FKLI Market Outlook 15 April 2009

US MARKET

An expected rise in retail sales was denied when the data shown that there is a contraction of over a percentage, sending the DJIA to retreat over a hundred points, ended below the 8000 level. The US stock market decreased 137 points, -1.71%, closed at 7833 level. Besides, the Goldman Sachs’ shares tumbled more than 10% as the bank raise $5 billion to help repay bailout funds and the Producer Price Index released yesterday was also worst than expected contributed to the decline in the overnight Wall Street.

Although we are going to maintain our positive view on the DJIA, we will closely monitor the 8000 level as DJIA need to sustain above the 8000 level to resume its uptrend. This downward movement coupled with the narrowing in the Bollinger Band is sending a much more positive signal for the near term market. The current strong resistance is still at 8270 level.[Reminder: US will release its CPI (0.4% Prior Vs 0.1% Survey), Industrial Production (-1.4% Prior Vs –0.9% Survey) & Consumer Confidence (-50 Prior Vs –50 Survey) data later tonight]

FKLI

KLCI continues its bullish trend by settled 12.3 pts or +1.31% higher at 953.71 led by financial and property stocks. Trading volume surged to 1.42B with value 1.13B. Meanwhile, FKLI tested another fresh six-month high to settle 18 pts higher at 962. Turnover increased to 9,546 lots from 6,016 lots and open interest reduced to 17,427 contracts from 18,123 contracts. The basis is at 9pts premium against cash. On technical side, the KLCI closed the day with white Marubozu candle and FKLI with long white candle indicating bullish continuation. The candle continues to trade above top Bollinger band. However, investors need to be cautious on RSI at 72 at overbought region.

In our view, the dropped in overnight DJIA coupled with the RSI trading in the overbought territory, we are expecting some mild selling pressure today. However, this may open up more space for the FKLI to resume its uptrend in the near term.

We maintain our bullish bias towards the market and still in the view that the FKLI will able to sustain above the 937 important support level for the short term and the underlying (KLCI) will be able to test the MA 200 level. Immediate support and resistance peg at 956 and 972 level.