Tuesday, November 01, 2011

Market Outlook as at November 1, 2011

Our FBMKLCI index is likely to be tracing out the 3-fan uptrend line. If so, it could be testing its 2nd fan-line where the support is at 1475. A break below that level could see the index dropping further to the potential 3rd fan-line where the support will be at 1450. I hope that the index can find support at the 3rd fan-line and stage a recovery. If the 3rd fan-line has been established, this line will be a critical support for the market. The breakdown of the 3rd fan-line shall mark the end of the short-term uptrend.


Chart 1: FBMKLCI's 60-min chart as at Nov 1, 2011_4.40pm (Source: Quickcharts)

For the past few weeks, I found it very difficult to be too excited about the market because I am still worried that this rally is nothing more than a bear rally. From the monthly chart below, we can see that market outlook has not changed & it remained negative as at October 31.


Chart 2: FBMKLCI's monthly chart as at Nov 1, 2011_4.40pm (Source: Quickcharts)

Based on this long-term bearish outlook, we should remain cautious in the market despite recent positive news (of the setting up of the EFSF in Europe & positive economic data from the US).

2 comments:

Anonymous said...

Hi Alex

Can you comment on Oldtown? stock trading below its IPO of RM 1.25 closed at 1.06 today.

Alex Lu said...

Hi hng

Oldtown is trading sideway, with "horizontal" resistance at RM1.15. However, it is also in a short-term uptrend line with support at RM1.00. This means that the stock should hold at RM1.00 & if there is more upside move, it may test the RM1.15 resistance.