Market Outlook as at October 6, 2015

FBMKLCI rallied to an intra-day high of 1662 before correction set in. Looking at Chart 1, we can see that FBMKLCI nearly tested the upper line of its downward "channel". An upside breakout of this downtrend line as well as the neckline of the Head and shoulders top at 1690-1695 could herald the end of the downtrend. Since it did not happen today, we will have to wait a while longer.


Chart 1: FBMKLCI's daily chart as at October 6, 2015_10.15am (Source: Shareinvestor.com)

Meanwhile the FBM70 (representing the second liner stocks) has broken above its downtrend line at 12300. It went as far as 12424 this morning before correction set in. To go further, FBM70 needs to surpass the horizontal line at 12400.


Chart 2: FBM70's daily chart as at October 6, 2015_10.15am (Source: Shareinvestor.com)  
 
Over the past one month, we have seen the market improved steadily. Share prices are climbing higher against a wall of worries. At some point in the near future, we have to make a decision: Is there going to be another leg down? While we wait for the jury to decide, those who are holding cash may have to bite the bullet and slowly venture back into the market by nibbling into stocks that have been rallied too far off their recent low. Who said investing easy?!