FKLI market outlook 05 Mac 2009

The performance for various sectors were mixed with mining industry gained the most (4.39%) while finance eased about 0.80%. The cash composite dropped 1.81 points to 866.93. Total 327 mill shares valued at RM539 mill traded. March contract gap up on the 2nd session to as high as 871 and then closed higher at 872 amid better outcome from the regional markets. As a result, March contract was traded 6 points premium to cash composite. Shanghai composite regained about 126points to 2,198 as a former statistic chief said Premier Wen Jiabao will announce a new stimulus package of 4 trillion Yuan in hope to curb economy slowdown. Nikkei was up 7,290.96 from 7,229.72 and HSI gained about 297 points to 12,331 on speculation that expanded stimulus program in China will boost demand for machinery and materials. We expect index futures are likely to perform better tracking the recent comeback from the regional markets generally. There are also some factors that might support the indexes technical correction based on technical analysis.

March contract might continue to strengthen as bullish crossover can be seen MACD and MA oscillator is already edging on positive divergence. Current RSI rebounded to neutral level. As mentioned in our report on Monday, at current level, the market’s downside will be well cushioned (supported by positive news, ie: Malaysia’s stimulus package), at the same time, the upside will be “well-capped” (capped by the negative outlook, ie: economy growth).

FKLI is most likely to hover around the 860 – 890 band, at least for this month. Immediate resistance can be seen at 882 while support level would be 857.

HAPPY TRADING & GOODLUCK2ALL