FBM KLCI: Key Points
SIME – Poised for a further plunge
FBM KLCI – Temporary high seen on 29 June
Weaker supports are at 1,285 & 1,297
Key resistances seen at 1,299 & 1,320
Market Review
The FBM KLCI tumbled 7.94 points yesterday to close at 1,299.50. The FBM100 and FBM EMAS declined by 53.40 and 53.53 points respectively. Market breadth was negative as losers far outnumbered gainers by 425 to 182 while 270 counters were unchanged. Market volume was weak, with just 449.5m shares traded valued at RM717.9m.
Regional Markets
Asian markets were mixed as a weaker Yen boosted the outlook for Japanese exporters while Chinese banks lost their attractiveness. The TAIEX gained the most and added 1.49%.
Other markets inched up in a range of 0.18% to 0.69%. Losers in the region were the Shanghai CI down 0.80%, the Hang Seng lower by 0.32% while the STI slipped 0.01%.
European Markets
American markets were closed last night for the Independence Day holiday. European markets were generally softer too. The main European bourses like the FTSE, CAC and DAX were all marginally softer by 0.30%, 0.48% and 0.31% respectively. Weakness in bank and mining shares dragged European bourses down.
Daily Technical Outlook
The FBM KLCI traded weaker to close lower by 7.94 points at 1,299.50. Its resistance areas at 1,299 and 1,320 will cap market gains, whilst the weaker support areas for the FBM KLCI are located at 1,285 and 1,297. Due to the Europe’s weaker market action overnight, we could see the FBM KLCI in a bearish mode today – with some late local nibbling activities that may cushion the initial fall.
The FBM KLCI had peaked at its previous high of 1,349.92. Trading opportunities then emerged with the Bullish Engulfing candlestick low at 1,243.86 on 27 May 2010. With the Bearish Engulfing candlestick pattern formed last Tuesday, we believe that downside volatility will persist for the FBM KLCI. We advise clients to remain cautious as the global news flow has turned negative and there is a plethora of bad news that will affect global equity markets. There could be a sustained spell of global equity downturns in the next few months. The weakness of US and European markets will ultimately contribute to the softer Asian and Malaysian equity markets too. We should see the FBM KLCI weaker in the next few weeks – led down by the`key blue chip shares like SIME, which is our “SELL” pick for today.
by Maybank IB
