My FBM KLCI Outlook (Based On FBM100)

Here is my FBM KLCI outlook based on FBM100 index. (Need to get familiar with FBM100 index now)

My outlook is very similar to KLCI. It is bearish both short-term and longer term. Likely we still in wave 5 (last bullish wave of  Elliot 5-wave sequence) and it is looking for the end. The likely level is the resistance at 7,645 pt. I don't have the volume data to assess the strength of last week up-trend. For now, let just assume the volume trend is similar to FBM KLCI.  Since the last close FBM100 index is 7,576.71 pt, it almost near the resistance 7645.6 pt level, I find next week is a crucial week. It is only 68.89 pt. We are talking FBM100 here, not FBM30 KLCI. 68.89 pt is only about 0.91% difference to last close.*  That resistance level is significant for both short-term and longer term outlook. See KLSE FBM100 daily chart below.


It need new money poured in to the market in order to break resistance. I don't know about fund availability of our  institutional funds but I think next week is the decisive week for them.  And they are the market leaders. It is decisive week for us  too. I see the only bullish factor is the improved financial earning release in US. For now, I am in bearish mode. If FBM100 index  decided not to breakaway but downward, be prepared for a correction to least a 6,670 pt level.    

Not much to say on that, just wait and see next week.

Here are opinions from a dealer and a market analyst on the current KLSE as appeared in TheStar Saturday 25 July 2009: 

A 10 years trading dealer said "yes, you see 1 billions volumes being transacted in the last two weeks, but there's no real liquidity in the market. Retailers are definitely not in. There are actually very few participants in the market. It is just the institutions that are supporting the market".
A technical analyst from ECM said, "The bulls might take out the key 1,165 the key resistance level. As the run up in the past 10 days have been hogged by the blue chips, he feels that lower liners will begin playing a central role in the coming weeks. He also said, "There are many people still sitting on the sidelines. This is a good news, a it shows many are still non-believers, hence the market has the room again to go."

I can't disagree with both.  Both talking about the lack of market participation. The technical analyst went  on further,  "lower liners will begin playing a central role in the coming weeks."  Another way to put it what he is was saying  "the retails participants  will be lured by the KLCI up trend and start buying lower liners".  Those sidelined retailers (that might include you and me) will be lured and come in coming weeks. Are you?

What you shouldn't forget is lower liners typically is the last batch to run before the market up trend ended. This is where unsuspecting retail traders get 'caught'. If you must trade, it should be for a very short (few days) holding. Yes, it is 'hit n run' trading. It is 'touch n go' trading. Cut loss if you must. Holding longer could make you 'caught n stuck' in uncompromising positions.

* The feel of FBM100 point changes is the main 'feel' we need to develop if we want to use FBM100 as our day to day market indicator. It a bit harder because we have been (and still)  shoved with KLCI for so long. There is a little  poll on the right side column of this blog if you haven't notice. I was thinking of using FBM500 actually but let just start with FBM100.