Market in danger of entering bearish zones

REVIEW: Taking the cue from a steadier overnight Wall Street, shares on Bursa Malaysia started out the week on a stronger footing, with the FBM Kuala Lumpur Composite Index (FBM KLCI) advancing 2.37 points to 1,486.04, extending the previous session's gains.

A bullish showing in major regional equities, climbing between 0.8% to 3.26% on renewed buying momentum, led by Hang Seng Index further fuelled the upbeat mood, thus clearing the way for the local bourse to sustain steady recovery from the opening bell to settle at an intra-day high of 1,499.74, up 16.07 points in robust volumes on Monday.

The closely-watched overnight Wall Street continued to mend the next day, with the Dow gaining nearly 2% to 11,482.90, the third in a row, as a large takeover deal bolstered investors' confidence.

As expected, the positive news of Google Inc offering to buy Motorola Mobility Holdings Inc for about US$12.5bil sparked a rally in Asian shares in the morning session, but sadly, they lost their lustre towards the closing bell owing to an apparent profit-taking activity amid worries about a slowdown in global growth after Germany released a weaker-than-expected Gross Domestic Product data.

Mirroring the regional trend, the local bourse hit a high of 1,510.54 in early trade before reversing to end at 1,498.24, down 1.5 points in sluggish business on Tuesday.

Then, the Dow snapped the winning streak in the wake of profit-taking activity, as a meeting between the heads of France and Germany failed to quell fears about eurozone debt crisis.

With Asian stocks turning mixed in cautious session, the FBM KLCI turned sideways, fluctuated between an intra-day high and low of 1,504.64 and 1,499.59 respectively, a tight 5.05 points throughout before finishing up 4.83 points at 1,503.07 in mid-week.

Thereafter, the local bourse eked out a small gain of 0.23 of a point to 1,503.30 amid follow-through interest on Thursday before reversing, losing 19.32 points to 1,483.98 yesterday, spooked by US recession fears and worries about the health of European banks.

Statistics: On a weekly basis, the principal index rose 0.31 point to 1,483.98 yesterday, versus 1,483.67 on Aug 12.

Total turnover for the week stood at 5.068 billion units valued at RM8.932bil, against 7.776 billion shares worth RM14.682bil traded a week ago.

Technical indicators: After issuing a sell signal at the 88% level on Thursday, the oscillator per cent K and the oscillator per cent D of the daily slow-stochastic momentum index weakened further to settle at 61% and 76% respectively yesterday.

Tracing out a similar pattern, the 14-day relative strength index pulled back from the mid-range to close at the 32 points level yesterday.

Meanwhile, the daily moving average convergence/divergence (MACD) histogram continued to flirt below the daily signal line to retain the sell signal.

Weekly measurements were tricky, with the weekly slow-stochastic momentum index calling for a buy and the weekly MACD sustaining the downward spiral to retain the bearish note.

Outlook: Despite a bullish start, Bursa finished little changed above the flat line week-on-week, as buying momentum fizzled out amid worries about a possible recession in the US and lingering eurozone debt crisis.

We have been telling investors to adopt a cautious stance in their trading approach since spotting a “dead cross” of the 14-day simple moving average (SMA) against the 21-day SMA a couple of weeks ago and we will continue to remind them to be prudent going forward

Based on the daily bar chart, the 14-day SMA and the 21-day SMA deteriorated further the past week and they now had fallen below the 200-day SMA. Such crossing is rare and not a good thing but a disturbing development, as it usually occurs in the early stages of a bearish-cycle and habitually threatens to open the window for a prolong downtrend.

In short, the latest happening does not bode well for the market. In the wake of fresh uncertainty and fears that this may lead to a fallout in risky assets, it is appropriate we shift our market outlook from “bullish” to “neutral” and the best course of action would be to wait at the sidelines until a clearer picture emerges before moving in again.

Technically, indicators are weak, implying the local bourse may drift within a moderate band on consolidation at best this week.

Initial support is pegged at the 1,474 points floor. A break below the recent lows of 1,423.47 would confirm the market entering the bearish phase.

Resistance is expected at the 14-day SMA of 1,505, followed by the 21-day SMA of 1,522 and the next, at 200-day SMA of 1,530. A successful penetration of the upper 50-day SMA of 1,550 would signal a revival of the massive bull rally.

theres a group of ppl i know sold every stock they have took out their fd and collect gold one year ago when they heard some "news" to buy gold last year



today they huat lor.....me i bought at rm95 and sell at 96 [You must be registered and logged in to see this image.] else huat lor

phoenix wrote:theres a group of ppl i know sold every stock they have took out their fd and collect gold one year ago when they heard some "news" to buy gold last year



today they huat lor.....me i bought at rm95 and sell at 96 [You must be registered and logged in to see this image.] else huat lor

wah u not bad even go into gold but 2 buy nw is abit 2 late

phoenix wrote:theres a group of ppl i know sold every stock they have took out their fd and collect gold one year ago when they heard some "news" to buy gold last year



today they huat lor.....me i bought at rm95 and sell at 96 [You must be registered and logged in to see this image.] else huat lor

phoenix,which bank gold account you open?

W wrote:

phoenix wrote:theres a group of ppl i know sold every stock they have took out their fd and collect gold one year ago when they heard some "news" to buy gold last year



today they huat lor.....me i bought at rm95 and sell at 96 [You must be registered and logged in to see this image.] else huat lor

phoenix,which bank gold account you open? [You must be registered and logged in to see this image.]

i use pbb

long time ago....only maybank and pbbank have gold account.....maybank rate not good.....pbbank alot better

nt sure nw any other bank have bor

hlk wrote:

phoenix wrote:theres a group of ppl i know sold every stock they have took out their fd and collect gold one year ago when they heard some "news" to buy gold last year



today they huat lor.....me i bought at rm95 and sell at 96 [You must be registered and logged in to see this image.] else huat lor

wah u not bad even go into gold but 2 buy nw is abit 2 late

2 yrs ago hear gold will go up alot mar.....tht time already surge frm 60-70 to 90 liao now 180 [You must be registered and logged in to see this image.]

phoenix wrote:

W wrote:

phoenix wrote:theres a group of ppl i know sold every stock they have took out their fd and collect gold one year ago when they heard some "news" to buy gold last year



today they huat lor.....me i bought at rm95 and sell at 96 [You must be registered and logged in to see this image.] else huat lor

phoenix,which bank gold account you open? [You must be registered and logged in to see this image.]

i use pbb

long time ago....only maybank and pbbank have gold account.....maybank rate not good.....pbbank alot better

nt sure nw any other bank have bor

UOB should be the best rate among all which gives fixed RM2.00 spread.

W wrote:

phoenix wrote:

W wrote:

phoenix wrote:theres a group of ppl i know sold every stock they have took out their fd and collect gold one year ago when they heard some "news" to buy gold last year



today they huat lor.....me i bought at rm95 and sell at 96 [You must be registered and logged in to see this image.] else huat lor

phoenix,which bank gold account you open? [You must be registered and logged in to see this image.]

i use pbb

long time ago....only maybank and pbbank have gold account.....maybank rate not good.....pbbank alot better

nt sure nw any other bank have bor

UOB should be the best rate among all which gives fixed RM2.00 spread. [You must be registered and logged in to see this image.]

icic....might consider investing gold after i make a fortune here [You must be registered and logged in to see this image.]

phoenix wrote:

W wrote:

phoenix wrote:

W wrote:

phoenix wrote:theres a group of ppl i know sold every stock they have took out their fd and collect gold one year ago when they heard some "news" to buy gold last year



today they huat lor.....me i bought at rm95 and sell at 96 [You must be registered and logged in to see this image.] else huat lor

phoenix,which bank gold account you open? [You must be registered and logged in to see this image.]

i use pbb

long time ago....only maybank and pbbank have gold account.....maybank rate not good.....pbbank alot better

nt sure nw any other bank have bor

UOB should be the best rate among all which gives fixed RM2.00 spread. [You must be registered and logged in to see this image.]

icic....might consider investing gold after i make a fortune here [You must be registered and logged in to see this image.]

hehe..good one..market crash = gold skyrocket. else vice versa.