KLCI Market Review and Outlook Commentary - 19122010

KLCI Daily Chart (Source: TradeSignum)

Fundamental outlook

Refer to KLCI Daily Chart shown above, the KLCI index was moving in a tight range and profit taking activity kicked in as anticipated. The market movement was accompanied with low volume transacted due to the year end holiday mood and most of the fund managers had closed the books to log in the huge profit gained in year 2010. The KLCI has broken the 1st support level 1500 and closed at 1499 level on 17th Dec 2010, while the market volume was hovering between 1.0bil level with less excitement anticipated. The market outlook for the coming weeks will be about the same and should maintain until the last trading day on 31st Dec 2010.

Technical Outlook
As long as the KLCI stays above the long term bullish support line, the uptrend is still intact and the super bull run in year 2011 is highly anticipated.

Technical Indicators
KLCI broke 50MA: Bearish.

KLCI above 100MA & 200MA level: Bullish.
MACD (12,26) dead-cross: Bearish.

RSI stays at 50 level: Neutral.

Support level

1,480, 1460, 1440.

Resistance level

1,500, 1524, 1531.

Near Term Outlook (30-days)
KLCI less excitement with less activity happening due to the holiday season in Dec 2010, most of the fund managers may already closing the account books earlier thanks to the huge capital gain in year 2010 bull run. Bluechips may not fluctuate much from current level, but undervalue mid-cap to small-cap may outperform the index link counters in near term.

Long Term Outlook (6-months)
With the improvement of global economy sentiment especially in US USD858bil tax rebate 2-years extention, Increase of Germany consumer confidence, delay of interest rate increase in China, as well as higher potential growth in emerging markets especially in Asian region. Thus, the equity and commodities markets are anticipated to be outperform the other investment like bond market.

Trading opportunity

Bargain hunting on good fundamental stocks on weakness.

Favourite stocks recommendations

Finance - Maybank, CIMB, RHBCAP, PBB.

Consumer - Asia File, CI Holdings, GuanChg, TWS.

Construction - Kimlun, Sunway, Gamuda, Wct.

Healthcare - KPJ, Faber.

Plantation - BStead, TDM, MHC, Cepat.

Trading/services - Kfima.

Gaming - Genting.

Telecommunication: Axiata.
Environmental: Cypark.
Oil & Gas: Kencana, Pchem.
Industrial: DRBhicom, Daibochi, Scientx.