On Monday’s close the KLCI was up by 3.90 points or 0.26% at 1495.95 on slightly lower volume of 1.04billion shares traded. Decliners led advancers by 463 to 293 with 274 stocks unchanged.
1. U.S. stocks headed to a lower open Monday as concerns about the European debt crisis took the edge off a strong weekend of holiday sales. The National Retail Federation, a trade group, estimated that 212 million shoppers visited stores and websites during the first weekend of the holiday season, up from 195 million last year. Online spending also rose more than 14 percent from Thanksgiving Day through Saturday, according to IBM's Coremetrics. A fuller picture on spending will come Thursday when retailers report their November revenue.
2. Investors have been hoping that consumers, who have generally been spending cautiously since the recession, would feel more comfortable about shopping during the holidays. Many economists believe that consumers will have to spend more freely for the economy to put together a stronger recovery. Traders seemed pleased with the results initially, but it's too soon to tell if sales will remain strong through Christmas.
3. Ahead of the opening bell, Dow Jones industrial average futures are down 4, or 0.04 percent, at 11,026. Standard & Poor's 500 index futures are down 1, or 0.1 percent, at 1,182. Nasdaq 100 index futures are down 2, or 0.1 percent, at 2,144. (Source: Yahoo Finance).
4. Many Malaysian stocks closed on a weak note on Monday despite a rebound on the KLCI. But the bounce on the KLCI was nonetheless impressive because it opened on a weak note, came down 18.03 points to 1474.02 before a strong rally in the afternoon lifted the index back up to neutralize its losses to close up 3.90 points, at 1495.95. This is a pretty impressive turnaround of over 20 points!
5. As a result of this turnaround, the stock index futures contract is now trading at a premium of 2.5 points over cash. This premium suggests that stock players are bullish on stocks.
6. Be that as it may, we see only selective buying on the local bourse yesterday (but we were right on calling a buy on KNM and TWS yesterday!) Only some index stocks and selective lower liners are bullish. The majority are still lacking buying support. Hence buy signals coming from our technical studies remain isolated and few.
7. The ones we see capable of further buying today are: KEURO, TWS, KNM, KBUNAI, AIRASIA,
AIRASIA-CF, IJM-WC.
8. New stock to watch is KSTAR.
9. Moving averages are still positive on the KLCI and many lower liners but are reaching a marginal point where further falls would tip the moving averages into negative territory, till the market towards a bearish phase. Note an important trendline support is 1470 (see chart in excel attached).
10. The ringgit improved marginally to 3.1500 from 3.1525. We are ready to take profit on the ringgit by buying dollars and selling ringgits given the turnaround of the U.S. dollar.
CONCLUSION: The KLCI made a U-turn yesterday, and formed a “hammer” pattern. A hammer seen
after a market dip, is a signal of a possible market bottom. Look for further rebound today.
Upside Targets: 1534(nearly hit)/1681 (Revised targets on 08/11/10)
Immediate downside targets: 1480 (hit)/1445/1342/ (Revised on 16/11/10)
Ichimoku chart: Span A SUPPORT: 1416 (Revised on 16/11/10)
KNM: H/FURTHER BUY/INVERTED HEAD & SHOULDERS BOTTOM
KEURO: BUY/WEDGE BREAKOUT/TARGET 1.50
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