FKLI Market Outlook: 30/01/09
The KLCI opened marginally higher following overnight gains in Dow markets. The bulls and the bears were in a tussle whole day but trading volume remained thin (284mil), slight increase from the previous day. At the closed, KLCI closed 3.53 pts (+0.40%) higher at 883.16. We believe that this is only a minor rebound from the rising support line at 880. There is a slim probability it could rebound to 900; nevertheless any rebound should be seen as a chance to sell into strength. Asian markets were off to a good start too. Japanese N225 gained +144; +1.79% on efforts from Central Banks globally would help unlock credit markets. The HSI closed climbed 4.58% or +575, played catch up following a 3-day break for the Chinese New Year. STI managed to hold on to its opening gains. At closed STI remained almost unchanged, gaining only 0.64pts or 0.04%. It was choppy and volatile days for FKLI. FKLI swung between a high of 890 and low of 872.5. At closed, the spot month settled at 876.5, down 10.5 pts. The basis shrink to 7 pts discount from 8 pts premium the previous day. The month end roll over activities contributes (83.5%) bulk of the volume. Technically, the FKLI continued to stay below its support major MA, and this could be seen as negative. The FKLI needs to overcome its 21-day SMA at 900 for the bulls to gain control. We continue to expect the index to be choppy today. Investors could adopt a sell-into-strength strategy with resistance at 890. Support is at 870 and 865. For today we expect the market will under pressure, tracking a sharp drop in Wall Street (-226, -2.7%) last night on weak economic data (especially unemployment rate which reaching record high) and earnings result. We maintain our earlier call selling on any rebound due to lingering recession worries.
(Reminder: The market will be closed on Monday (2nd Feb) for Federal Territory day.)
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