After being hit by Swine Flu triggered bearish sessions in the last two days, world equities markets are now looking to the Dow for hope. And so far the Dow is not disappointing, at least not yet.
Dow Jones building a base at 8,000 :
Short Term line cutting above mid term line?
The Dow Jones is currently building a base at the 8,000 level, and this base was strong enough to withstand the bearish effects of the Swine Flu when the Dow took just a small 0.7% negative hit in the last two days compared to the KLCI which regressed as much as 2.7%.
Short Term line cutting above mid term line?The Dow Jones is currently building a base at the 8,000 level, and this base was strong enough to withstand the bearish effects of the Swine Flu when the Dow took just a small 0.7% negative hit in the last two days compared to the KLCI which regressed as much as 2.7%.
The Dow appears to be building a base/consolidating at the 8,000 level. After this base building phase ends, the Dow will be primed for a big move, either upwards or downwards. When will this big move happen? It will happen soon when the red short term line cuts above the blue mid term line. Considering the upwards trajectory of the red short term line, it seems more likely that the Dow will spring upwards in the short term instead of venturing downwards, barring any sudden and dramatic spikes in Swine Flu cases.
Measuring the Swine Flu “fear factor” with the VIX Index
The VIX Index, an important indicator of the “fear factor” in US markets, can be used to gauge the level of emotions of fear that is caused by the Swine Flu outbreak. Considering that the VIX index actually dipped 0.97% last night and still remains below the red short term line, it can be concluded that the level of fear in the US markets actually decreased last night. Apparently the Swine Flu outbreak has yet to reach levels where it would be triggering fear and panic among US traders and causing havoc in the US markets. The emotions of fear are still within control in the US markets, further supporting the likelihood that the Dow may be venturing higher from the 8,000 base. However, we still retain a sense of caution of the Swine Flu and will be tracking its spread closely.
Measuring the Swine Flu “fear factor” with the VIX IndexThe VIX Index, an important indicator of the “fear factor” in US markets, can be used to gauge the level of emotions of fear that is caused by the Swine Flu outbreak. Considering that the VIX index actually dipped 0.97% last night and still remains below the red short term line, it can be concluded that the level of fear in the US markets actually decreased last night. Apparently the Swine Flu outbreak has yet to reach levels where it would be triggering fear and panic among US traders and causing havoc in the US markets. The emotions of fear are still within control in the US markets, further supporting the likelihood that the Dow may be venturing higher from the 8,000 base. However, we still retain a sense of caution of the Swine Flu and will be tracking its spread closely.
Swine Flu Watch : Cases steadily increasing ; deaths confined to Mexico
So far, deaths remain confined to Mexico and have risen to 152, with suspected infections rising to 1995. The US has 65 confirmed cases but has yet to report fatalities. The next-highest country is New Zealand with 43 suspected cases, and countries including Spain, France, and South Korea have reported suspected infections too.
So far, deaths remain confined to Mexico and have risen to 152, with suspected infections rising to 1995. The US has 65 confirmed cases but has yet to report fatalities. The next-highest country is New Zealand with 43 suspected cases, and countries including Spain, France, and South Korea have reported suspected infections too.
KLCI may be buoyed by US base building and neutral VIX Index
After being hit by a 2.7% correction in the last two days, the KLCI may get a break in the next few days with the Dow Jones’ positive base building at the 8,000 level and the neutral VIX Index. Bank Megara's possible announcement (6 pm) of an OPR cut might add to the possibility of a rebound in the KLCI. With the 970 support broken, we are looking to the dynamic 200 Day MAV support of 955 to halt the bear’s advance for now and possibly triggering a rebound in the KLCI.
After being hit by a 2.7% correction in the last two days, the KLCI may get a break in the next few days with the Dow Jones’ positive base building at the 8,000 level and the neutral VIX Index. Bank Megara's possible announcement (6 pm) of an OPR cut might add to the possibility of a rebound in the KLCI. With the 970 support broken, we are looking to the dynamic 200 Day MAV support of 955 to halt the bear’s advance for now and possibly triggering a rebound in the KLCI.
KLCI : Hopeful in the short term but cautious of Swine FluWe maintain our positive mid term outlook for the KLCI and are hopeful for a KLCI rebound due to the Dow Jones’ base building and the neutral VIX Index. However, we still retain a high sense of cautiousness and are monitoring the Swine Flu outbreak closely to detect any sudden spike in its severity.
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