Market Outlook as at November 14, 2017

Our market has been sliding in the past 3 days. FBMKLCI lost a total of 13.20 points during the 3-day period, with significantly higher losers than gainers. This is borne out by the intra-day chart below.

Chart 1: FBMKLCI's intra-day chart as at Nov 14, 2017 (Source: Shareinvestor.com)

From the daily chart, we can see that FBMKLCI is once again at the low recorded in October 25-26 of 1733. If FBMKLCI were to go below 1733, the downtrend of the index will continue.


Chart 2: FBMKLCI's daily chart as at Nov 14, 2017 (Source: Malaysiastock.biz)

Looking at the weekly chart, we can see that the 10-week SMA line has cut below the 20-week EMA line and is poised to also cut below the 30-week EMA line. This is marked as "X" on the chart. At the same time, we can see the MACD is almost about to go below the zero line.

The current price action is similar to what we saw in the last quarter of 2014 - marked as "X1" - when the 10-week SMA line cut below the 20-week EMA line and then cut below the 30-week EMA line. What followed was a sharp sell-off where we saw a 120-point drop in the index from 1840 to 1720.

I have given the above price action as a possible sell-off scenario if FBMKLCI were to break below 1733. Any sell-off that may happen, might not be as sharp as what we saw in late 2014 because the earlier sell-off came after a long rally that started in 2009. The current developing price action - if it turned out negatively - is a retracement of a 6-month rally from January 2017 to June 2017. Nevertheless, we have to be careful, especially in our trading activities in the near term, because we have seen daily how volatile the market can be. As always, good luck to everyone out there!


Chart 3: FBMKLCI's weeky chart as at Nov 14, 2017 (Source: Malaysiastock.biz)