Market Outlook as at June 7, 2018

We saw strong rally in FBMKLCI of about 50 points over the last 2 days ( assuming no sharp drop before the close today). The index tested the 1800 psychological resistance but it failed to stay above that level. At the time of writing this, FBMKLCI is at 1795.

Chart 1: FBMKLCI's daily chart as at Jun 7, 2018_4.00pm (Source: ShareInvestor)

FBM70, representing the 2nd liner stocks, is still in a downtrend. The same goes for FBMSCAP, which represents the 3rd liner stocks.


Chart 2: FBM70's daily chart as at Jun 7, 2018_4.00pm (Source: ShareInvestor)


Chart 2: FBMSCAP's daily chart as at Jun 7, 2018_4.00pm (Source: ShareInvestor)

The recovery in FBMKLCI is to a large extend brought on by the receovery in the banking stocks. We can see that the Finance index rallied from 17500 on Tuesday to 18100 today (Thursday).


Chart 4: Finance's daily chart as at Jun 7, 2018_4.00pm (Source: ShareInvestor)

The construction index has hardly recovered. It is a long way below where it was before GE14. Many pundits and analysts are fairly bearish about this sector. To me, it is too late to be bearish. At such low prices, it is time to consider buying slowly into this sector. In my opinion, the Government will have to do pump-priming very soon. Our economy is at a critical juncture and we can ill afford to tighten our belt any further. As you know, any pump-priming will involve the construction sector. Before long, the stocks you shunned yesterday may be the stocks you will crave for tomorrow. Buy them before the stampede begins.


Chart 5; Construction's daily chart as at Jun 7, 2018_4.00pm (Source: ShareInvestor)

Lastly, the market is likely to be subdued next week due to Hari Raya Aidilfitri holiday. The market will be closed Friday and Thursday will be a half-day. If you have not bought any stock since GE14, next week may be a good time to get some stocks. Good luck!