Jul 1, 2010

KLCI - A downside test of 1,300 soon : Maybank

FBM KLCI: Key Points
  PROTON – High formed at RM5.03
  FBM KLCI – Temporary high seen on 29 June
  Weaker supports are at 1,290 & 1,306
  Key resistances seen at 1,314 & 1,332

Market Review
The FBM KLCI fell 5.82 points yesterday to close at 1,314.02. The FBM100 and FBM EMAS lost ground and declined by 35.15 and 30.99 points respectively. Market breadth was negative as losers outnumbered gainers by 343 to 267 while 259 counters were unchanged. Market volume traded yesterday rose to 563.5m shares valued at RM987.6m.


 Daily Technical Outlook
The FBM KLCI traded weaker to close lower by 5.82 points at 1,314.02. Its resistance areas at 1,314 and 1,332 will cap market gains, whilst the weaker support areas for the FBM KLCI are located at 1,290 and 1,306. Due to the USA’s weaker market action overnight, we could see the FBM KLCI in a bearish mode today – with some late local nibbling activities that may cushion the initial fall. 

The FBM KLCI had peaked at its  previous high of 1,349.92. Trading opportunities then emerged with the Bullish Engulfing candlestick low at 1,243.86 on 27 May 2010. With the Bearish Engulfing candlestick pattern formed this Tuesday, we believe that downside volatility will emerge for the FBM KLCI. We advise clients to remain cautious as the global news flow has turned negative and there is a plethora of bad news that will affect global equity markets. There could be a sustained spell of global equity downturns in the next few months. The weakness of US and European markets will ultimately contribute to the softer Asian and Malaysian equity markets too.

Regional Markets
Asian markets tumbled after a fall in consumer confidence fuelled concerns about the strength of the global economy. The Shanghai CI fell 1.18% and led the regional decline through softness in the basic materials sector. The Nikkei 225 declined the most in the region (by 1.96%) and the Hang Seng lost just 0.59%. Neighboring countries like the Jakarta CI and Singapore STI bucked the regional trend and closed up by 0.70% and 0.18% respectively.

US Markets
American markets were lower last night on late afternoon selling activities.  A private US sector report showed weakness in employment and this contributed  to the softer US markets. The Dow declined by 0.98% or  96.28 points to 9,774.02, the NASDAQ fell by 1.21% or 25.94 points to 2,109.24 and the SP500 lost 1.01% or 10.53 points to 1,030.71. Spot NYMEX WTI crude slid USD0.31 to USD75.63 per barrel.  

by Maybank IB