Market Outlook as at February 8, 2011

FBM-KLCI is still struggling to climb back above its uptrend line that began in May 2010. See Chart 1. However the broader market is performing slightly better as reflected by FBM-Emas's ability to climb back above its uptrend line. See Chart 2.


Chart 1: FBM-KLCI's daily chart as at Feb 8, 2011_9.30am (Source: Quickcharts)



Chart 2: FBM-Emas's daily chart as at Feb 8, 2011_9.30am (Source: Quickcharts)

Our market is at a critical juncture. If we look at the weekly chart of FBM-KLCI (Chart 3)- presented in both linear & logarithmic scale- we can see that we are trading very near to the 2 years' old uptrend line. If we look at the chart plotted on linear scale, the uptrend line support is at 1500. On the other hand, the uptrend line support of the log scale chart is at 1550. This means that FBM-KLCI is trading below the uptrend line of the chart plotted on log scale. However, FBM-KLCI is trading above the uptrend line of the chart plotted on linear scale. As such, the market is now in an uncertain territory. A quick recovery above 1550 would change the present cautious outlook to bullish outlook. On the other hand, a break below 1500 would push us into bearish outlook. Despite the uncertainty that hangs over the market, the 2nd & 3rd liners are having a field day. The market belongs- as always- to the quick & agile.


Chart 3: FBM-KLCI's weekly chart as at Feb 7, 2011 (Source: Tradesignum)