F1 TRADER ONLINE: May 2010

STOCK MARKET OUTLOOK: Expect a technical rebound today possibly to 1270/1285 but sell on rally as market has not bottomed yet.

On Wednesday’s close the KLCI was down by 1.19 points or 0.10% at 1248.94 on higher volume of 929 million shares traded. Advancers led decliners by 426 to 320 with 265 stocks unchanged.
1. Stocks rebounded, after yesterday’s slide drove the MSCI World Index to a nine-month low, and commodities rallied as gains in U.S. durable-goods orders and home sales added to evidence economic growth is improving, reported Bloomberg.
2. Asian markets rebounded yesterday also because of a recovery in the Dow, which closed lower by a mere 22 points to 10066 after an intra-day plunge of 292 points to test 9774 at one stage of the day. That rebound from 9774 to close back above the 10000 level triggered a gap-up in our KLCI by 6 points and 15 points for the futures market! We had expected the Hang Seng index’s drop of 682 points to cast a bearish tone on the Dow but the Dow recovered.
3. Following Dow’s rebound, Hong Kong was up 1.11%, Singapore up by 1.71%, Taiwan up 1.14%, Korea up 1.36%, Australia up 1.03%. It is only Malaysia that is down by 0.10%.
4. Our market traded within a tight range yesterday for both the cash market and futures, closing with a“bullish harami cross” for the KLCI futures and a slightly lower low for the KLCI.
5. As world stock markets are now oversold, I expect a technical rebound coming from the Dow, through to European indices to Asian indices. Even though the indices are below Ichimoku charts, they have fallen too much, and are due for technical rebounds.
6. Traders can do two things.
7. Aggressive traders can call for a “speculative buy” and “sell on rally” as prices rebound. Our KLCI may rebound back up to 1285 (38% Fib resistance) or 1309 (62% Fib resistance) But the 50% rebound resistance of 1297 may also be possible if 2008 repeats itself. Note from the KLCI 2008 chart (see excel spreadsheet) that we may be in a similar scenario as 2008, dropping sharply and then rebounding.
8. Many stocks are now considered technically oversold (where stochastic is below 20, RSI below 30 and CCI below -100).
9. Aggressive traders may like to pick up some stocks for a technical rebound that may last till 1285-1297-1309?
10. The stocks are: ZELAN, KKB, BURSA, CIMB, OSK, COASTAL, HIAPTEK, KINSTEL, AIRASIA*, KENCANA.
11. Conservative investors on the other hand MAY NOT WANT TO BUY YET.
12. This rebound of yesterday could well be short lived, and we see another fall today.
13. Any fall below 1247.35 on the KLCI and below 1240.5 in the May futures would mean further bearishness and re-entry of “shorts”.
14. The Ichimoku charts of the CAC, DAX, FTSE UK, DJIA, S&P 500, Nasdaq, Hang Seng, Australia, Shanghai, Singapore, KLCI charts continue to remain below the clouds, suggesting the markets are already in bearish mode. But a temporary rebound happen in the near term.
15. In short, we expect the Asian, Europe and U.S. markets to remain weak and we are sidelined as a result for now. We will not re-enter until the Malaysian stocks trigger buy signals based on our CBO 20-10 system.
16. The ringgit strengthened to 3.3170 from 3.3620.

CONCLUSION: The Asian markets rebounded after the Dow unfolded a long legged “doji” pattern the day before yesterday. Asian markets rebounded in line with the Dow. Asian markets are still taking the cue from Dow. Therefore traders will need to look at Dow’s close to get an indication of the Asian markets’ direction. Hong Kong’s index is also a good cue for Malaysian stocks and futures. It is important that Dow must not fall
below 9774 last night. If so, we can expect our market to fall further, and all the above analysis will be premature.!!! For our KLCI to rebound, Dow must stage a positive close on Wednesday.
Upside Targets: 1360/1436/1463/1524 (Revised targets on 5/3/10)
Immediate downside targets: 1224-00/1154/1033 (Revised on 20/05/10)
Ichimoku chart: Span A resistance: 1288/92 (Revised on 2/03/10)

THIS IS A 2008 CHART OF KLCI
ARE WE REPEATING 2008 REBOUND OF 50% (TO 1443) BEFORE ANOTHER FALL?

THIS IS A CURRENT CHART OF KLCI (2010)
WILL WE SEE A SIMILAR REBOUND LIKE 2008? OF SO, LOOK FOR 1297 AREA TO STOP ADVANCE

STock Market Outlook: Good for May 17,2010

STOCK MARKET OUTLOOK: KLCI beginning to show signs of jitters.
Possible weakness if Asian markets react to weak Dow on Friday.

On Friday’s close the KLCI was down by 7.62 points or 0.57% at 1339.30 on slightly lower volume of 682 million shares traded. Decliners led advancers by 371 to 293 with 260 stocks unchanged.

1. The Dow Went down 162 points on Friday to close at 10,620, while the UK Footsie index, French CAC and German DAX lost even more, between 3 to 4 %. 2. The reason behind this weakness is because of renewed concerns that Greece’s sovereign debt crisis will trigger a breakup of the European currency. 3. With the world’s equity indices all falling one after another, how long can our Malaysian index stand? 4. So far, our index has been very impressive. But like I said, no country is an island. 5. For now, our finance stocks like CIMB, PBBANK, MAYBANK, HLBANK, RHBCAP, and even AFFIN still managed to stay firm. 6. So are stocks like KKB, AXIATA, TM, TNB, etc. 7. So as long as their stops are not hit, these stocks remain a “hold”. 8. But lower liners and others that have “S.A.’ or “Stay Aside” in our “REC” column means that these stocks are not to be touched. 9. In short we are not calling a “buy” on Monday. 10. The lower KLCI even suggests that this could be the start of weakness for our KLCI. 11. But I must admit that our Malaysian KLCI is currently one of the strongest “bourse” in the world” as you can see that it is still above the “clouds”. 12. The Ichimoku charts of the CAC, DAX, FTSe UK and DJIA charts in the excel spreadsheet continue to remain below the clouds, suggesting the markets are already in bearish mode. 13. So in short, we expect the Asian, Europe and U.S. markets to remain weak and we are sidelined as a result for now. We will not re-enter until the Malaysian stocks trigger buy signals based on our CBO 20-10 system. 14. The ringgit strengthened to 3.1920 from 3.1980.
Ichimoku chart: Span A resistance: 1288/92 (Revised on 2/03/10)

KLCI: STAY ASIDE/GOING TO GET BEARISH/BUY @ 1350 OR HIGHER