Sunday, April 26, 2020

Market Outlook as at April 24, 2020

Last week, FBMKLCI surpassed the 1400 to reach an intra-day high of 1429 on Monday (20 April, 2020). The next day, it dropped back sharply and broke its tentative uptrend line, SS at 1395. On Wednesday, FBMKLCI staged a rebound which did not carry thru on Thursday. MACD is turning down but has yet to cross below the MACD signal line. However, the stochastic indicator has crossed below the 50% mark on Friday to close at the 20%. This signals further weakness ahead for FBMKLCI.

Chart 1: FBMKLCI's daily chart as at April 24, 2020 (Source: Kenanga's BTX chart)

FBM70, which represents the medium-cap stocks, also broke its uptrend line, SS last Tuesday. Its MACD has yet to crossed below the MACD Signal line while the stochastic indicator is still above the 50% level. The same pattern of the price movement and the indicators can also be seen in FBMSCAP. This means that our market is seeing more trading activity as retail participation increased. This may not be a good sign in a challenging and extremely volatile market of today. I hope that traders would exercise careful discretion and avoid chasing stocks which have gone up substantially from their recent low, as the market begins to show signs of weakness. 


Chart 2: FBM70's daily chart as at April 24, 2020 (Source: Kenanga's BTX chart)


Chart 3: FBMSCAP's daily chart as at April 24, 2020 (Source: Kenanga's BTX chart)

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