Market Outlook as at August 8

On August 1, I posted that the KLCI might be testing the immediate uptrend line support at 1340 and, if that support failed, the index might drop to test three horizontal supports, i.e. 1320, 1300 & 1285 (go here). The market has in fact broken through the uptrend line & dropped to a low of 1290 before staging a convincing rebound yesterday.

If the March recovery is a guide, the current rebound may still have some way to go before exhaustion. I think the resistance levels will likely be at the second recent gap-down level of 1333, the psychological level of 1350 and the first recent gap-down level of 1374.

Is the worst over? The answer is probably. The damage to the technical picture is significant enough that one has to be very careful at this period of time. Those who are underweighted in equity may accumulate slowly now or when the market does a pullback to re-test the low.

Chart : KLCI's daily chart as at August 8 (courtesy of Quickcharts)