Market Outlook as at August 14, 2008

As at 4.50 pm today, the KLCI was down by 14 points to 1095. The sharp drop in the KLCI was partly attributable to the continued losses suffered by plantation stocks. This in turn was due to a 5%-drop in CPO prices. As at 4.45 pm, CPO futures contract for September was down by 5%, from yesterday's close of RM2551 to RM2428.

The weakness in the stock market ahead of the budget announcement doesn't augur well for the market outlook for the coming weeks. Technically, the KLCI is poised to tested its horizontal support of 1089-90 next week (see Chart 1 below). A break below this support would then sent the KLCI to its long-term uptrend line support at 1050 (see Chart 2 below). Next week will be a very interesting week.


Chart 1: KLCI's weekly chart as at August 14th (source: Quickcharts)



Chart 2: KLCI's monthly chart as at August 14th (source: Quickcharts)