KL >>> Midday stocks remain in negative territory

Share prices on Bursa Malaysia ended the morning lower in lacklustre trade with major index linked counters in the red, in line with the bearish sentiment on other major regional markets, a dealer said.

At lunch break, the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) dropped 5.24 points to 1,166.04 after opening 5.66 points lower at 1,165.62. Sentiment was dampened further by the overnight losses on Wall Street over renewed fears of the banking and financial sector, the dealer explained.

The Industrial Index fell 14.68 points to 2,571.95, the Plantation Index shed 13.72 points to 5,761.52, the Finance Index slipped 35.979 points to 9,397.29 and the FBM Top 100 dipped 36.64 points to 7,642.33.

The FBM70 shrank 46.31 points to 7,725.54 and the FBM Ace Index slid 37.41 points to 4,051.88.Losers outnumbered gainers by 401 to 89 while 197 counters were unchanged, 587 untraded and three others suspended.

Turnover stood at 242.945 million shares worth RM376.623 million. Dutch Lady led the losers. It shed 20 sen to RM11.30 while Magni was down 14.5 sen to 84 sen and Subur was 14 sen lower at RM1.90. The counters that bucked the trend were Panasonic which jumped 20 sen to RM12.50 with Silver Bird adding 15 sen to 79 sen and Tanjong rising 14 sen to RM15.58.

Among the actives, KNM slipped 2.5 sen to 73.5 sen, Multi Sports shed 2.5 sen to 52.5 sen, Compugates was flat at seven sen, TAS Offshore narrowed 3.5 sen to 76.5 sen and Telekom Malaysia perked two sen to RM3.13.

For the heavyweights, Sime Darby slid six sen to RM8.20, Maybank and Bumiputra-Commerce shed four sen each to RM6.39 and RM10.18 respectively, while Tenaga Nasional inched down one sen to RM8.02 and IOI Corp was flat at RM5.04.

Overly convenient reason?

The Dow Jones’ significant sell-down last night might give bearish traders a convenient reason to sell down their stocks today. The big question is, is the reason too convenient? The reasonable trader would know that a convenient reason might not always be a good reason to take action.
An Unemployment inspired sell-down
The good news is, the sell-down in the Dow last night might be an “employment reports” inspired event. Critical employment reports will be released in the US in the next few days which includes the ADP as well as the Labor Department’s employment report. The market is generally expecting the August unemployment rate to edge up slightly from the previous month’s 9.4% to 9.5%.
Dow Jones yet to breach bearish technical indicators
Despite the 1.96% sell-off in the Dow, the Dow has yet to trigger any important bearish technical indicators. Most importantly, the critical 30-day MAV line for the Dow has yet to be breached. This would indicate that the sell-off could possibly be a 1-2 day head fake to scare retailers away. It would be more prudent to wait for important bearish indicators to be triggered before making any overly hasty bearish decisions. For the next few days, our FBM-KLCI will closely track the bullish or bearish movements of the US Dow Jones.

No Flight to safety yet :
Generally, a bearish wave would be accompanied by a flight from risky assets to safer assets like US Government securities. We are not seeing that yet. The 2-year yield on US Government Securities has yet to stage a major break-down as it is actually still encased in a triangular convergence pattern. The Proshares Ultrashort Lehman 7-10 yr Treasury Index has also yet to break down from its uptrend line, indicating that there is no clear bearish sign of a flight to safety yet.

Strategy : Wait out the bearish wave to gauge impact on highly correlated FBM-KLCI
It is uncertain where the markets are heading at this point. As such, we will not make any changes to our bullish view yet until we see a concrete bearish sign in the US markets which will have a huge impact on our local highly correlated

FBM-KLCI market. It is more prudent to wait till the unemployment-data wave passes before making any concrete calls on
the market.

CPO Slower Export Soften Market; FBM KLCI Futures Falls

CRUDE palm oil (CPO) futures on Bursa Malaysia Derivatives ended lower yesterday as investors loosened their positions on concerns over slowing exports, dealers said.
Cargo surveyors, Societe Generale de Surveillance (SGS) and Intertek Testing Services (ITS) also yesterday released reports on export of Malaysian palm oil products for August. SGS said that the export of palm oil for August reduced by 7.9 per cent to 1.298 million tonnes compared to the 1.409 million tonnes in July.
Meanwhile, ITS reported a 4.9 per cent fall in export for August to 1.332 million tonnes, from 1.401 million tonnes the previous month. The market was closed yesterday for the National Day holiday.

The CPO futures for September 2009 fell RM45 to RM2,395, October 2009 decreased RM46 to RM2,335, November 2009 went down RM67 to RM2,303 and December 2009 declined RM64 to RM2,296. Turnover jumped to 16,801 lots from 13,584 lots last Friday while open interests edged down to 84,342 contracts from 84,990 contracts.

On the physical market, September South reduced to RM2,405 per tonne from RM2,460 last Friday.

FBM KLCI Futures

FBM KLCI futures ended lower in line with the easier cash market, dealers said. Spot month September shed 3.5 points to 1,165.5, October was flat at
1,164.0, December slipped 3.5 points to 1,160.5 and far month March 2010 declined four points to 1,154.0.

TECHNICAL ANALYSIS >>> Composite Index 01/09/2009 / 综合指数 2009年 9月 01日

Composite Index 01/09/2009

The Bollinger Bands contracted another 29%, indicating that the KLCI is still in a correction and consolidation stage (Refer to A), and therefore, the KLCI lost another 2.99 pt, to close at 1171.28 pt. The KLCI support level fall at 1163 pt Fibonacci Retracement (FR), while the resistance remains at 1186 pt.

As shown in the chart above, the KLCI was precisely support at Bollinger Middle Band, and therefore, the Bollinger Middle Band remains as the Dynamic Support Line for the KLCI. Actually, it is very important that the KLCI is supported by the Bollinger Middle Band; this is because if the Bollinger Band was to expand subsequently, with the KLCI below the Bollinger Middle Band, KLCI will form a downtrend.

As indicated by B, volume traded declined 21.2%, and continue to trade below the 40 days Volume Moving Average (VMA), this is due to the KLCI remain in consolidation; in other words, should the KLCI continue to consolidate, the volume traded will continue to stay below the 40 days VMA.

The Relative Strength Indicator keep losing strength below the 50%; therefore, the mid term trend of the KLCI remain weak; should the RSI break below 30%, the KLCI will be on a mid term down trend, and the mid term downtrend is expected to continue until the RSI is able to rebound and break above 30%.

Technically, the narrowing Bollinger Bands confirmed that the KLCI remains in consolidation, and no formation of new trend is sighted yet. The KLCI is due to start a new trend when the Bollinger Bands stopped narrowing and started to expand, and the new trend will be determined by the relative position of the KLCI against the Bollinger Middle Band.

综合指数 2009年 9月 01日

如图中箭头A所示，布林频带（Bollinger Bands）进一步收窄29%，这显示富时综合指数继续的处于调整巩固的格局，所以综指微跌2.99点，以1171.28点闭市。综指当前的支持水平落在1163点的费氏线，阻力水平则是1186点的费氏线。

如图所示，综指精确的在布林中频带（Bollinger Middle Bands）上获得扶持，所以布林中频带仍然是综指当前的动态支持线。综指是否能在布林中频带上获得扶持有着决定性的作用，因为若综指跌破布林中频带，而布林频带则开始打开的话，综指将形成一个下跌的趋势。

如图中箭头B所示，马股成交量下跌21.2%，继续的低于40天成交量移动平均线（VMA），这是整体市场走势维持在横摆巩固的现象；换句话说，若综指持续的横摆或布林频带一直收窄，市场的成交量将继续维持在低于40天平均值的水平。

胜图强弱指标继续在50%以下的水平下滑，所以综指的中期走势依然属于疲弱；接下来若胜图强弱指标跌破30%的话，综指的中期走势将开始转向下跌，直到胜图强弱指标再度上扬突破30%为止。

总的来说，布林频带继续收窄显示综指依然维持在横摆巩固的格局，所以并未发出任何明显的走势。综指目前正等待布林频带再度打开，届时综指将开始一个新的趋势，而新趋势的方向将取决于综指处于布林中频带的相应位置。

Ugly Kick-Off to September: Dow Dives 186

After notching its best August in nearly a decade, Wall Street started the historically bearish month of September on a disappointing note as the Dow tumbled nearly 200 points Tuesday despite new evidence the economy is slowly healing.

The bank-led selloff marked the steepest one-day decline for the Dow since Aug. 17 and its first three-day losing streak since June 24. The benchmark index has tumbled 2.82% over that span, its worst stretch since July 7. It's also worth noting the S&P 500 and Nasdaq Composite broke through the psychologically-important levels of 1000 and 2000 respectively.

Even some bullish analysts had long been calling for a pause or a correction after stocks’ summer surge. They pointed to an economy that is still weak, the longest win streak since 2007 for the Dow and the 3,000-point climb off the March lows.

“It’s not that the market is going back to the March lows but there’s no question it got ahead of itself,” noted NYSE trader Ted Weisberg of Seaport Securities

Today’s Markets
The Dow Jones Industrial Average lost 185.68 points, or 1.96%, to 9310.60, the Standard & Poor's 500 slid 22.58 points, or 2.21%, to 998.04 and the Nasdaq Composite tumbled 40.17 points, or 2%, to 1968.89.

The wave of selling on Wall Street was led by the financial sector and came in the face of a pair of better-than-expected economic reports that revealed the sharpest increase in pending home sales since June 2007 and the first expansion in the U.S. manufacturing sector in nearly two years. After initially cheering those reports, the markets headed south and didn’t look back.

“While there is nothing negative about the data, I think it’s more market sentiment driving stocks’ direction,” said Michael James, senior equities trader at Wedbush Morgan Securities. “There are far more people looking to sell stocks than buy stocks, which is a change in sentiment from the last several weeks.”

Oil prices fall as Dow stumbles
Oil prices dipped again Tuesday despite new indications that the U.S. manufacturing and housing industries may be on the mend. Benchmark crude for October delivery fell $1.91 to settle at $68.05 a barrel on the New York Mercantile Exchange. The contract Monday lost $2.78 to settle at $69.96, meaning crude has fallen almost 6 percent this week

On Tuesday, however, it appeared energy prices were rebounding but the bounce in energy prices Tuesday was short-lived and both equity and energy markets reversed course before noon.

"The question is the sustainability," said an oil dealer. Another possible reason for the volatile prices Tuesday is the low volume on the floor of the Nymex. It is typical for futures prices to swing in the week before a holiday and some traders said there was nothing to be read into falling prices before the Labor Day weekend begins.

In London, Brent crude fell $1.92 to settle at $67.73.