Monday, November 21, 2011

Market Outlook as at November 21, 2011

I have posted a few days earlier that our market is on the verge of completing the bear rally (here). In that post, I compare the rally which started in October this year to another rally in 2008. The triggers for the completion of the bear rally are:
1) FBMKLCI dropping below its 20 & 40-day SMA lines at 1462 & 1456; and
2) Indicators, such as MACD, RSI and ADX, turning negative.

We can see from the chart below that these two triggers or conditions have been met. FBMKLCI is at 1442 as at 9.30am.

In line with this, I believe the bear rally is over & the bear market downtrend is likely to resume. You are advised to avoid taking long position in the market.


Chart: FBMKLCI's daily chart as at Nov 21, 2011_9.30am (Source: Quickcharts)
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4 comments:

  1. bennu chongMonday, November 21, 2011 10:24:00 AM

    thanks bro... i have sold 80% of my current position

    ReplyDelete
  2. Fabien WongTuesday, November 22, 2011 9:31:00 AM

    Hi Alex, mind sharing your take on CIMB's technical outlook? Several analysts were predicting a single digit growth on banking sector.

    ReplyDelete
  3. Alex LuTuesday, November 22, 2011 8:59:00 PM

    hi Fabien Wong

    One of my regular tracking stock is CIMB. It is a good trend-follower in the sense that it would go up once the downtrend is over and conversely, it would go down once the uptrend is over. In addition, it is also performed in line with the broad market. The other stock that has this same behavior is Gamuda. So, if you see CIMB or Gamuda trending lower, it is hard to be bullish on the market. These two stocks have broken their uptrend line in the first half of the year.

    How far would CIMB go? If you use a semi-log chart, CIMB is still in a very long-term uptrend, which contradict my earlier technical take. This very long-term uptrend line support is at RM4. You can also draw an irregular upward channel onto the chart as well as a line dissecting this channel. That line would also act as support & resistance for CIMB. Currently, CIMB is resting on that line at RM6.50. If the market continue to deteriorate, CIMB may break this support & test the RM4 support. Until then, CIMB is a trading BYy at RM6.50.


    http://nexttrade.blogspot.com/2011/02/cimb-has-broken-its-uptrend-line.html

    http://nexttrade.blogspot.com/2011/07/gamuda-is-breaking-its-long-term.html

    ReplyDelete
  4. Fabien WongWednesday, November 23, 2011 2:52:00 PM

    Thanks Alex, appreciate your input. I made one round of profit a month ago when CIMB dropped below 7 in sept and reached above 7.5 in oct. I believe 6.5 is a strong support.Fundamentally, CIMB has been in a single digit growth since Dec 2010. Based on conservative estimate I think CIMB can fetch at least 7.8

    ReplyDelete