Asian Markets Are Divided

Asian stock markets are divided into two camps; those that broke their uptrend lines and those that are still in an uptrend. In the first group, we have SSEC, HSI & STI. SSEC broke its uptrend line in February- right after Trump started talking about having a trade war with China. HSI & STI were able to hold out for a while but they too succumbed to the selling pressure, and broke their uptrend lines in June. 

Chart 1: SSEC's daily chart as at Aug 8, 2018 (Source: Stockchart.com)


Chart 2; HSI's daily chart as at Aug 8, 2018 (Source: Stockchart.com)


Chart 3: STI's daily chart as at Aug 8, 2018 (Source: Stockchart.com)

The second group of stock markets that manage to continue to trend higher are NIKK, BSE and, surprise, surprise, TWII.


Chart 4: NIKK's daily chart as at Aug 8, 2018 (Source: Stockchart.com)


Chart 5: BSE's daily chart as at Aug 8, 2018 (Source: Stockchart.com)


Chart 6: TWII's daily chart as at Aug 8, 2018 (Source: Stockchart.com)

FBMKLCI appears to fall in between these 2 groups; we have to drifting higher (if that's ever possible). As noted in the immediate preceding post, FBMKLCI has surpassed the 200-day SMA line and it may begin to go into an upswing. Hopefully we will join the latter grouping and be among the performing stock markets in this region.

Market Outlook as at July 25, 2018

In the past 12 days, our market has enjoyed a scorching rally off the low at 1660. FBMKLCI may soon encounter resistance at 1775 or 1795. Those who had bought in late June or early July, should be sitting on decent paper profit. I think it is a good idea to take some profit off the table. Since FBMKLCI has broken above its downtrend line, it is likely that the market can begin its recovery. This bullish breakout can be seen for the other indices- FBM70, FBMSCAP & FBMACE.

Chart 1: FBMKLCI's daily chart as at July 24, 2018 (Source: Shareinvestor.com)


Chart 2: FBM70's daily chart as at July 24, 2018 (Source: Shareinvestor.com)


Chart 3: FBMACE's daily chart as at July 24, 2018 (Source: Shareinvestor.com)


 Chart 4: FBMSCAP's daily chart as at July 24, 2018 (Source: Shareinvestor.com)

Meanwhile we should note that DJIA, which has managed to stay above its 200-day SMA line as well as its uptrend line, is now poised to test the line connecting its recent reaction highs (denoted at "AB"). If DJIA can surpass the AB line at 25400, it may continue with its prior uptrend.


Chart 5: DJIA's daily chart as at July 23, 2018 (Source: Stockcharts.com)

Despite the brouhaha about trade war, we can see Shanghai's SSEC index has rebounded somewhat in the past 2 weeks. While it must be noted that the worst is not over yet for SSEC as it is in a downward channel, it is still good to see this stock market - caught in the middle of Trump's terrible tantrum - is shaking it off and steeping up.


Chart 6: SSEC's daily chart as at July 23, 2018 (Source: Stockcharts.com)

Based on the above, I believe the time is right to buy some good blue chip stocks as well as attractive 2nd liners for long-term investment - especially if you have not done it yet. However this market will not go up in straight line fashion. If you feel like cashing in some of your paper profit - or you have been waiting to reduce position as long ago as May or June - the market is now at a level attractive enough for you to do so. But, don't forget to buy back when the prices eased back- which is not a guarantee. Good luck!