ZLBT Chats

Tuesday, March 1, 2011

ZLBT's Morning Outlook : FBMKLCI, DJIA, Crude and Gold

Malaysian Stocks Market May Test 1,500-Point 
The Malaysian stock market on Monday halted the four-day losing streak in which it had declined more than 35 points or 2.2 percent. The Kuala Lumpur Composite Index finished just above the 1,490-point plateau, and now investors are looking for continued support at the opening of trade on Tuesday.
The global forecast for the Asian markets is mildly positive, although concerns over unrest in Libya continue to weigh on investors. Gold stocks and properties are tipped to provide support, while technology shares may see some profit taking. The European and U.S. markets finished in positive territory, and the Asian bourses are expected to follow that lead.
The KLCI finished barely higher on Monday as gains from the financial shares and industrial issues were offset by consolidation from the plantation stocks.
For the day, the index added 1.98 points or 0.13 percent to finish at 1,491.25 after trading between 1,474.38 and 1,493.97. Volume was 1.16 billion shares worth 2.04 billion ringgit. There were 626 decliners and 228 gainers, with 223 stocks finishing unchanged.
Among the decliners, IJM Plantations, TDM Plantations, Sarawak Oil Palms, Sime Darby, Maybank and CIMB Holdings all finished lower.
The lead from Wall Street is cautiously optimistic as stocks closed mostly higher on Monday, with easing oil prices and the continued stream of largely upbeat U.S. economic data driving the buying interest. Meanwhile, the ongoing unrest in the Middle East and surrounding regions kept a lid on the upside.

Bullish Buffet Lift Wall Street
Major Indexes Closes 3rd Month Victorious
A round of merger-and-acquisition news helped stocks to an early lead today, with Ventas Inc.(VTR) leading the charge with a multibillion-dollar offer for Nationwide Health Properties (NHP). In the same vein, the Street cheered Berkshire Hathaway (BRKB) Chairman Warren Buffett's annual letter to shareholders, in which the billionaire investor confessed that his "trigger finger is itchy" for "major acquisitions."

Elsewhere, positive economic developments also added to the bulls' momentum, with investors celebrating larger-than-anticipated rises in both personal income and Midwestern business activity last month. Against this backdrop, and despite news that Oman citizens are taking a cue from their Libyan neighbors, all three major market indexes said farewell to February on a high note.

The Dow Jones Industrial Average (DJIA – 12,226.34) settled near a session high, adding nearly 96 points, or 0.8%, to end atop its 10-day moving average for the first time since Feb. 18.

Only five of the Dow's 30 blue chips bucked the trend, led by Intel Corp.'s (INTC) 1.8% retreat, while Johnson & Johnson (JNJ) paced the bullish majority with a gain of more than 3%. For the month, the Dow advanced 2.8%, marking its third straight month-over-month incline.

Technical Analysis : Dow Jones Industrial Average
The Dow closed higher due to short covering on Monday as it consolidates some of last week's decline. The high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near-term. If the Dow extends last week's decline, the reaction low crossing at 11,803 is the next downside target.

Multiple closes above the 10-day moving average crossing at 12,223 would confirm that a short-term low has been posted. If the Dow renews this winter's rally, the January 2008 high on the weekly continuation chart crossing at 12,767 is the next upside target.

First resistance is the 10-day moving average crossing at 12,223.
Second resistance is February's high crossing at 12,391.

First support is last Thursday's low crossing at 11,983.
Second support is the reaction low crossing at 11,803

CRUDE : Saudi Arabia & Kuwait To Offset Libyan Production Shortfalls
Crude futures ended lower today, as investors sought solace in Saudi Arabia's efforts to offset declining production in Libya. Furthermore, Kuwait – a member of the Organization of Petroleum Exporting Countries (OPEC) – could follow suit if necessary, a top official at Kuwait Petroleum Corp. told Dow Jones. However, black gold's dip was limited as Oman – the largest non-OPEC exporter in the Middle East – became the latest country in the region plagued by anti-government demonstrations. Against this backdrop, April-dated crude futures fell 91 cents, or 0.9%, to end at $96.97 per barrel. For the month, however, oil added a whopping 5.2%.

GOLD : Investors Seek Safe Haven
Gold futures, on the other hand, finished modestly higher today, as escalating geopolitical tensions in the Middle East fueled investors' appetite for "safe-haven" investments. However, encouraging economic data kept the malleable metal's gains to a minimum. By the close, gold for April delivery tacked on 60 cents to end at $1,409.90 an ounce. For the month, the commodity gained 5.6%. Elsewhere, May-dated silver futures finished the session at a 31-year high of $33.82 an ounce, adding 2.7% on the day.

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