Market Outlook as at Mar 15, 2020

Despite the sharp rally in US stocks markets last Friday, global stock market will remain very choppy due to fear and uncertainty surrounding Covid-19 pandemic.

Last week, our FBMKLCI broke below the long-term uptrend line at 1420, and closed at 1345. This means that our long-term uptrend may have ended, and the market may enter into a bear market unless there is a quick recovery. See the monthly chart below.


Chart 1: FBMKLCI's monthly chart as at Mar 13, 2020 (Source: Malaysiastock.biz)

Looking at the daily chart, we can see bullish divergence in Stochastic RSI as compared to the index. However, this divergence will take a back seat as the market is driven by fear and forced selling.


Chart 2: FBMKLCI's daily chart as at Mar 13, 2020 (Source: Malaysiastock.biz)

For long-term investors, this is the market that you should take advantage of to invest. However, I will caution that the breakdown of the long-term uptrend line has just happened last week and it may be a long track downward until the bottom. Nonetheless, no one knows where the bottom is. You should calibrate your buying accordingly. As for traders, this will be a very volatile market and you should avoid trading unless you have the necessarily skill and temperament to weather the oncoming storm. Good luck.