ZLBT Chats

Friday, April 24, 2009


Maintain Mid Term Positive on Dow and KLCI
While we are mid term positive on the Dow Jones, it’s getting increasingly difficult to tell the short term direction of the Dow, which will have a huge bearing on the short term outlook of the KLCI.

Dow : Intraday Uncertainty ; Looking for certainty in MAV intersection
In last night’s trading, the Dow has been alternating between positive and negative territory for the whole session. To make matters more interesting, the Dow was actually in negative territory one hour before the end of trading, only to carve out a near vertical ascend to close
upwards by +70 points. Ironically, last night’s chart pattern was the opposite of the day before where the Dow suddenly plunged during the last moments of trading to close downwards by -82 points.

It is safe to say that the Dow does not know where it wants to go. Expect the high amount of intraday volatility to continue amidst all the uncertainty. But we sense certainty ahead. If the red short term line can cut above the blue mid term line and maintain its steepness above the mid term line, it will be a sure sign that the bulls are back in control in the short term. As of now, we maintain our positive mid term view of the Dow Jones but are monitoring the upcoming intersection of the short term and mid term line to determine the Dow’s short term outlook.

VIX Index : Positive Assurance

The VIX Index which measures volatility and the “fear” factor in the US markets are indicating that the bears are kept at bay, at least for now. So far, the VIX has failed to pierce its short term MAV line, which has given us a certain amount of assurance of the presence of the Dow bulls.
Strategy : Maintain Positive view on KLCI and Dow
Our expectations of a larger correction in the KLCI did not materialize. On the contrary, the KLCI is still powering ahead with a strong +10 point gain yesterday. Its strong directional inertia will ensure that it continues its moves upwards towards the 1,000 resistance. We maintain our mid term positive view of the KLCI and the Dow Jones.

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