momentum, upside will be limited as external uncertainties prevail.

Immediate resistance levels are 1600-1610 whilst immediate supports are mid Bollinger band at 1587 and 30-d SMA (1584). A violation of 1584 will drive KLCI lower towards 40 & 50-d SMAs at 1577 and 1571 respectively.

Daily KLCI - Sideways Consolidation
FBM KLCI 12-04-2012

Source: HLIB Research

Wednesday, April 4, 2012

Dow Jones Tumbles 125 Points On Negative Economic News

Wall Street Recap: Dow Jones tumbles 125 points on negative economic news
The Dow Jones experienced a 2nd day selldown as a positive ADP report failed to stem concern about a pathetic Spain’s bond sale, a weaker-than-expected ISM servicing index and diminishing hopes of QE3.

The Dow Jones plunged as much as 179 points before narrowing the losses to 125 points at 13075 as the market is looking for an excuse to pause and digest the strong rally in 1Q12.

Wall Street outlook: More healthy pullback
After surging to 52-week high at 13297 on 2 April 12 from 52-wk low of 10404 on 4 October 11, the Dow Jones began its long overdue pullback to close at 13075 yesterday. Technical indicators are showing divergence signals, with a possibility that an uptrend could end and a reversal pattern is in the pipeline. If prices fail to push above the wedge resistance over the next few days, selling pressure could accelerate and take prices lower.

As the 30-d SMA support was violated, the Dow Jones could head lower towards 12970 (50-d SMA) and 12926 (lower Bollinger band) before technical rebound emerge. Current rally will be disrupted if the uptrend line support from October 11 near 12800 is broken. Resistance levels are situated at 13297 to 13350 (upper Bollinger band).

Daily Dow Jones - Wild Swings Ahead As 30-Days SMA Support Is Violated


FBM KLCI Outlook: More Volatility Ahead

Bursa Recap: KLCI closes below 1600 psychological mark
Asian markets declined in lackluster trading as HSI, SHCOMP and TWSE were closed for a holiday. Investors reacted negatively amid fading hopes of more monetary stimulus by Fed, sluggish Spanish bond auction and an unexpected Australian trade deficit. Tracking regional losses, KLCI snapped its 4-day winning streak with a 7.4 points drop to 1559.3.

Losers thumped gainers by 2 to 1 while trading volume and value retraced 5% and 19% to 1.2 billion shares worth RM1.1 billion respectively, as investors remained on the sidelines given the lack of fresh catalysts and election fears.

FBM KLCI Outlook: More volatility ahead
In the wake of sluggish overnight Wall St and European markets, deteriorating technical readings and renewed fears of a prolonged EU debt crisis amid disappointed Spain’s debt sale, KLCI is likely to face more volatility ahead of the looming general election. Immediate resistance remains at 1600-1630.

Immediate supports are 10-day SMA (1591) and mid Bollinger band (1583). A breakdown below 1583 will drive KLCI lower towards supports at the 30 and 50 day SMAs at 1579 and 1565 respectively. We reiterate that investors should take opportunity of a sideway market to top-slice and turn more defensive/nimble.

Daily KLCI - More Weakness Ahead Following The Evening Doji Star Formation
FBM KLCI 05-04-2012

Source: HLIB Research
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