Market Outlook as at April 1

Over the past few days, the KLCI has crossed above the resistance of 1250 (and, barely hanging on to it). The next hurdles- the resistance at 1280 (thereby closing the earlier gap) & the resistance from the immediate downtrend line at 1300- still lie ahead.

I like to compare our current reversal and, possibly, recovery to those witnessed in August 2007. Like the earlier recovery, I do not expect the market to charge ahead. Share prices would likely to inch up against a backdrop filled with bad news. However, investors must realize that they might be underestimating the potential for an upside surprise, coming from US payrolls, ISM or GDP growth, which could cause a major move in the market.


Chart: KLCI's daily chart as at April 1, 2008 (courtesy of Quickcharts)

Investors, who have an outsize position in the plantation sector, should do some re-balancing of their portfolio, by reducing their exposure to plantation stocks and increasing their exposure into property & construction sectors, which had dropped substantially.