FKLI And Other Indices Wrap UP 26 Mar 2009

Most Asian market closed in negative territory after a pullback in overnight Dow Jones where STI eased 15 pts or -0.93%, HSI lost 288 pts or -2.07%, Nikkei plunged 8 pts or -0.1%. KLCI rebounded from the low of 871 at eleventh hour to settle marginally 0.89 pts higher at 878.81. Trading turnover stood at 363M worth 672M.

Meanwhile, FKLI was trading in range-bound throughout the day and last hour pushed up earned 8 pts to settle near day high at 884.5 with 5.7 pts premium against cash. Turnover reduced to 7030 lots with open interest stood at 20,541 contracts. On technical side, the RSI stood at 56 while Bollinger band maintain its width. Uptrend momentum remains weak given lack of catalyst in the market. We recommend to sell on high at 890 levels, FKLI will be well supported around 880-890 before the end of UMNO election. We expect after the election and any reverse in US Dow Jones rebound will spur a slide. Immediate support at 871.5 while resistance at 890.

Overseas News Highlight:Dow Jones gained by 89.84 points to 7749.81 yesterday, after government reported a 3.4 percent increase in demand for longer lasting products and resulted JPMorgan Chase and Bank of America to gain. Market sentiment starts to become better as seeing US economy is stabilizing. However as companies earnings estimates are still gloomy, Dow Jones is yet to go through its worst.

FKLI market outlook 05 Mac 2009

The performance for various sectors were mixed with mining industry gained the most (4.39%) while finance eased about 0.80%. The cash composite dropped 1.81 points to 866.93. Total 327 mill shares valued at RM539 mill traded. March contract gap up on the 2nd session to as high as 871 and then closed higher at 872 amid better outcome from the regional markets. As a result, March contract was traded 6 points premium to cash composite. Shanghai composite regained about 126points to 2,198 as a former statistic chief said Premier Wen Jiabao will announce a new stimulus package of 4 trillion Yuan in hope to curb economy slowdown. Nikkei was up 7,290.96 from 7,229.72 and HSI gained about 297 points to 12,331 on speculation that expanded stimulus program in China will boost demand for machinery and materials. We expect index futures are likely to perform better tracking the recent comeback from the regional markets generally. There are also some factors that might support the indexes technical correction based on technical analysis.

March contract might continue to strengthen as bullish crossover can be seen MACD and MA oscillator is already edging on positive divergence. Current RSI rebounded to neutral level. As mentioned in our report on Monday, at current level, the market’s downside will be well cushioned (supported by positive news, ie: Malaysia’s stimulus package), at the same time, the upside will be “well-capped” (capped by the negative outlook, ie: economy growth).

FKLI is most likely to hover around the 860 – 890 band, at least for this month. Immediate resistance can be seen at 882 while support level would be 857.

HAPPY TRADING & GOODLUCK2ALL