Market Outlook as at March 21, 2011

Our market is set to test its short-term downtrend which started in January. From the two charts below (for FBM-KLCI & FBM-Emas), we can see that an upside move of 1% or more will be sufficient to break above this downtrend line ('RR'). If this were to happen (I think it is a probable scenario), then the current market downtrend would be suspended. The market would either move sideway or stage a recovery rally (which I believe is a more likely scenario). We could then enjoy a decent rally over the next 1-3 weeks where the market would try to recoup half its recent losses. Thus the FBM-KLCI & the FBM-Emas should face resistance at 1525 & 14040 level, respectively. Since both indices have broken below the intermediate uptrend line ('SS') and given the heightened geopolitical risk & challenging economic condition currently, we can expect trading to be volatile. Good luck!


Chart 1: FBM-KLCI's daily chart as at March 21, 2011 (Source: Quickcharts)



Chart 2: FBM-Emas's daily chart as at March 21, 2011 (Source: Quickcharts)