Market Outlook as at September 9, 2008

From Chart 1 below, we can that the KLCI has been holding above the horizontal support of 1065 for the past 2-3 weeks. The overhead downtrend line will continue to cap any rebound in the market.


Chart 1: KLCI's daily chart as at September 9th, 2008 (source: Tradesignum.com)

This morning, the KLCI opened lower, at 1062 level. Despite a quick rebound to an intra-day high of 1068, the KLCI closed the morning session at 1064 level. The weakness in the KLCI is due to weakness among the plantation stocks, which was brought on by a drop in CPO prices. Further weakness could send the KLCI to the 1050-60 level, which is the long-term uptrend line (see Chart 2 below). If & when that happened, we can only hope that the KLCI would have a good rebound-- maybe a rally that can break above the prevailing downtrend line. Given the current global economic weakness & our internal political problem, that may look like wishful thinking.


Chart 2: KLCI's daily chart as at September 9th, 2008 (source: Tradesignum.com)