FBM-KLCI getting ready for lunar new year party

On Jan 3, FBM-KLCI broke above its recent all-time high of 1531.99 (recorded on Nov 11 last year). This followed an earlier breakout for FBM-Emas, which occurred on Dec 29 last year. See Chart 1 & 2 below.


Chart 1: FBM-KLCI's daily chart as at Jan 4, 2011 (Source: Quickcharts)


Chart 2: FBM-EMAS's daily chart as at Jan 4, 2011 (Source: Quickcharts)

The upside breakout of the two main barometers of our stock market also reflect the strengthening of the ringgit. From Chart 3 below, we can see that the USD-RM cross rate has again curved down. Due to technical problem, I have only attached the basic chart which does not give a very clear picture. Go to the interactive chart [here] and see how the 20 & 50-day SMA lines have crossed downward. Since Mar 2009, there have been 4 occasions when this has happened- Sept 2009, Mar 2010, Jul 2010 & now. In the previous 3 occasions when this happened, our stock market has a good rally. This means that our market could be heading into a lunar new year rally.


Chart 3: USD-RM exchange rate as at Jan 4, 2011 (Source: Yahoo Finance)


Chart 4: FBM-KLCI's daily chart as at Jan 4, 2011 (Source: Tradesignum)