ZLBT's Morning Outlook >>> Bursa Malaysia, Wall St., Crude Oil, Gold

Malaysian Stocks May Test Support At 1,500 Points

The two-day winning streak for the Malaysian stock market came to an abrupt end on Monday, after it had collected more than 20 points or 1.3 percent in that span. The Kuala Lumpur Composite Index finished just above the 1,515-point plateau, although now analysts are expecting to see the losses accelerate at the opening of trade on Tuesday.

The global forecast for the Asian markets is negative due to surging oil prices and continued uncertainty in Libya and the Middle East. Steel companies and technology stocks are likely to be hit especially hard. The European and U.S. markets finished lower on Monday, and the Asian bourses are expected to follow that lead.

The KLCI finished modestly lower on Monday, dragged to the downside by weakness from the plantation stocks, industrial issues and financial shares.

For the day, the index shed 6.87 points or 0.45 percent to finish at 1,515.74 after trading between 1,511.27 and 1,521.34. Volume was 714.797 million shares worth 1.097 billion ringgit. There were 584 decliners and 184 gainers, with 243 stocks finishing unchanged.

Among the actives, Axiata, CIMB Holdings, IOI Corporation, Kuala Lumpur Kepong, SAAG Consolidated and Maybank all ended lower, while RHB Capital was unchanged.

The lead from Wall Street suggests further consolidation as stocks opened the week on a sour note on Monday, with the rising price of oil raising concerns about the economic impact of higher fuel prices. Oil prices closed above $105 a barrel, continuing to grab headlines amid ongoing unrest in key oil suppliers in the Middle East and North Africa.


Dow Tumbles 0.66% On Tech & Oil
Major Indexes Settle Above Supports
Overseas turmoil continued to set the tone on Wall Street today, as the ongoing conflict in Libya prompted the U.S. government to consider the last-ditch maneuver of tapping into its strategic petroleum reserve -- a step that has not been taken since 2005, in the aftermath of Hurricane Katrina. Oil prices had no trouble finding a fresh two-year peak against this angst-ridden backdrop, particularly after Societe Generale predicted that a similar uprising in Saudi Arabia could push crude closer to $200 per barrel. Meanwhile, on the home front, semiconductor stocks slipped after Wells Fargo downgraded the group to "market weight" from "overweight," with the brokerage firm predicting that the sector's growth will moderate in 2011. The major market indexes at first displayed an impressive resilience, surging higher right out of the gate -- but by midday, the bears were firmly in control.

The Dow Jones Industrial Average (DJIA – 12,090.03) was off 128 points at its intraday low, but found a floor near 12,040 -- the site of its rising 40-day moving average. The blue chip barometer settled for a daily deficit of 79.9 points, or 0.7%, as all but four of its 30 components ended in the red. Alcoa (AA) paced the 26 decliners with a drop of nearly 2%, while McDonald's (MCD) led the charge for the four advancing Dow members.

Meanwhile, the S&P 500 Index (SPX – 1,310.13) battled back from the worst of its losses after finding support at its 10-week moving average, perched just north of 1,300. For the day, the SPX gave up 11 points, or 0.8%.

Finally, the Nasdaq Composite (COMP – 2,745.63) fared the worst of the three by shedding 39 points, or 1.4%. However, the COMP maintained a foothold above its 50-day moving average, which has provided a reliable technical floor throughout the past few weeks' worth of market mayhem.

Crude : Black Gold Backpedals From $107
Crude futures rose to a new 29-month peak today, as Col. Muammar Gaddafi's military forces dropped bombs on rebel strongholds -- placing oil-rich Libya's energy processing facilities right in the line of fire. As a result, crude oil for April delivery continued its breakneck ascent, tacking on $1.02, or nearly 1%, to finish at $105.44 per barrel. This marked the front-month contract's highest close since Sept. 26, 2008. Earlier in the session, futures peaked at $106.95 per barrel.

First resistance is today's high crossing at 106.95. Second resistance is weekly resistance crossing at 110.45. First support is the 10-day moving average crossing at 99.92. Second support is the 20-day moving average crossing at 94.60.

GOLD Tags USD1445.70 Intra-day Record High
Gold futures also gained ground, as political unrest in the Middle East and North Africa stoked safe-haven demand for the malleable metal. Meanwhile, oil's continued climb generated some interest in gold as an inflationary hedge. By the close, gold for April delivery added $5.90, or 0.4%, to end at $1,434.50 per ounce. On an intraday basis, gold found a new record high of $1,445.70 per ounce.

First resistance is today's high crossing at 1445.70. First support is the 10-day moving average crossing at 1419.70. Second support is the 20-day moving average crossing at 1394.30.

TECHNICAL ANALYSIS

Dow Jones Industrial Average

The Dow closed lower due to profit taking on Monday and the low-range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are neutral signaling that sideways to lower prices are possible near-term. Closes below the reaction low crossing at 11,983 are needed to confirm that a short-term top has been posted. If the Dow extends the rally off the reaction low, February's high crossing at 12,391 is the next upside target.

First resistance is February's high crossing at 12,391.

Second resistance is the January 2008 high on the weekly continuation chart crossing at 12,767. First support is the reaction low crossing at 11,983.

Second support is the reaction low crossing at 11,803.

HAPPY TRADING