Market Outlook as at May 12, 2015

Today is not a good day for our market. FBMKLCI broke below the previously overcame downtrend line, RR as well as the psychological 1800 support. With these double whammy, FBMKLCI is poised to go lower, possibly testing the 1770-1780 level in the next few days. To avoid this downside trajectory, FBMKLCI must recover above the 1800 mark soon.


Chart 1: FBMKLCI's daily chart as at May 12, 2015_12.30am (Source: ShareInvestor.com)

Over the past few months, we have been adopted a constructive outlook towards the market after the recovery that began in early January. This tinted view of the market is partly a function of a financial market that is flushed with liquidity, courtesy of various central banks around the world that have to prop up their respective economy. The investors has been so accustomed to this condition, which is not unlike a frog who has gotten used to the lukewarm water in a slow boiling pot. Once in a while, we must look at the numbers and the charts to see exactly where we are.

If you look at the monthly chart for FBMKLCI, you will see that the 10-month SMA line has just cut below the 21-month SMA line. The MACD line has not to yet hooked up, let alone cut above the MACD Signal line. The -DI is still above the +DI and they have again started to diverge. In short, the negative technical outlook is slowly reasserting itself in the market.


Chart 2: FBMKLCI's monthly chart as at May 12, 2015_12.30am (Source: ShareInvestor.com)

The same reading is also present for FBM70.


Chart 3: FBM70s monthly chart as at May 12, 2015_12.30am (Source: ShareInvestor.com)

With the prevailing uncertain condition, we must reduce our trading activities in the market.