Thursday, October 01, 2009

Market Outlook as at October 1, 2009

Our KLCI (that's short for FBM-KLCI) is now resting on its medium-term uptrend line support at 1208. That uptrend line was violated yesterday but the recovery today has managed to safe the KLCI.

Chart 1: KLCI's daily chart as at Oct 1, 2009_4.45pm (Source: Quickcharts)

Similarly, the Emas index (again, short for FBM-Emas index) broke below its medium-term uptrend line marginally yesterday. The recovery today has not pushed it above the uptrend line. For both KLCI & the Emas, the MACD indicator has hooked down, while the RSI is resting on its uptrend line.

Chart 2: Emas' daily chart as at Oct 1, 2009_4.40pm (Source: Quickcharts)

Based on the non-confirmation between the two main indices, one should adopt a cautious stance in this market. It is possible that the market may resume its uptrend again after a few days of listless trading. On the other hand, if the KLCI were to weaken significantly in the days ahead (say, breaking below the 1200 level), I believe the uptrend for our market has ended. In such situation, you would be well served by reducing your exposure in the market until clearer signs emerge again.


JR said...

Hi Mr. Alex,

What about the trend of crude oil & CPO ?
Apperciate your feedback.

Thank you.


MaxWealth88 said...

hi alex, could you also comment on ijm-wr? is it worth it? tq

Alex Lu said...

Hi JR,

Both Crude Oil & CPO are trading sideway for now. Crude Oil may weaken while CPO may strengthen.

Alex Lu said...

HI Maxwealth88,

IJM-WR is the rights to subscribe for a new warrant for IJM, presumably known as IJM-WC when listed. The exercise price of IJM-WC is RM4.00. The subscription cost for IJM-WC is RM0.25. As it is now trading at about RM0.585 (as at 4.45pm), a person buying it now will be getting IJM-WC at total cost of RM0.835. This means it has a premium of 7.4% when compared to IJM currently trading at RM4.50.

I think that it is a reasonable premium to pay for an IJM warrant.