Market Outlook as at January 15, 2009

The market outlook has deteriorated significantly over the past 2 days. The KLCI is likely to drift lower to test its immediate short-term uptrend line support at 880. If that support failed, it will test the next short-term uptrend line support at 860. We can also expect psychological support at 850 & thereafter horizontal support at 835. I am unable to access Quickcharts, as the service provider is presently upgrading the software. My alternative source for charts, i.e. Tradesignum has not updated their charts since January 8th. Thus, I have to fall back on Bloomberg, whose charts I am unable to copy & upload onto this blog. To access the KLCI chart on Bloomberg, go here. A daily chart of KLCI up to Jan 8 is attached (Chart A).


Chart A: KLCI's daily chart as at Jan 8, 2009 (source: Tradesignum.com)

The sudden deluge of negative news flow-- on everything from slumping retail sale during the Christmas season; temporary shutdown by Toyota (unthinkable just 6 months ago); big jump in unemployment numbers everywhere; the start of Quantitative Easing in the US; and, more losses announced by banks-- have probably put an end to the nascent rally in the equity markets, worldwide. I have attached below the daily charts for S&P500, FTSE, Hang Seng, Singapore's Strait Times & Shanghai's SSEC indices for your review. All these charts show that the short-term uptrend has ended. The SSECI is ahead of the other 4 markets and, if it can be a guide, the other markets will probably be moving sideway, with a downward bias in the weeks ahead. The same may apply to our KLCI.


Chart 1: S&P500's daily chart as at Jan 15, 2009 (source: Stockcharts.com)


Chart 2: FTSE's daily chart as at Jan 15, 2009 (source: Stockcharts.com)


Chart 3: HSI's daily chart as at Jan 15, 2009 (source: Stockcharts.com)


Chart 4: STI's daily chart as at Jan 15, 2009 (source: Stockcharts.com)


Chart 5: SSEC's daily chart as at Jan 15, 2009 (source: Stockcharts.com)

Based on the above, we should avoid taking new or large trading positions in the market until the outlook has improved.