Our market ended with a bang today. FBMKLCI went up 18 points to close at 1598. We have 539 gainers to 308 losers and 385 unchanged. Looking at the chart 1 below, FBMKLCI is poised to continue to rise to test the downtrend line, RR at 1640. If we can break above this downtrend line, we will have more than a year-end rally or CNY rally. Keeping my fingers crossed!!
Chart 1: FBMKLCI's daily chart as at October 31, 2019 (Source: Malaysiastock.biz)
One of the sectors that I have been monitoring closely is the Financial Services sector. The FinServ index monthly chart is given below. This is my observation:
1. When the 10-month SMA line has crossed below the 20 & 30-month EMA lines, the worst of the decline is over. The current one is denoted as D and the earlier ones are denoted as A, B and C.
2. In the first 3 cross-under, the index took 6 months to form the bottom.
Chart 2: FinServ's monthly chart as at October 31, 2019 (Source: Shareinvestor.com)
We can see that FBMKLCI moves in tandem with the FinServ index. If the FinServ index can make a bottom in the next 6 months and thereafter begin to recover, then FBMKLCI and our broad market will also begin to recover.
Chart 3: FinServ and FBMKLCI's monthly chart as at October 31, 2019 (Source: Shareinvestor.com)