Wednesday, May 19, 2010

Market Outlook as at May 19, 2010

The FBM-KLCI looks BAD. As at 4.17 pm, it has lost 20 points to 1310. It broke below the 50-day SMA line at 1328 in the morning. Its next important support will be the 100-day SMA line at 1303 (which will coincide with the psychological 1300 level). That's very crucial support. We can see that a quick succession of breakdown of the 50 and 100-day SMA lines was followed by sharp selloff in 2007 & then 2008.


Chart 1: FBM-KLCI's daily chart as at May 18, 2010 (Source: Tradesignum)


Chart 2: FBM-KLCI's weekly chart as at May 18, 2010 (Source: Tradesignum)
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28 comments:

  1. kyongWednesday, May 19, 2010 5:16:00 PM

    Dear Alex,

    Today close is 1308, which is very near to both the 100D SMA and the psychological level of 1300.

    The embattled Euros showed no sign of slowing down, The world economy looks dimmer each day,

    In addition, the Crude future is also pointing towards South, SOON MAY BE below 60 level, RESULTING in higher pressure on all the Palm-oil related Stocks, and also may affect all the OIL and Gas related companies.

    During this unstable Market turmoil , we should stay aside temporarily from the Bursa Equity, unless we are trading the KLCI future indices.

    Thanks for your excellent info,

    ReplyDelete
  2. JYWednesday, May 19, 2010 5:45:00 PM

    The lower the Euro currency falls, the more severe the Euro debt crisis is. Euro/USD is now 4 year low. The next support would be at 1.17.

    If it breaks, it'll be 7 year low, Could this Euro crisis be a repeat of Asian crisis whereby Thai Baht started falling follow by other regional currencies?

    ReplyDelete
  3. kyongWednesday, May 19, 2010 9:08:00 PM

    Dear Alex,

    The EURO/USD is now on a mild Reversal, it is just traded at 1.2310 as envisaged.if it breaks above 1.2500, then a meaningful strong rebound may be sustainable.

    Actually, the next support level will be 1.1217 (61.8% FIBO) BASING on the Monthly chart over 10 years spread. Breaking this important level will lead us to an uncharted Territory,

    And I personally think that Euro Central Banks will protect AND DEFEND this level at all costs, EVEN TO THE EXTENT OF DEPLETING the majority THEIR RESERVE !!, OTHERWISE a total collapse of the entire world financial system CANNOT BE AVOIDABLE.

    THANK YOU FOR YOUR COMMENTS.

    ReplyDelete
  4. kyongThursday, May 20, 2010 10:25:00 AM

    Dear Alex,

    The Swiss National Bank has just involved herself to cause a change of CHF/USD WITH +300 pips .

    With Europe 1 Trillion USD ,Plus purchasing of Both Gov/Private Bonds by Central banks, and Germany Banning of Short selling,, HAVE ALL failed to tame and calm down the market Fear, ,, with no end on sight on the severe sliding of Euros vs USD/jpy/Asian Currency, IT is thus that coordinated central bank intervention to support the single currency is inevitable. Such action will unlikely reverse the euro's slide, but may help resurrect a 2-way market in the currency and slow down the damage.

    So I expect the mild reversal on the EURO/USD WILL continue towards the 1.2500. As the Severe selling down the Euros has been calming down WITH DIMINISHING TRADING VOLUME.

    Thanks

    ReplyDelete
  5. khooThursday, May 20, 2010 12:37:00 PM

    Dear Alex,
    I would like to place my money in foreign currency fixed deposit. Is this the right time to do so & what currency is the best bet?

    ReplyDelete
  6. Alex LuThursday, May 20, 2010 1:58:00 PM

    Hi Kyong,

    You are on the ball. You see it and say it better than I can. Keep it coming.

    ReplyDelete
  7. East Point TradingThursday, May 20, 2010 2:06:00 PM

    Dear Alex,

    May I know can we sale share and buy it back in the same trading day?

    Thanks

    ReplyDelete
  8. Alex LuThursday, May 20, 2010 2:15:00 PM

    Hi John,

    The USD/EUR rate has broken above the long-term downtrend at 0.75. Last Friday, it broke above the strong horizontal line at 0.80. Its next resistance is at 0.85. See the link below.

    Could this Euro crisis be a repeat of Asian crisis of 1998? A crisis is a crisis, but there are differences. The biggest problem is how to restructure the huge debts taken by Greece & other PIIGS nations, which make these economies unsustainable. Alternatively, how to get these economies off the Euro block because these economies would remain uncompetitive hanging onto an expensive currency, like the Euro.

    ReplyDelete
  9. Alex LuThursday, May 20, 2010 2:20:00 PM

    Hi khoo,

    You can consider USD for the short-term (say, 1-2 months) or the JPY for short to medium-term (say, 1-6 months). You may get better information from some forex websites or blogs.

    ReplyDelete
  10. East Point TradingThursday, May 20, 2010 2:46:00 PM

    Dear Alex

    My I know can I sale a share and buy back it later in same trading day?

    Thanks

    ReplyDelete
  11. LaymanThursday, May 20, 2010 3:04:00 PM

    Dear alex,

    You mentioned about kencana at 1.50-55 support line. Now it seems going into bearish mode. What would be the possible next support line based on your opinion.

    Any hunch CI would break below 1300?

    Thanks.

    ReplyDelete
  12. 仑襁Thursday, May 20, 2010 4:22:00 PM

    Dear Alex,

    how do think of Tomypak as it will release its 1st quater report soon?

    from your previous post, u give the comment of taking profit on daibochi, may i know u will also give the same rating on Tomypak which is also the same category plastic packaging share?

    Next, i bought lingui when the price was 1.46, but it has dropped till 1.16 now, can you give me some comment and opinion for that?

    Thank you

    ReplyDelete
  13. Alex LuThursday, May 20, 2010 4:55:00 PM

    Hi Durian Edge

    You are not allowed to do naked short selling. If you have stocks in hand, you can sell & buy it back on the same day.

    ReplyDelete
  14. Alex LuThursday, May 20, 2010 5:05:00 PM

    Hi Layman,

    Kencana should have support at the 200-day SMA line at RM1.40.

    I have no idea whether the CI would break below 1300. Our KLCI & Hang Seng tested their strong support today & survived. We will have to wait.

    ReplyDelete
  15. East Point TradingThursday, May 20, 2010 5:09:00 PM

    Hi Alex,

    For example, if
    I buy the share 100 unit first and
    I sale 500 unit, later
    I buy back 400,
    all done in one single trading day.

    Is this also call naked short selling?

    Thanks for your reply.

    ReplyDelete
  16. kyongThursday, May 20, 2010 5:18:00 PM

    Dear Alex,

    Thanks for your compliments.

    I would try to add some interesting information/comments to be shared amongst your visitors. Hopefully, it can benefit everyone.

    Thank you again.

    ReplyDelete
  17. AvatarThursday, May 20, 2010 5:24:00 PM

    Hye Durian Edge,

    At the point when you sell 500 units, you're actually short of 400 units; thus, the term "short" selling.

    ReplyDelete
  18. kyongFriday, May 21, 2010 7:40:00 AM

    Dear Alex,

    DJ plunge 376 pts, closing at 10067., a massive raid today., and S & P dropped 4 % TO 1071 !, Indicators showed Bearish extreme !

    Now S & P (at 1071) is exactly sitting on the trend channel support, Next trading opening is extremely critical, Breaking the trend channel support exposes BELOW 1040,then to next support at 1000, the near term future is looking very ugly indeed.

    Coming back to Bursa, hopefully our Local institutions with EPF can jointly unload their Cash to DEFEND the very CRITICAL 1300 level today, failing which, the plunge to its next support level at 1240 may be very near. So , We will wait and see the market opening development, and I would predict that traders for the KLCI future indices may make a huge profit in next 1-3 trading days.

    Thanks

    ReplyDelete
  19. Alex LuFriday, May 21, 2010 7:58:00 AM

    Hi Durian Edge,

    The scenario that you have described would tantamount to naked short selling.

    ReplyDelete
  20. kyongFriday, May 21, 2010 7:59:00 AM

    Dear Alex,

    As predicted, major Interventions have activated the Reversals on both the EURO/USD and GBP/USD currency pairs. Now trading are at 1.2546 and 1,4380 respectively. .

    Technically, Both reversals may be sustainable, and so it is a real relief temporarily for the equity/Bond/Forex Trading markets They are very important to bring at least some calmness and stability to the market.

    I would expect a slight rebound in the Entire European/US MARKETS IN THE NEXT TRADING'S OPENING.

    Thanks for your comments

    ReplyDelete
  21. Alex LuFriday, May 21, 2010 8:19:00 AM

    Hi 仑襁,

    Tomypak is in a similar business as Daiboci. Like Daiboci, Tomypak's results has been very impressive. For FY2009, it reported a net profit of RM20.0 million on a turnover of RM159 million. While net profit increased by 263%, its turnover actually declined by 13%. You may recall my observation that Daiboci's bottom-line rose while its top-line remained flattish. I wonder whether these two packaging companies are merely benefiting from an undervalued RM vis-a-vis other currencies. If so, what would the impact be now that our RM is rising.

    Chartwise, Tomypak is resting on its 100-day SMA line support at RM2.80. If it breached this support, I believe the uptrend could be over.

    Lingui's play is probably over. One of the many wham-bang stories that have a nasty habit of happening just before a market top. While the downside risk is limited, with support from the 200-day SMA line at RM1.12, any rebound would be weak. Nevertheless, you should use any rebound to reduce exposure.

    ReplyDelete
  22. kyongFriday, May 21, 2010 9:24:00 AM

    Dear Alex,

    The FKLI MAY10 plunged almost 20 pts on opening at 1282.00,

    So far , I think that the Local Institutions have done a good job to defend the KLCI from sliding down below 1285, after almost 20 minutes of Bursa opening ! KEEP IT UP !!Hopefully they can work harder and force the KLCI moving higher.

    So, A words of Congra. to those FKLI traders !!

    Thanks.

    ReplyDelete
  23. kyongFriday, May 21, 2010 9:56:00 AM

    Dear Alex,

    EURO/USD is on course to a Healthy reversal, NOW being TRADED at 1.2580, likewise the GBP/USD is also showing positive.

    This is a good sign, it would definitely help to calm down the SELL Down in the world's EQUITY markets, COUPLING WITH THE MARKED SOFTENING IN BOTH Gold/Crude prices

    Next Equity market opening at both Europe and US may show a very significant rebound /Reversal.

    Thanks

    ReplyDelete
  24. kyongFriday, May 21, 2010 12:52:00 PM

    DEAR ALEX,

    EURO IS BULLISH SHORT TERM, A imminent Reversal still in Progress, EURO/USD is trading near the 1.2670.ahead of the EU officials meeting in the next few hours on the probable announcement on the detailed INTERVENTION package to calm and stabilise the Market sentiments.... GOOD NEWS !!

    World Equity and Forex TRADERS ARE WATCHING THESE POSITIVE NEWS closely.

    Thanks

    ReplyDelete
  25. East Point TradingFriday, May 21, 2010 1:48:00 PM

    Thanks Alex and Avatar for the info you give.

    ReplyDelete
  26. David ChanMonday, May 24, 2010 12:09:00 AM

    I plan to buy Frontkn. What do you think about this company? Any potential ?

    ReplyDelete
  27. AnonymousMonday, May 24, 2010 5:53:00 AM

    This comment has been removed by a blog administrator.

    ReplyDelete
  28. Alex LuMonday, May 24, 2010 11:12:00 AM

    Hi David Chan,

    Frontkn provides integrated engineering solutions to the Oil & Gas, Energy, Electronics & Marine sectors.

    For FYE31/12/2009, its reported a net profit of RM8.1 million on turnover of RM137 million. Last year, it reported a net profit of RM18.9 million on turnover of RM131 million.

    Its financial position as at 31/12/2009 is adequate, with current ratio at 1.2 times & gearing ratio at 0.5 time. Its main concern is the timely & quality of trade receivable, which as at 31/12/2009 stood at 98 days.

    It is trading at a PER of 12 times or Price to Book of 0.6 time. At these multiples, the stock is deemed inexpensive.

    Frontken is in a downtrend since November 2007. The downtrend resistance is at RM0.22-23. However, it has a horizontal support at RM0.12.

    Based on the above, I think Frontken can be a BUY at RM0.12.

    ReplyDelete