The opposite directions are in control for now but could they stage a U-Turn?

Now, there are alot of chatter that's going on for the two markets. For the KLCI/FKLI index, ever since the new year of 2014 started, it had been dropping like mad. Some say that it was the "kang kung" govt that wanted to show their "kang kung" power and raised the index to crazy heights which does not make sense. It's only 30 counters and hence, very easily manipulated and as we all know, KLCI and FKLI do move in tandem. Others also said could be the foreign funds pulling out even more. On the other hand, FCPO rebounded after a week or so of bears defying export data's which showed big negative numbers. However, it was clearer for FCPO as USDMYR seems to gain strength and has reached previous high again. Also, reported that there would be leaner production this round which will tighten up stocks. Having said that, some are still remaining cautious as exports don't show a good picture and the speculation of lower RM to increase more purchasing from importing countries.

Nevertheless, let's analyze a little bit on these two markets:


FCPO

The good news is, the bullish trend line is still in tact as can be seen in the chart above. 15th Jan has shown the signal of the rebound. Supporting that, USDMYR had been climbing and now it is at 3.316, which was a previous high. Indicators are also showing positive bull movements. Stochastics has crossed up from its low while MACD-H shortens higher. MACD-H and price shows a bullish divergence which means the bulls are ready to push prices higher. MACD lines are curving upwards but has not crossed its signal line. Candlesticks for today are above 12EMA and 12EMA has a curved upwards line which is an indication of bullish powers has return. Having said that, export data for Jan 1-20 was down by 15% and hence, capped down any further bulls for the moment but it is believed that with the weaker ringgit, demand will be more.

FKLI

FKLI on the other hand shows a different direction. It has broken a trend line and as mentioned earlier, dipping since after New Year 2014. With stochastics still crossing down and also MACD lines and MACD-H are still below water. However, today's candle shows a doji sign which marks the market is indecisive on the movement as it has tested 1800, a strong support. Nearest support levels are 1800 and 1786. Today's candle showing that doji may or may not indicate a rebound. It will depend on the fundamentals now. Coming from several days of drop, at current price seems to be the logical current price that makes sense. That is why, maybe there would be a rebound from here. However, candlesticks are trading below all 12,22 and 32EMA. 

Personal View: 

FCPO: 3 days of high bull gaps may attract some retracement. 15-20 points retracement would be a good spot for long positions.

FKLI: Indecisive. Wait for confirmation on next trading day. If there are no signs of recovery, go short on any strength but by candlestick pattern, there should be a rebound

One up, one down. But which one?

Actually, it's very obvious which one is most likely (but never 100%) to move in the expected direction. Nevertheless, to profit from this, still boils down to ones strategy and how well their money and emotion management is. People tend to focus on a definite answer about the market but they have forgotten the basis of what the market is..and that is the market is an extremely big collective pool of people. Now, when there are so many people involved, this means the more emotions there will be in the market. Like George Soros once said, "It's not about whether you are right or wrong, it's how much you make when you're right and how much you lose when you're wrong". Brilliant words from one of the world's best traders. There is no "holy grail" strategy that will fit for all, it's more on what will one do when the market moves in a certain way.

Let's take a look at the two futures market in bursa:


FCPO

FCPO had a series of bad fundamentals which spells from strengthening of the ringgit right up to export data. With the ringgit strengthening and also Soy Bean oil going down, due to increasing supply and lower demand, FCPO tracked that and dented any bullish hopes in it. Adding that for Jan 1-10 exports fell 21% and with a surprise increase of stocks of 0.3% had hampered down FCPO price further. On the technical side, as we can see that FCPO had turned and fullfilled the bearish divergence between price and MACD-H. Prices are now trading way below all levels of EMA (12,22,32) and sticking to the lower band in the Bollinger Band. MACD lines have also tracked lower highs all the way which also shows a bearish divergence between MACD lines and also price. MACD lines had both crossed the 0 line and is at the negative region showing bears are currently in power which had been the case for the past week or so.


FKLI

It had been said that this year even with the foreign funds pulling out from the market, it's still going to be a good year for the equity market. ESPECIALLY index counters. Which in turn would direct FKLI movement too. With gold also gaining into highs, it had spurred Asian markets regionally to rise and in turn gave more boost to our KLCI and FKLI. Although with the GST coming in which actually is suffering for the rakyat but it is seen as a revenue for the markets as the index counters are always backed by the govt. It is also seen to have a "oversold" bounce back from the previous week's correction. This week there will be major companies in USA reporting on their earnings and hence, this will definitely move the market. With Intel and Microsoft being one of the many companies that reported positive earnings, FKLI is set to move further upwards. On the technical side, as we can see that FKLI is still trading within the uptrend line. MACD-H showing shallower histograms which is ticking upwards and also stochastics have also crossed upwards after several zig zags at its low. Notice a small candlestick pattern of a hammer on 7th Jan 2014, had actually given the signal that FKLI is ready to make a U-Turn upwards although there might be some selling activities but it's still on an upward movement. With the long green bodied candle on 13th Jan 2014, FKLI has shown that the bulls have returned and is set to make further upward movements. Although candlesticks are trading below 12 and 22 EMA, both these two EMA's have not crossed down which means that it was just a mere correction which happened last week.

Personal View:

FCPO: There might be some rebound movements but with FCPO closing below 2500 on Monday, bears will take over and hence it's best to sell on strength and follow the trend. 

FKLI: Look for supports and buy on weaknesses. 

2014, a brand new year for the markets, or is it?

The new year of 2014 has kicked in and it's been a great run for 2013. Both KLCI and FKLI recorded historical highs and from technical point of view, seems to stage more bullish moves in 2014. There are many worries for 2014-2015 as some  say the recession will hit at the last quarter of 2014 which spells the worst recession in the history of mankind. With stimulus still on going, although reduced by 10b, many still take this as a high risk move as govt debts are still at large and seemingly increasing.

On the other hand, USDMYR had a "end-of-the-year" push reaching 3.3x which gave FCPO a bullish move. Adding that this month is the month of the Chinese Lunar New Year may spur more imports from China which in turn could improve exports and also reduce stocks. Nevertheless, 2014 eve was defiant on its fundamentals probably due to rumors on increase exports for Jan 2014. Weather concerns may play a smaller roll now as during the start of the year, rains start to diminish and stocks will increase. 

Nevertheless, lets take a look at the charts for both of these markets technically wise.

FCPO

FCPO had a crazy volatile movement at the last month of 2013. However, the last  day of 2013 (31st Dec 2013) showed some buying power storming up FCPO to 2659 at the end of day. Both MACD-H and MACD lines show positive bullish turns as MACD-H has ticked up to the positive region indicating prices are on the bullish side. MACD lines have crossed upwards from its signal line indicating the bulls have taken over. Stochastics have shown a steady climb and poised to test its resistance at 90. Thin volume was at the last few days of Dec but on the 31st Dec 2013, there was a higher volume indicating that probably the bulls are preparing to push on in 2014 and in line with the Chinese Lunar New Year. The long white candle on 31st Dec 2013 shows engulfments of the 3 candles the day before which could spell strong bullish movements for the coming days. Candlestick stays way above all levels (12,22 and 32) EMA showing that the bull trend is still in tact.

FKLI

FKLI also show strong movements for the past few days. Probably due to good regional news on Jobs data, the minimum taper of the stimulus and most importantly the window dressing that occurs end of the year has took a boost for FKLI and KLCI. However, MACD-H may form a bearish divergence as prices are rising against a lower MACD-H curve. Having said that, MACD lines show otherwise and is still on a bullish move as the MACD average lines have moved upwards from its signal line. Stochastics showing that it had reached its resistance of 90 and a lower volume on the rise may detriment the bull move further as lesser participants are actually going for the bulls. However, thin volume due to the holidays could be the reason why too and may not be of impact on the movement. Candlesticks are trading strongly above all EMA levels (12,22 and 32) showing that it still has strength to push on but may retrace a little before continuing the bull as it has been flirting around its channel top band.

Personal View:

FCPO: Buy on weakness but if movements are weak or sideways, take quick intraday shorts with quick cut losses
FKLI: Plot supports and take longs there as there are most likely be retracements from strong resistances. However, if prices have hit strong resistances, prepare for some retracements and for those who are in line with their risk management, intraday shorts can be implemented.

HAPPY NEW YEAR AND MAY EVERYONE BE PROFITABLE!