Preview
Expect futures to take a bearish turn today after US markets posted two consecutive days of steep decline. However, do expect the local market to be reasonable supported by Moody’s report which dictated Malaysia’s outlook to be stable. The vicissitude in US shares relates to disappointing results and outlooks from Wal-Mart and Cisco.Additionally, reports showing that jobless claims fell to a six-year low and rising consumer prices generated further speculation that the Federal Reserve will soon trim its effort in supporting the economy. The Fed’s next policy meeting will be held on 17-18 September, whereby its outcome will be heavily anticipated for any changes in its quantitative easing programme.
Back in the local front, FBM KLCI descended marginally by 0.08 percent, closing at 1792.21. Gains were witnessed during the early trading session despite a steep fall in the US overnight market.
However, selling picked up towards the closing bell which reversed earlier gains. The energy and
banking industries were major losers for the day, Petronas Dagangan, Petronas Gas, Ambank, Maybank, and Hong Leong Bank to name a few.
Futures trade at a further premium of 6 points away from its underlying cash market.
Technicals
Futures closed at a gain of 0.11 percent and settled at 1798. Trading activities wobbled between positive and negative territory as buyers remained hesitant of upward potential. Chart wise, a white candle was formed, whereby prices managed to close higher than overnight levels amid uncertainties. MACD indicator also journeys towards a buy signal.
However, expect prices to open gap down as the market takes cue of the fall from the US overnight market. Buyers may step in to take advantage of low prices during early trades. Nevertheless, downside risk remains eminent and selling activities will intensify upon breaching immediate
support at 1793. As such, support and resistance can be eyed at 1780 and 1810 respectively.
Strategy
Trade may short with a stop on or above 1810.
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