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Thursday, March 29, 2012

FKLI Preview / Technical Outlook 29 Mar 2012

Expect futures to trade with a downward bias after a decline overnight in the US markets. Durable goods data came in weaker than expected which deflated investor’s confidence as well as a sharp fall in US crude prices, which may indicate a faltering economic recovery. Back home, FBMKLCI settled at 1583.75, down 0.27 percent. The index traded gradually lower throughout the day as a consequence of a lack of fresh leads as well as light profit taking activities. Banking giant CIMB was once again the leading lag on the index followed by IOI and Tenaga. Market sentiment remains positive although futures premium over the underlying cash was cut to circa 1.5 points

Futures finished the day at 1585.5, off by 0.41 percent. Investors took the chance to book profits after prices climbed on Tuesday on the back of encouraging news from the Fed.

Trading was depicted by the formation of a short-bodied black candle as prices set back into consolidation mode whilst closing the gap-up made on Tuesday’s opening. MACD resumes its bearish divergence course. As such, support and resistance levels pegged at 1578 and 1588 respectively.

Overnight Leads
U.S. stocks declined on Wednesday as sliding oil and metals prices gave investors a reason to sell commodity-related shares.

Aggressive trade may short with a stop on or above 1588.0

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