KLCI Update

We are near the end of 2009. The stock market has rallied from its March low and it has retraced more than 60% of it down swing from a high of 1521 to a low of 801.

The technical picture is indicating weakness ahead. The MACD indicator has made a bearish crossover. +DI is still above the –DI but it looks to be turning towards the –DI. ADX is also decreasing which shows a weakness in the current uptrend. Stochastic indicator is also showing a bearish stance.

The market needs more positive news to push it higher. Any retracement should be well supported at 1157.

Dow Update

Dow Jones Industrial Average closed at 9712 on Friday down 249 points. The moved erased all the gains made on Thursday. The index closed below the uptrend channel and is at dangerous territory. The RSI is now at 45 level. Note that RSI has not fall below 40 level since Jul 09. MACD is showing bearish signal as well with the indicator below its signal line. -DI is set to cross the +DI, this may mark the beginning of the correction that the market has been expecting for some time now.

The next few trading days will be crucial. If the index is able to close within the
uptrend channel, it will be good for the bulls. If the index is not able to gather enough
momentum, then the correction looks set to test the low of 9378 set on 2 Oct 09.

KLCI Update

KLCI manages to keep above its up trend support line last week. This is a positive sign.

The MACD indicator is still above its signal line, indicating that the Bulls are still in control.

However a danger sign is appearing on the RSI chart. The indicator is showing a slight divergence from the price chart with the index making a newer high whereas RSI is trending downwards.

All eyes will be on whether the index is able to maintain above its up trend line. If this line is violated, coupled with a diverging RSI, it will mean a sell down is in the cards.

Trade with care.

TELEKOM MALAYSIA BHD

Telekom Malaysia broke out of RM3.06 on Friday. The technical charts are showing positive signs of further strength.

Firstly, the ADX value is increasing and approaching the 30 level. +DI is above the –DI indicating development of strong up trend.

The Force index is also showing pockets of strength.

RSI is starting to tick up after testing the 50 level indicating that buyers are once again stepping in again.

MACD indicator is slightly above its signal line. Price momentum is likely to continue if the MACD indicator can stay above its signal line for the next few trading days.

All bets are off if price breaks below RM2.85 level.

KLCI Updates

KLCI index closed at 1184 points on Friday, the highest since June 30, 2008. The question now is whether this uptrend will continue or will we see a down swing that will take out the lows made in March 2009.

The index is now above its 50, 100 and 200 day moving average. And all three moving averages are increasing. This shows the strength of the current up move.

The MACD indicator is moving down and looks set to cut its signal line. If the crossover occurs, it will mean weakness in the short term. However, given the fact that the index is still above its up trend support line, “Bullish” investors are still in safe territory.

Dow Inverse Head And Shoulder

Stock market has rallied across the board. The Dow Industrial Average is now above 9000 level. The index is currently at Jan 2009 level.

Technically, the charts are looking better. Just a few weeks ago, there was a possibility of a sell-off based on the head and shoulder pattern. That did not materialize. And when the pattern failed, the market rallied. The reverse seems to be happening. An inverse head and shoulder is now in the picture.

The ADX chart is showing the development of an uptrend, with +DI above –DI and ADX moving towards 30 levels.

MACD is indicating a bullish trend as well with the indicator above its signal line.

RSI is now at overbought levels but it an uptrend situation, market can stay at overbought levels for longer periods.

Based on the monthly charts, the 50% Fibonacci retracement level is at 9176 and 61.8% retracement level is at 9825 level. Market needs to scale these 2 levels for up move to continue.

Let’s see if the market is able to stay above 9000 level next week.

Happy trading!

Dow Potential Head & Shoulder Pattern

Stock market around the world is in corrective phase except for the Shanghai market which went above the 3000 resistance level.

If you look at the technical charts from US, Hong Kong, Singapore etc, the charts are all showing a potential head and shoulder pattern.

For US Dow Industrial Average, the index needs to stay above 8200. If it breaks this level, the right shoulder will be completed and it suggests a target of 7523.

Let’s see if the US market is able to hold on to 8200 level next week.

LCL Corporation Bhd

LCL Corporation closed at RM 0.725 during Friday's trading session.

The stock closed up on high volume a sign that investors are buying into the stock.

The technical charts are also showing bullish signs.

The MACD indicator just made a bullish crossover.

The +DI is above the -DI. However ADX is still at the lower end which means that the stock price although moving up, will most likely be a weak up trend.

RSI is increasing and is not in overbought region.

The resistance is still at RM 0.76. Support is at RM 0.62 level.

A way to ride on this uptrend is to buy when the stock moves above RM 0.73 and to take profit when RSI shows decreasing momentum. Stop loss level can be set at slightly below RM 0.64 which is near the 50 day moving average closing price.

Lafarge - Buy On Pullback

Lafarge Malayan Cement broke out of its resistance level RM 4.74 near the end of May 09 and the stock has been gaining ground since then to reach a high of RM 6.50.

As the leader of the Malaysian cement industry and a major player in the Asian export market, this stock should benefit from the stimulus plan that are being implemented by Asian countries.

The ADX is above 30 with +DI above the –DI, indicating a strong trend that is developing.

MACD is also bullish at the moment with the indicator above its signal line.

Analysts are expecting a pullback in the stock market after a spectacular run from March lows. This stock should be a good candidate to buy on pullback. Look to enter near the RM 4.74 level, which is the previous resistance level.

Market Update

Dow Industrial Average reached a high of 8839 in the opening minutes before succumbing to selling pressure. It lost all its gain and went into negative territory before buyers came in to bring up the index. Market closed at 8768, up 12 points for the whole session.

The non-farm payroll showed a decline of 345000, a better than expected number of job losses. However un-employment rates reached a high of 9.4%. This mixed picture also explains why the market closed near the unchanged mark.

Looking at KLCI, it has recovered more than 50% of its downswing from May 08 till Oct 08. Immediate resistance is at 1090, 1111 and 1141 respectively. Support is at 1055, 1036 and 1000.

US Market

Market continued to rally higher in May. The upward momentum seems to be slowing down as the market hit critical resistance level.

The S&P500 index is approaching its 200 day moving average. The market has been going sideways for the past few trading sessions with the index moving in a band of 880 and 930 levels.

The index has rebounded from its 20 day moving average and seems to be moving towards the upper Bollinger band.

Next week should see the market testing the 930 level.

WTK Holdings

The technical indicators for WTK holdings are showing further strength.

Price managed to close above its 200 day moving average for the first time since Jun 2008.

MACD made a bullish crossover on Friday and ADX is increasing with +DI above –DI. This shows that investors are bullish on this stock.

RSI is approaching overbought levels. Investors can consider entering into this stock on pullback.

Support level is at RM1.09 and RM 0.955 respectively

HAI-O Enterprise Bhd

HAI-O Enterprise Bhd had a good run since Mar 09. It broke the resistance on 27 Mar 09 and reached a high of RM3.96 on 8 May 09.

It has since pulled back and tested its 20 day moving average on Friday.

A few negative signs are developing. Firstly, the MACD indicator made a bearish crossover recently and RSI is coming down from overbought levels. +DI is also getting closer to –DI with a decreasing ADX. This shows a weakening of the up trend.

The stock should find some support at the lower Bollinger band if it breaks through its 20 day moving average.

KLCI

KLCI broke through its 200 day moving average, made a test before resuming its current bullish trend. This is a good sign for the market. It shows that investors are willing to buy on pullbacks.

RSI is showing a slight divergence with the indicator making a lower high on 7 May 09.

Immediate resistance level is at 1040 and 1060. Pull back should find support at 1000 level.

IOI Corp

IOI Corp has moved up together with price of palm oil. Since breaking out of the resistance of RM 4.00, this counter has gained RM 0.40 to close at RM 4.40. Not bad for a one month gain.

The counter is processing the high of RM 4.48 set in 7 Jan 2009. MACD indicator is about to go above its signal line. This is an indication that there may further strength in this rally. ADX is approaching 40 level with +DI above the –DI, another bullish indicator.

RSI is moving down from overbought level. However, so long as price stays above RM 4.20, the upwards momentum should be sustainable.

Telekom Malaysia Berhad

Global stock markets pullback this week after a spectacular rally in March that saw majority of the world indexes up with double digit percentage gains. KLCI went from a low of 836 on 12 Mar to a high of 926 on 6 Apr, a gain of 10%. Investors that missed out on this rally can consider picking up counters during the pullback.

Let’s look at Telekom Malaysia which made a bullish MACD crossover yesterday. The counter gapped up on 25 Feb with high volume. The MACD indicator made a bullish crossover and is now above its 9 day signal line. RSI is approaching overbought levels suggesting that the stock may pullback anytime soon. However with the MACD showing a bullish signal and the current +DI above the –DI with ADX above 40, pullback should be mild and not a severe downswing.

Resistance level is at RM3.68 and RM3.76 respectively. Support level is at RM3.46 and RM3.38.

KLCI Update

The rally finally came to a stop yesterday. KCLI has broken through its 50 day moving average. It is now sitting at the support level of 867.

Bearish signals include a down sloping 20 day and 50 day moving average. Stochastic has made a bearish crossover and RSI is coming down from overbought levels.

MACD indicator is still above its signal line. If the index is able to bounce off from 857 which is the 61.8% retracement level, there is a chance for the index to test its recent high of 890. And penetration of the 890 level will set us the first Fibonacci objective of 911.

DOW Update

Dow Jones rebounded from its low of 6440 set on 9 Mar 09 to end at 7278 yesterday. That is about 13% rebound in the span of 2 weeks.

The rebound has taken the index right up to its 50 day moving average. Last night the market was not able to take out the 50 day moving average. That is not a good sign. However, it may turn out to be just a pause before the index attacks its 50 day moving average again.

The 7392 level now serves as a critical resistance that the index needs to overcome in order for the rally to continue. Support level is at 7041

KLCI Update

US market managed to edge out a slight gain on Friday. Dow was up 32 points to close at 6626 points.

Malaysia market has been affected by the negative sentiment as well. For the week, KLCI closed at 858 points, down 32 points.

The index is still above its low of 801 points set in Oct 2008. The index is now heading towards the lower boundary of the uptrend channel that goes all the way back to 2001. There should be buying support near the 830 level.

Dow Update

Dow industrial average has fallen to 1997 levels. It has broken its Nov 07 low of 7392. The picture looks bad at the moment. ADX is at 49 levels and –DI is above +DI. This suggests a continuation of the down trend. MACD indicator has also crossed below its signal line, another bearish indication. The only bright spot is that the RSI indicator has not made a new low yet and divergence of RSI can still occur. For trend to reverse, Dow has to conquer the resistance at 7392 and 9175. In the mean time, the bears have the upper hand.

Dow Jones Industrial Average

The Dow Jones Industrial Average looks to be forming a bottom. The index is near its Nov 07 low of 7392. The trend is still bearish at this point in time. However there are 2 positive signs in the technical charts. Firstly, the weekly MACD indicator is above its signal line and secondly, the weekly RSI seems to be forming a divergence signal. The index needs to break the downtrend channel line in order for a sustainable rally.

Resistance level is at 8446 level and support is at 7392 level.

KLCI Update

US market managed to stage a rally on Friday. The Dow Industrial Average closed at 8280, up 217 points on Friday. Market look past the bad job numbers and are hoping that the Obama Administration is able to come up with a stimulus package that will save the financial sector which in turn will support the stock market.


Our own KLCI index is also making a comeback. The index closed above its 20 day moving average on Friday. The MACD indicator is looking to cross above its signal line, another positive scenario.

Note that the 13 day force index has just turned positive. If the index is able to hold above 867 points, there is a potential for the index to test its upper Bollinger Band limit.

Stochastic indicator is also turning up, indicating short term strength.

Resort World

Resort World is trading on a downtrend channel.

MACD indicator is almost in line with its signal line. If the stock is able to pierce above the downtrend line, MACD will make a crossover above its signal line. If that happens, there is a possibility of testing the pivot point at RM 2.46.

With Dow Jones Industrial Average down 148 points last night, Monday should see further weakness in Resort World. The next level of support is at RM 2.15 level.

IOI Corp

IOI corp closed at RM 3.78 on Friday.

The stock price is now sitting near the 20 day moving average. The stock price looks to be forming a pivot point at RM 3.68 level.

The fast stochastic line is about the slow stochastic line. Once the fast stochastic line cuts above the slow stochastic line, it indicates short term strength and a possibility of a short term rebound from current levels.

If RM 3.68 is not broken today, it will most likely test RM 4.00 level soon.

TM

TM technical chart is not looking pretty. The stock looks set to break RM 2.98 level and to test support at RM 2.88 which is the 61.8% Fibonacci Retracement Level.

MACD indicator just crossed below it signal line and with Dow closing down 143 points on Friday, it looks bearish for TM at this juncture.

So Monday should be good for the bears. Happy trading!

KLCI Update

KLCI closed at the high of 920.66. The next resistance is at 926.65 and 970 respectively.

The technical charts continue to show a bullish bias. The MACD line is currently above its signal line indicating a bullish market.

+DI is still above –DI. However ADX will need to go above 30 soon in order to have a sustainable rally.

RSI is approaching overbought levels. Unless there is a sustainable rally, market will not stay in overbought level for long. In this market, it is best to be nimble and take profit when a danger sign appears. For example the appearance of a graveyard doji, hanging man etc.

All eyes will be on US market tonight to see whether last week’s breakout is a false dawn.