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Tuesday, March 13, 2012

FKLI : Preview & Technical Outlook 13 Mar 2012

Expect futures to trade range bound today after a relatively flat performance in the overnight US markets as investors wait for clues in regards to monetary policy from the Federal Open Market Committee later on today. Back home, FBMKLCI settled at 1564.75, down nearly 1 percent. The index gradually traded lower throughout the day as investors indulged in profit taking activities. Furthermore, as news filtered through that China reported a trade deficit of $31.5bn for the month of February, its largest deficit for over a decade, concerns that deeper economic issues in the second largest economy may arise. A mixture of counters were sold down, with Petronas Chemicals, Sime Darby and Axiata amongst the leading stocks. Market sentiment remained neutral as futures and the underlying cash are almost at par. 

Futures settled at 1565.0, down 0.76 percent. From the onset, futures came under selling pressure as the bears pushed prices lower throughout the trading sessions. A long black candle was formed from the day’s trading action as futures settled below its 20-day moving average for the first time in just over 2 months.

Further indication of a bearish trend developing is evident from the bearish divergence course futures is now on. As such, support and resistance levels are pegged at 1558 and 1574 respectively. 

Defensive names rallied in an otherwise flat day for Wall Street on Monday as investors paused after recent gains and looked ahead to the Federal Reserve's monetary policy statement.

Intraday Strategy 
Aggressive trade may long with a stop on or below 1558.0.

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