Technical | Fundamental Analysis Discussion Stocks Listed In Bursa

Thursday, December 18, 2008

Bulls Alert In Wall Street / 综合指数 2008年 12月 17日 / Composite Index 17/12/2008

Bulls Alert In Wall Street By Zhuge Liang

Will Bursa Sound The Alarm Too?

When the Fed cut interest rates (Target Federal Funds Rate) by 75-100bps to a record low of 0.25%-0% and its discount rate by a similar margin of 75bps to 0.5%. As a result, the Dow rallied for a 360 pts breakout above the 30-days MAV.

Dow : Bulls broke short term MAV line
We had thought that the Dow has already priced in the effects of rate cut. Actually the Dow had priced in a rate cut,
but not a rate cut of this quantum. Yesterday, the market was expecting a 50bps to 75bps rate. But last night, the Fed sprang a huge surprise when it actually lowered the target rate by as much as 75bps 100bps.

What the Fed did was they actually set a range for the target rate as opposed to a single number. This is the first time in recent memory that the Fed has done so. By setting the target rate to as low as 0%, the Fed need not wait for another FOMC meeting which is 2 months away, to lower its target rate to 0%.

By setting a range to as low as 0%, the Fed now has the official authority to effectively cut the
actual/effective fed funds rate to 0% through open market operations if it sees the economy worsen further. Effectively, the Fed is sending out a very strong message that it will do everything in its power to save the US economy. Hence the huge jump in the Dow last night.

As a result of the Fed’s strong message, the Dow has now broken above its short term 30 days MAV line, which denotes significant strength upwards.
The next stop for the Dow would be to retest the upper resistance of the trading box at 9792.

KLCI : MAV & Linear Downtrend Crossing Makes Oily Slope

Now it is the KLCI’s turn to try and break above the 30 day short term MAV line. At this time, the 30 day MAV line is tricky as it intersects with the linear downtrend line in forming a tough resistance at the 870 level. If the KLCI can break above this 870 level, it could mean the continuation of its up-move. But it's easier said than done considering the lack of participation by many traders on the sideline. This speaks volumes of a truly weakened KLCI.

RESORTS is a fine example whereby as much as 75% of all components stocks and bluechips are, at best, sputtering along like a 1970 Model Honda Cub 70. We'd be a much better proposition if we have something like the Mat Rempit's Kapcai if we need to vroom along until the year is out. Have a strong feeling the traffic cops will be setting up a few roadblocks to check any daredevils who hopped onto the KLCI 1000 cc 2009 Speedking.

We are now watching the 870 level very closely. If kena speed trap >>>> POH CHUNG lor. Recklessness is not an excuse. You have been warned!


综合指数 2008年 12月 17日
如图中箭头A所示,由于布林频带(Bollinger Band)开始打开,再加上综指继续的处于布林中频带(Bollinger Middle Band)以上,所以综合指数终于上扬突破了T1这下降趋势线。无论如何,综指目前是第一天突破了T1,综指接下来是必须继续的维持在T1以上,那综指才能算是成功的摆脱了T1及T2的下降趋势线。





Composite Index Daily Technical Analysis 17/12/2008

As indicated by A, the Bollinger Bands Width expanded 16% on Wednesday, with the KLCI above the Bollinger Middle Band, therefore, the Bollinger Bands Width is now suggesting a bullish biased signal. Meanwhile, the KLCI also breaks above the T1 downtrend line by margin.

Nevertheless, the Bollinger Bands Width is only showing an early signal and to sustain this bullish signal, the Bollinger Bands Width has to continue its expansion. Immediate support for the KLCI is now at the T1 line followed by 800 points level.

As indicated by B, total market volume only increased 12.1%, despite the KLCI ended higher. Therefore, total market volume is still below the 40-day VMA level, suggesting the market participation is still insufficient.

As circled at C, the Stochastic is now above 70% level, which is the short term bullish region. If the Stochastic should remain above 70% level, the short term market movement is expected to be bullish biased. In conclusion, the bullish Bollinger Bands signal on Wednesday was not confirmed with a significant increased of volume, but it is still a positive sign for the market. As long as the KLCI could maintain above the Bollinger Middle Band with the Bollinger Bands Width continue to expand, it would help lifting the market sentiment, thus volume is likely to increase

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