Market Outlook as at November 2, 2009

FBMKLCI broke below its medium-term uptrend line support at 1250 on October 29. We have noted earlier that the index might find support at the 20-day Simple Moving Average (SMA) line at 1243, failing which it might test the 50-day SMA line (now at 1216 and rising). Unless a strong rebound happens soon, this violation of the uptrend line would lead to further price consolidation.

Negative indicators' readings include MACD crossunder and -DMI cutting above the +DMI. RSI is now at the neutral level, at the 50 mark.


Chart: FBMKLCI's daily chart as at Oct 30, 2009 (Source: Quickcharts)

I expect a test of the 50-day SMA this week and the market to put in a decent rebound after the test. Those seeking to reduce their large position should do so early (say, today), failing which you might want to wait for the rebound off the 50-day SMA line. Those seeking to build up their position in the market should do so slowly, maybe at the 50-day SMA line.