Hazy situation is clearing up

FBMKLCI managed to break above the neckline of the Head and Shoulders reversal pattern at the 1680. At the time of writing this post, FBMKLCI is at 1685. If we can stay above the 1680 mark, this means that we are in neither a bearish reversal mode nor a bullish up-trending mode. That means we are likely to trade sideways. Still it is an improvement from a downtrend market PROVIDED FBMKLCI stays above the 1680 mark. 

 
Chart 1: FBMKLCI's weekly chart as at Sept 17, 2015_10.30am (Source: ShareInvestor.com)

The second good news is that USD-MYR has broken below the immediate accelerated uptrend line. See Chart 2 below. 


Chart 2: USD-MYR's daily chart as at Sept 17, 2015_10.30am (Source: XE.com) 

If we look the weekly chart (Chart 3), we will see that the USD-MYR is still in an uptrend. That means that our MYR is still weakening against the USD - except now the pace of the deterioration has decelerated. The MYR may strengthen slowly, with USD-MYR possibly dropping back to the 4.00 mark in the next 1-2 week. Further strengthening of the MYR could push the USD-MYR to 3.75 (in the next 3-6 months time).


Chart 3: USD-MYR's weekly chart as at Sept 17, 2015_10.30am (Source: XE.com)   
Other good news includes CPO breaking above its medium-term downtrend line at RM2070.


Chart 4: CPO's daily chart as at Sept 17, 2015_10.30am (Source: ifs.marketcenter.com) 

And, crude oil continues to recover, with WTIC having a strong rebound yesterday. WTIC's next resistance will be at USD50 & USD54.

 
Chart 5: WTIC's daily chart as at Sept 16, 2015 (Source: Stockcharts.com)
 
The improvement in crude oil & CPO will be positive for O&G stocks as well as plantation stocks. The tentative strengthening of our MYR will be a relief for importers (like auto players) while posing as a drag for exporters (like rubber glove producers). In light of these, you should examine your stocks and re-balance it accordingly. Good luck!