FBMKLCI dropped sharply this morning. As at 10:00am, the index was down 16 points to 1759. The immediate support is at 1750 which is the medium-term uptrend line as well as the downside support of the previous expanding triangle. If the 1750 support is violated, the index may drop further to close the gap at 1720. Below that, the index should find good support at the psychological 1700 mark.
Chart: FBMKLCI's daily chart as at June 13, 2013_10.15m (Source: Quickcharts)
The sell-off in our market is a catch-up action after the steady sell-down seen in many equity markets. The widespread weakness in global equity markets has been attributed to the strengthening U.S. dollar on the back of rising yields, which in turn was brought on by improving U.S.
economy data that prompted fear of an earlier-than-expected extraction from QE by Fed (aka Fed tapering). At the same time, China has been releasing weak economic data, leading to further sell-down in the commodity complex.
Based on the above, we have to adopt a more prudent approach in the market for now.
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