Market Outlook as at Mar 6, 2015

FBMKLCI tested and failed again to surpass its downtrend line. We saw the same thing when it comes to FBM70- though it tested its downtrend line for the first time in the present rally. These indices - representing blue chip & second liners -  look set for a correction with the daily MACD line just crossed below the signal line. This correction may send the FBMKLCI to the psychological 1800 mark. If that psychological support failed, the correction would extend further and the index may test lower support levels such as 1780 or 1770.


Chart 1: FBMKLCI's daily chart as at Mar 5, 2015 (Powered by ShareInvestor.com)


Chart 2: FBM70's daily chart as at Mar 5, 2015 (Powered by ShareInvestor.com)

While the blue chips and second liners have been inching higher cautiously over the past few weeks, the third liners - represented by FBMACE, FBMSCAP & FBMFLG - have been trending higher brazenly. Are we seeing a return of smallcap play as witnessed in 2013-2014? I doubt it, given the cautious & subdued market sentiment today.


Chart 3: FBMSCAP's daily chart as at Mar 5, 2015 (Powered by ShareInvestor.com)

 
Chart 4: FBMFLG's daily chart as at Mar 5, 2015 (Powered by ShareInvestor.com)


Chart 5: FBMACE's daily chart as at Mar 5, 2015 (Powered by ShareInvestor.com)

Based on the above, I believe that we should wait for the outcome of the test of the 1800 psychological support level by FBMKLCI. Going forward, I believe our market may continue to trade sideways as we negotiate the two forces acting on the market. On the positive side, we will still have some easy money- courtesy of ECB, etc. On the negative side, we have political uncertainty in the local front and high valuation everywhere. Good luck to everyone!