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.
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4 comments:

  1. JRFriday, October 02, 2009 8:19:00 AM

    Hi Mr. Alex,

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

    Thank you.

    BR.

    ReplyDelete
  2. MaxWealth88Friday, October 02, 2009 4:01:00 PM

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

    ReplyDelete
  3. Alex LuFriday, October 02, 2009 4:34:00 PM

    Hi JR,

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

    ReplyDelete
  4. Alex LuFriday, October 02, 2009 4:57:00 PM

    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.

    ReplyDelete