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