Wednesday, November 28, 2012

Market Outlook as at November 28, 2012

As at 11.00am, FBMKLCI recovered back to positive territory- from a low of 1591 to 1599 (a gain of 1 point). If FBMKLCI can stay above the horizontal cum psychological support of 1600, we may have averted further selldown which could send the index to test its long-term uptrend line at 1510.

Chart 1: FBMKLCI's weekly chart as at Nov 28, 2012_11am (Source: quickcharts)

Meanwhile, FBM70 is still resting on its strong horizontal support at 11900. Again, this shows that the correction for the past few days is confined mainly to blue chip stocks that make up the FBMKLCI.

Chart 2: FBM70's weekly chart as at Nov 28, 2012_11am (Source: quickcharts)

If FBMKLCI can stay above the 1600 mark, this could be one level to accumulate some beaten down stocks, such as telcos and consumer stocks.

1 comment:

Mat Cendana said...

Yesterday, the stock market showed yet again what it can do. In earlier trading, it looked like things were going to be just like the past few trading sessions - going down and down.

But things started to change, with the telcos leading the way. If one wasn't following the trading screen, he would have missed it. The telcos helped to boost sentiments with many other counters also recovering from their earlier loss to finish decidedly positive.

I've discovered one way to try and benefit from slides in price of quality counters. It's very hard to buy Axiata, Digi etc, when the price keeps going down. However, you just feel it will recover "soon", and this puts you in a dilemma. Buying would mean having significant capital being stuck for an unknown duration while you wait. Not buying might mean a missed opportunity to make profits when they rebound.

A cheaper alternative are the call warrants. Although they are risky, you'd only have to put in a fraction of the capital as compared to ordinary shares. And when the mother's rebound does happen, like yesterday, you won't be just a spectator but someone who immediately benefits and profits.