Market Outlook as at August 5, 2011

Global equity markets were heavily sold down yesterday. You may revisit my earlier post and click on the link for each individual index to see where that market is presently. You would see that most of the European markets & the U.S. market are in deep trouble. We could be seeing the end of the 2009-2011 bull and the beginning of the bear market at this moment.

I have appended below the charts for FBM-KLCI, FBMScap & FBMFLG with the self-explanatory lines. In particular, you can see how I compare the current market action with what we saw in early 2008. In 2008, the FBM-KLCI- dominated by blue chips- enjoyed a technical rebound after the sharp sell-off (denoted as 'A' in the FBM-KLCI chart). Further weakness pushed the market lower before a bear rally kicked in (denoted as 'B' in all three charts). We may see the same pattern again in the weeks ahead.

The immediate support for FBM-KLCI is at the 40-week SMA line at 1518 as well as the psychological 1500 level. Unless you are super-agile or a masochist, I would advise you not to try your hands in this tricky market. The odds are heavily staked against you.


Chart 1: FBM-KLCI's weekly chart as at Aug 5, 2011_11.00am (Source: Quickcharts)



Chart 2: FBMScap's weekly chart as at Aug 5, 2011_11.00am (Source: Quickcharts)



Chart 3: FBMFLG's weekly chart as at Aug 5, 2011_11.00am (Source: Quickcharts)