Market Outlook as at December 19, 2014

Courtesy of ShareInvestor.com, I have accessed to a powerful website that offers fundamental & technical analysis that are very useful to investors and traders alike.

From this paid website, I have been studying the FBMKLCI chart for the past few days. You will notice that the FBMKLCI has been in an upward channel since 1999 (see the blue lines). If you divide the channel into 2 halves, i.e. X-Y & Y-Z, you can see 2 distinct periods: 2000 to 2007 (denoted as 'Zone A') and 2008 until today (denoted as 'Zone B').,

In Zone A, you will see that the index was trading mostly in the lower half of the channel, except for 2007. In Zone B, the index was trading mostly in the upper half of the channel. Why? Is it because US & Japanese central banks flooded their market with easy money thru QE? If so, what would happen when US Fed begins the tightening measures next year? Would ECB's easy money policies be sufficient to make up for Fed's withdrawal?

In Zone A, the index's upside was capped in the lower half from 2004-2006 by the line Y-Y1. Would the opposite happens this time around, i.e. would the line Y-Y1 acts as the support if the market were to weaken further?

These are some questions I can post here today because our market has rebounded nicely over the past 2 days. Let's hope that the market will be kinder to us for the rest of the year, so that we can have a worry-free Xmas and a bountiful New Year.


Chart: FBMKLCI's monthly chart as at Dec 19, 2014 (Powered by ShareInvestor.com)

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of FBMKLCI.