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Tuesday, March 31, 2009

FKLI OUTLOOK 31 Mar 2009

Further slid in overnight DJIA of 254 points, -3.27%, indicating that the DJIA may not able to test its important overhead resistant of 8000 level. The slumped was caused by:-
1) Obama warned of some banks need more government aid

2) GM and Chrysler given last chance to restructure

3) Tumbled in Alcoa after Aluminium Corp. of China’s profit reduced more than 99%

4) More writedown is expected in UBS

Technically, DJIA need to re-gain its posture above the important MA 50 level (7580 level) to resume its uptrend and to test the 8000 psychological level.[Reminder: US will release its Consumer Confidence data later tonight (Survey 28 Vs Prior 25)]

Composite index dip further tracking bad performance from regional index, amid renewing gloomy economy slowdown and recession might deepen.
The cash market settled lower at 869 after it slid 16 points yesterday with total 363M shares valued at RM600M traded. Leading the most losses was finance sector and trade & service sector. Meanwhile March contract retraced about 20 points to end lower at 867. Total volume increased from 19,323 to 16,317 while open interest shrinks from 31,051 to 29,187. It was the entire way downward trend for March contract touching the lowest of 864.
Asian Market:
Regional market ended bearish yesterday as Nikkei tumbled about 390 points to 8,236 amid Japanese stocks fell the most in more than 2 months on concern the recession will trigger more corporate failures and demand for vehicle will contract.

Meanwhile Shanghai composite was a little changed after it slid 16 points to 2,358. The HSI dropped about 663 points to 13,456 amid renew economy recession that might trigger more corporate failure and curb bank’s earning.

Today’s Outlook: Spot month contract surpass most of the support level as it dipped as low as 864 point, the steepest fall this month. The market might expect technical rebound on March contract due to oversold territory on RSI and remain resilient on downside as gloomy economy prospect is far from over. It is still bearish movement for long term trend.
Unable to close above the MA 50 and MA30 attracted our attention on whether the uptrend that we expect for short term (to reach 900 level) is achievable. Judging from technical and market sentiment, we literate that market is cap at 900 while support level would be 862 points (Bollinger Middle Band).

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