Thursday, September 08, 2011

Market Outlook as at September 8, 2011

The FBM-KLCI is poised for a technical rebound, with both MACD & RSI slowly turning upward. The index could swing upward to test its short-term downtrend line at 1495 & the psychological 1500 level. If it can surpass these two resistance levels, it could potentially test the 200-day SMA line at 1528.


Chart: FBM-KLCI as at Sept 8, 2011 (Source: Quickcharts)

Globally, the stock markets are heavily oversold & are also poised for technical rebound. A bear rally is also possible. I have appended below a table of global stock market which shows the indices and their 50, 100 & 200-day SMAs. If the markets can rebound back up to the 100 & 200-day SMA, the potential upside can be very significant. At the low end, we have MXX which could chalk up an abysmal 0.3% if it can recover back to its 100-day SMA while on the other hand, we have DAX which could record a huge 29% gain if it can recover back to its 200-day SMA. In the final analysis, we must accept the fact that we are rewarded in the market for taking risk. The higher the risk, the higher the return. If you cannot accept the accompanying risk, then you should invest in something safer.


Table: Global Equity indices & their SMAs (Extracted from Yahoo Finance)

However, I still believe equity market here & around the world had peaked. The rebound or rally that may come, would be a rally for us to sell. Morgan Stanley agrees with that approach.
at

5 comments:

  1. hkloonThursday, September 08, 2011 1:24:00 PM

    Hi Alex,

    If you have to choose top 5 to 10 stocks for long term holding in the 5 to 10 years horizon, what would your pick be and if any of these picks would become like digi consistently paying big dividend after its growth story?

    regards

    ReplyDelete
  2. IvanThursday, September 08, 2011 2:06:00 PM

    wondering how much time u need to spend for put a great output for us to study and learn from u . .

    always notice they is an excel updated data .. .and chart . ..that is taketime to update and do it..


    thanks a lot for u great effort to pump in

    ReplyDelete
  3. AnonymousThursday, September 08, 2011 9:33:00 PM

    Hi Alex

    I agree with you that current market is still weak and any rebound should be treat as bear rally and offer opportunity to unload stock holding. I've capitalize Malton strength today, to realize my targeted return of about 30% gross return.

    ReplyDelete
  4. DJ MaxThursday, September 08, 2011 10:36:00 PM

    Yes, actually this is a good time to offload some of the equities as the bad and uncertain market sentiment is still looming around.
    But at the mean time, do keep an eye for undervalue and good fundamental counters.

    ReplyDelete
  5. Alex LuMonday, September 12, 2011 5:57:00 PM

    Hi hkloon

    The top 5 to 10 stocks for long term holding in the 5 to 10 years horizon? That depends on the price. The market is too topsy turvy to apply my mind to that question. Let's put it off for now.

    ReplyDelete