Wednesday, April 04, 2012
Market Outlook as at April 4, 2012
If we just focus on the current 4 months old rally, we can expect the index to consolidate its recent gain. This corrective move will bring the index to the 10-period SMA line support at 1599-1600 and then to the 20-period SMA line at 1594-1595. This initial correction would last for 1-2 days. Then the index will test the uptrend line (SS) support at 1590-1592 and the 50-period SMA line at 1586-1588. This latter stage correction would last for 3-5 days. If the index can break above the recent high of 1609, this rally will keep to its schedule. We must be prepared that the rally may finally change course, either accelerating (which is not very likely) or reset to a more gradual course (which is more likely in order to accommodate for the laggards). If you agree with my assessment of the probability of the direction of the index, then you should take some precautions in the market.
Chart: FBMKLCI's 180-min chart as at April 4, 2012_4.00pm (Source: Quickcharts)