FBMKLCI Futures - 1470 Holding

Again, not much has changed since the last report two weeks back. In the short term, price is still trading within the 1480 – 1525 range, the 2-day dip aside, while the longer term trend has not turned down yet as the important 1470 support still holds.

It is all too clear now that support is at current level, around 1470 – 1480, as price has bounced off this level for more than 5 times in the past 6 weeks. In fact, daily RSI is forming a series of higher lows, despite the lower lows in price (chart 2), which can be taken as positive. But on the other hand, RSI rebound since early Feb is rather weak, it stayed at bottom half for most part (chart 2), which indicate weak momentum. The 30-mins chart is indicating the same, with a top divergence (chart 1), in spite of strong rebound in global equities last week. Therefore, there is a risk of price falling unless price can gain some momentum. But again, falling price can only be confirmed with a sustained close below 1470.

 Also, do watch out for the 28 day cycle, that may be making a comeback. It pointed to a Mar 15 bottom and a good upleg should see price going higher for at least 14 day, around mid next week.

Again, look for price to trend in the direction of break of either 1470 or 1525, which is also 09 high. The break direction likely answer the question on current consolidation, is it a longer term consolidation since Nov or short term one since early. The former should be positive and latter negative.

Meanwhile, the mid and small caps are rebounding better, probably taking cue from stronger global equities. This too should be positive for FBMKLCI. Should price fails to break above 1525, it could either signal weakness in equities that yet to manifest in global markets or a country specific, perhaps Sarawak election?

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FBMKLCI Futures - Still Looking for Bottom

Price is still on a short term downtrend with what we believe still a longer term uptrend. Short term downtrend is definitely not in question. Downtrend resumed after failing to hold 1524 support and is still in place as price is below moving average (chart 1) and the lower daily closes.

Unfortunately, the direction of longer term trend is still in question. There yet to be clear downtrend picture formed and therefore the prudent view is that prior trend, which is up, still in place. The aregument for the view are:

1) the 4 day rebound last week is considered too short to be an up-cycle. Therefore, the fall from 1580 is still considered a downmove within a cycle and so price is currently searching for bottom;

2) RSI too has only just reached oversold level, first time since May10;

3) Similarly, it’s the first selling spike since then and market breadth is not particularly weak; 4) 20 week moving average still points up; and

5) MYR is still on a downtrend and developed market uptrend still intact.

If so, rebound is expected and if it is to occur soon, the first signal would be a close above 1500 level. Thereafter, the strength of rebound is to be assessed and anything above 61.2% retracement level will be in support for the bull. Anything below that and a break of the eventual bottom should mark the beginning of downtrend.

Another thing, Dec- Jan rally is fully retraced and price is probably correcting a larger cycle. If it is correcting May-Jan rally, the correction so far is only the tip of iceberg as anything between 1445 to 1370 (38% t0 62% retracement level) is considered an acceptable correction for an uptrend. 

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FBMKLCI Futures - Mid Cycle Consolidation?

Price has resumed its uptrend and last week’s sideway move is likely a short term consolidation. Based on current trend, price should break up and even a break down may not be enough to change current picture.

The new all time high printed signals good resumption of trend as: 1) stays above 08 high for 2 weeks now, 2) RSI also moving above consolidation high, and 3) price again hugging the Bollinger band.

We believe price may trade higher following last week’s consolidation given the current uptrend, also higher lows printed every two days, Monday, Wednesday and Friday and daily stochastic is still in buying mode (chart 2). Price touching 1600 is possible given consolidation range of around 20 pts.

However, short term strength may sizzle if price trades and especially a close below 1566. Support likely come at 1555, likely a mid cycle bottom, as it recorded the lowest RSI since late Dec (chart 1). Support area maybe around 1520-1545, the 62% and 38% Fibonacci levels of current rally.

Note too that the 28 day cycle may still be in play and now we are at day 19. Therefore a break up may last for another week while a break below likely see price bottoming in about 10 days from today.

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FBMKLCI Futures - New Upcycle?

Price has likely entered into a new cycle, within a longer term uptrend. We believe long term trend have yet to turn down as:

1) FKLI yet to chart lower low since May, it is not even below Oct low of 1470

2) Still above its 20 week moving average (chart 3) and above medium term trendline (chart 2)

3) Yet to make significant bottom since May

At the same time, price maybe into the 9th day of new cycle with bottom at Dec 20 as:

1) 20 Dec bottom is 59 days after Sep bottom, slightly above 2x prior cycle;

2) 20 Dec bottom found support right at 6 month uptrendline; and

3) 21 day moving average starts moving higher.

Nonetheless, the 1530 resistance has yet to broken convincingly. Therefore it needs to be broken to confirm the new up-cycle. Do note too, further positive signs are evident. The first is sentiment been overwhelmingly positive in the past 2 weeks while Ringgit strengthened further which usually coincide with stronger KLCI. Also, in 08 FKLI closed above 1450 for only 2 weeks whereas it has been above the level for 15 weeks now while the midcaps continue to print higher close.

So if all come into play, price should close above 08 intraday high of 1536 soon and further 10 days of upward movement is possible. It be great to if breadth confirm the move. But a close below 1485 and definitely below 1470 should see increase in selling pressure.

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FBMKLCI Futures

Bias is still down but may turn up if trades and closes above 1498.
Resistances at 1502, 1510.
Supports at yesterday's low 1489 and Friday's low 1485. Downward pressure likely increase on close below 1480.

FBMKLCI Futures - Consolidation

Price is still consolidating within a longer term uptrend. We believe long term trend have yet to turn down as:

1) FKLI yet to chart lower low since May, it is not even below Oct low of 1470

2) Still above its 20 week moving average (chart 3) and just above medium term trendline (chart 2)

3) Yet to make significant bottom since May

But price is still consolidating as:

1) Yet to trade above Nov and all time high of 1530 and 1536;

2) Yet to trade below 1470, the low of Oct and Nov; and

3) 21 day moving average still flat (chart 2).

Trend is still uncertain until either level is broken convincingly. Nonetheless, on a short term basis price is still trending lower since 9 Dec, as price is below both trendline and moving avg (chart 1). But last Friday action could provide signal for immediate direction. We had a first positive close in 6 days right after high volume trade at 1485 low. The close was also above the medium term trendline. That day was also 60 days since Sep low, which is about 2x the prior cycle of 28 days.

Therefore, if price is to turn up and 1485 is the latest bottom, price should close above Friday’s low but if short term downtrend to continue, price will trade below 1485. Expect downward pressure to increase on close below 1480.

Do note that global equities are giving mix picture at the moment with the US continue to print higher close while weaknesses are seen in some emerging markets. Mean-while, Asean currencies are also showing weakness and in the past few year, Asean equities rose on stronger currencies. We believe that whatever the next trend turns out to be, developed markets equities and currencies should confirm the move too.

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FBMKLI Futures: Correction - How far will it go?

  

Price is currently on a correction within a longer term uptrend. We believe long term trend is still up as:

1) FKLI yet to chart lower low since May, it is not even below Oct low of 1470

2) Still above its 20 week moving average (chart 3)

3) Yet to make significant bottom since May

However, on the short term basis, price is trending lower. It is clear from chart 1 that price is making lower high of 1510, 1506 and 1500 (also near 21 day moving average). Nontheless, supports isn't too far at 1480 and 1470. Price is unable to trade below 1480 for a significant amount of time and at both times rebounded off October low of 1470.

Therefore, we believe that clear buying power will not be evident until price trades above short term resistance level, and especially with a close above 1510, despite the holding of support levels.  Alternatively, one can also monitor the rectangle 1500 - 1480 level which forms the weird shoulders, and trade support and resistance. As such, expect downward pressure to continue on close below 1480.

Note too taht the sideway move of RSI and stochastic too suggest that a complex consolidation, not signaling an end of down movement yet, contrast to the V shape bottom of Aug, Sep and Oct.

On cycle basis, price seem to move away from prior 28 day cycle but the 32 day upmove from Sep was probably long enough to suggest that we are still in up cycle configuration.

Fibonacci retracement of level of May - Nov move is 1350 (61.8%) and 1420 (38.2%).

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