Chart 1: FBM-KLCI's daily chart as at Mar 15, 2011_11.00am (Source: Quickcharts)
The index recovered back above the preferred uptrend line (SS) support of 1480 as at 11.30am. The alternative uptrend line (Sa-Sa) support is at 1450.
Chart 2: FBM-KLCI's daily chart as at Mar 15, 2011_11.00am (Source: Tradesignum)
Despite the poor market sentiment & difficult trading condition, one can take some comfort that our market is still holding up pretty well. If someone were to give you a scenario where crude oil prices traded above USD100 & most commodities, including foodstuff, were rising rapidly; the debt-ridden European nations again experiencing fresh problem; heightened geopolitical risks in the Middle East due to popular uprising; and finally a powerful earthquake in Japan that devastated a big city & a few nuclear power plants, you would probably call that a doomsday scenario. And, you would probably call your broker to dispose all your stocks (if you can get him on the line). Hi, wait a minute! Ain't we already in such a scenario now? Contrary to your expectation, the stock market has been behaving rather calmly. It dropped some but it wasn't a panic sell-off, except in Japan. Is the sell-off this morning the long-awaited start of the monsoon? Let's wait & see. I must admit that the calm reaction by the market to the plethora of bad news has been very encouraging. Is this what some called the new 'normal'- a market that is so conditioned to the easy money environment under Quantitative Easing 2, courtesy of a very accommodating Fed? When things behaved contrary to your expectation, you need to sit up & re-examine your assumptions. Some may recall the old Chinese saying: "What doesn't kill you, can only make you stronger. "
Note: The news flowing out from Japan is getting grimmer. Japan's nine nuclear reactors are under state of emergency with radiation spewing. Japan is facing a nuclear catastrophe, said The New York Times.
Dear Alex,
ReplyDeleteMarkets gradually positioning to what could be a Japanese market meltdown after a 4th nuclear reactor blew up. Japans Nikkei-225 ended down 10% (considered a crash) after a having been -14% at some point earlier today. SP500 futures -30 pts at 1260 (further below the 55-day MA) and US Dow-30 futures -238 pts. The classic case of risk aversion is prompting renewed yen strength alongside the USD.
we expect further 2% drop on the S & P 500 and DJ tonight.
Dear Alex,
ReplyDeleteThe Federal Reserve issues an almost identical FOMC statement to the January meetings, maintaining its view that measures of underlying inflation have been subdued despite recent increases in the prices of energy and other commodities are currently putting upward pressure on inflation. USD backing down from risk aversion buying, while EURUSD stands at the top of the days ranges as warned last night following the FOMC decision. The ECB is still expected by many to raise rates as early as April, hence, enabling EURUSD to hold above the Jan 12 trendline support. Accordingly, EURUSD remains among the pairs most likely to rebound the hardest (against USD).
HI Kyong,
ReplyDeleteThanks for sharing.