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Wednesday, January 27, 2016

Market Outlook as at January 27, 2016

FBMKLCI tried to stage a rebound today. The rebound had little momentum and by the afternoon session, we saw losers outnumbered gainers. The market is likely to continue its downtrend as reflected by the fast 10-week SMA line crossing below the slower 21-week SMA line. In addition, MACD may have crossed below the MACD Signal line which would signal continuation of the downtrend.


Chart 1: FBMKLCI's weekly chart as at Jan 27, 2016 (Source: ShareInvestor)

Our market was pinning its hope of a decent recovery based on better showing on Wall Street overnight. From the chart below, we can see that DJIA may have found only a temporary bottom at best. From here, it might swing up to test the horizontal resistance at 16500 or 17000. The 4-year uptrend line that stretched back to September 2011 was convincingly broken in August last year. That was proceeded by a likely rounding top that stretched from October 2014 to August 2015.


Chart 2: DJIA's weekly chart as at Jan 26, 2016 (Source: Stockcharts.com)  

Based on poor technical outlook, we must remain cautious in this market.

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