Market Outlook as at August 12, 2009

As at 3.45 pm, the KLCI was trading at about 1179 (down 7 points from yesterday's close of 1186). Presently, Shanghai's SSEC is down 152 points or 4.7% to 3113. It looks like an Asian-wide stock market correction may have just kicked in.

From the daily chart below, we can see the following for the KLCI:
1) the 20-day SMA line support at 1159 (previously, tested in April);
2) the uptrend line (SS) support at 1115; and
3) horizontal line support at 1095-1100 & 1030-1035.


Chart: KLCI's daily chart as at August 12, 2009_3.40pm (Source: Quickchart)

From the past few days of market action, we can sense that some institutional funds were selling as reflected in the drop in the prices of blue chips. As such, I believe that the correction can be severe. A test on the uptrend line, SS is possible. Hopefully, that uptrend line will remain intact.