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Tuesday, June 26, 2012

Market Outlook as at june 26, 2012


Our FBMKLCI made a new all-time of 1611, which surpassed the previous all-time high of 1609, recorded in April 3 & 4 this year. The breaking of the previous high could set the stage for the continuation of the prior uptrend. However, we have to be cautious. The present market rally is driven by local fund managers, especially those with close tie with GLCs. Foreign funds had been selling for the past few weeks, even months. Retail players would not be a big factor in the present run-up as many have been badly mauled by the sharp consolidation among 2nd & 3rd liners in the past 3 months. The current market is very similar to what we saw in July 2011 or even January 2008. When you compared the strength of the blue chips (as represented by FBMKLCI) and the weakness among the 3rd liners (as represented by FBMFLG), we can see that the divergence between the two indices. FBMFLG has acted as a canary in a coal mine- warning us that the light at the end of the tunnel is an oncoming train. Is it the same this time around?

 
 Chart 1: FBMKLCI's weekly chart as at June 26, 2012_2.45pm (Source: Quickcharts)

 
  Chart 2: FBMFLG's weekly chart as at June 26, 2012_2.45pm (Source: Quickcharts)

4 comments:

Lennon said...

Do you mean that a market downturn is coming soon?

Alex Lu said...

Hi Lennon

If the breakout to new high faltered, this bearish scenario may play out. At the moment, it is only a possible- not probable- scenario.

富升 said...

May I know what more about FBMFLG index? How many stock was included in this index?

Alex Lu said...

Hi 富升

To get the answer to your question on FBMFLG index, please go to the link below:

http://www.bursamalaysia.com/market/products-services/indices/ftse-bursa-malaysia-indices/