Market Outlook as at September 5, 2011

I have appended below the weekly chart for FBM-KLCI overlaid with 10 & 20-week SMA lines and 40 & 80-week EMA lines. We can see the following:

1. The 10 & 20-week SMA lines are pointing downward; and
2. The 40-week EMA line has curved downward while the 80-week EMA line is flattening out.

The first point above indicates strong downward pressure while the second point indicates the slow reversal of the uptrend. These two points or conclusions mean that any rebound in this market could be temporary. The strong resistance is the 40- week EMA line at 1510. If the index can surpass this level, there is hope that the worst is over. Until then, we should take the opportunity accorded by any rally to reduce our position to a comfortable level.


Chart: FBM-KLCI's weekly chart as at August 29, 2011 (Source: Tradesignum)