FKLI and FCPO technical update

The FKLI is a market that has many people baffled.  It shows signs of an upward movement yet is conflicting some traditional technical indicators such as the 200 day moving average.  A trend line within the 1800 to 1850 box was tested and seems to be holding for the sellers.  

If the market were to go below 1670, the low in February, it would probably find some support.  At any rate the market is in a difficult place right now, trying to break upward but just not having the same follow through.



FCPO is an even more difficult market to analyse.  The recent swings in prices have been going from bearish to bullish in just a manner of a few days.  All I can see is that the market is neutral, having tested the lowest trend line but may encounter some resistance on the way up.  Volatility doesn't happen this often usually, so rest assured this movement is a rare occurrence.

KLCI/FKLI and FCPO technical analysis update

FKLI futures broke out from a very strong support level at 1760 directly to an uptrend, but not all is well as we note the 200 day moving average is negative sloping and also 1800-1850 contains pretty difficult resistance.  In order for the market to set up to try and break 1850, simple supports must have held, baby steps, starting with 1770.

Today we seem to have gotten that support level holding with a clear break above 1790 after a test below.  The market is looking like it is on its way to testing 1850.  In my last update, I did state the market is most likely looking to move higher from 1750, but the nature of the rally seems to be a slow large range movement upward based on today's market information.  Movement is still decidedly upward for the short term though.  Ultimately I do expect the market to hit 1850 in the next few months.  Note* Although it may hit 1850, it may not follow through much higher.

FCPO is in a totally different camp.  A move past the 200 day moving average saw prices drop like a rock.  In order for FCPO to have a chance at reaching new yearly highs, the support at RM 2,080 must hold.  A move below that will set the tone for this year as somewhat bearish or ranged and choppy.



So far though, the immediate sentiment is bearish, so careful trading!

The ringgit outlook and just how bad can it get

Malaysia seems to have received a lot of accolades due to its resilient economy, having recovered  from the asian financial crisis without a bailout from the IMF.

I'm not so sure it's really well deserved, because when we look at the Ringgit, the currency isn't far away from all time lows versus the US dollar.  If you recall the peg rate, it was fixed at RM 3.8 to the US Dollar and we are now at RM 3.53 versus 1 USD.  Perhaps economists have not looked at Malaysia over a long enough time frame.  I'ts been roughly 10 years, surely the Ringgit is worth a lot more now than back in 1997, but according to the markets it's not.

The major problem I can see is confidence.  If most markets are doing well, inevitably international investors will invest in Malaysia, but it won't be a without reservations because at any time, Malaysia can re-instate capital controls.  

Ultimately, the capital controls of 1997 still haunt the country today.  Investment in Malaysia has never been quite the same since then.  In order to purge the stigma of capital controls, the government would need to be controlled by the opposition.

The current ruling coalition will always have investors anxious as they are the ones who instituted capital controls.  But even then, the saying goes "the genie is out of the bottle."  I think even the opposition will consider capital controls if they are desperate.

The Ringgit has two distinctive down trend lines.  It will need to get past these two trend lines with some authority.  It's likely that prices will dither around these levels for at least the next 6 months.  Note that the currency is 1 MYR will buy x amount of USD, hence the small values.

FCPO and FKLI technical update

Since the recent bottom near 1700 the market has rebounded quite strongly.  The rebound may have legs as an uptrend seems to be developing, The next major selling spot would be near 1850 by the looks of the charts.  It actually isn't that far away.  

FCPO has rebounded quite nicely and looks to continue its upward trajectory.  If you aren't sure why the market has rebounded, we can look to two things, the market has sold off extremely hard over the last two months, breaking a lot of technical areas and stops.  After all the selling, we are having a little rally.  The rally isn't just due to  short covering but fundamentals.



If you've never seen what a flooded palm oil palm oil plantation, you can look at this.

It's not exactly a little flood.  You need a boat to go harvest the palm oil fruit.  The rains are right now causing massive floods.  There is no way palm oil plantations can get a lot of the crop.

KLCI and FCPO technical update

The FKLI tested a failed down trend line by a big chunk.  So far it has rebounded quite meaningfully compared to the test, leading me to believe the market has found a temporary bottom.  Overnight markets are also helping.  Such is the life of an FKLI long trader.  It seems everyone is ready to sell overseas markets to the point they've sold too much.  When the US markets do better, the FKLI does better by a big chunk as well.

FCPO is trading in a holiday range.  I don't know what to make of it.  It's not exactly strong or weak, just muddling through.  The whole Russia issue doesn't seem to be going away.  FYI Russia buys a fair amount of palm oil, about 300 thousand tonnes a year.  I imagine palm oil is affected by the threat of capital controls to stem a severely weakened Ruble.

Long term FKLI chart and how trend lines work

I remember mentioning in a previous post about a long term trend line near 1700.  Here it is.  This trendline signifies a breakout from the FKLI previous decade high.  As you can see we have gone lower than the trend line. 

Trend lines are usually set by people who have clout in the market.  Sometimes these trades by big players don't pan out and thus the big player has to re-evaluate his position and is praying for the market to come back to his original trend line so he can cut his remaining position at a positive number.

Trend lines are more like guides than hard fast market rules.  Sometimes the market does dip below the trend line, but buyers push the market up to its trend line and beyond.  Hopefully it turns out this way but of course it all depends.  The lower it dips below the trend line, the more of a failure that trend line is.  I would be extremely concerned if the market dipped near 1600.  That point is a lot further than the big player who pushed the market higher would want.

Magnum Technical Analysis

Magnum stock is one I've always liked and personally purchase their products from time to time.  The stock pays consistent dividends.  The company plies its trade in the gaming industry and has reached a market size which enables it to compete with the big boy, Berjaya Sports Toto.  It's latest 4D jackpot is within the 20 million Ringgit prize pool which is a testament to its market strength.

Any time I get a chance to buy a stock like this on a discount, I'll take it any day.  There are only a few things which have always been recession resilient, alcohol, taxes, cigarettes, death industry, and gaming.  Of course most of these industries face the risk of government meddling, but assuming status quo, buy these industries on the cheap.

Gaming tends to also have a problem with over expansion world wide, but in the case of Malaysia I doubt it will ever experience that scenario, given the conservative religious majority.  Restrictions on new entrants and a resilient industry is a winner in my books.  The price of course is the major issue which leads me to some price analysis.

The stock is on an uptrend with a breakout in 2012.  It is now approaching that particular trend line sent at the start of 2012.  For me, a buy below 2.25 would be the best, but I would consider putting in a purchase at the trend line.

KLCI/FKLI and FCPO Technical Analysis

It's been a quiet weekend.  Not much news only that industrial production has expanded which is good, but the market has been bad regardless. 

The FKLI has stopped its downtrend with the rally a few days ago, buyers can take note of a breakout trend line at 1711, as well as a couple of failed trend lines to provide upside fuel.  At the moment the market is trading in line with regional markets which is somewhat good news in that the selling is getting exhausted for now.  Our market tends to follow regional cues when prices are in line with other markets.  Of course if other markets take a nosedive, we will likely follow.



FCPO has stopped its downtrend lower for a few days now.  But it's tough going for CPO at the moment as Friday saw some selling on a day which is usually quiet.  It may be a bad omen that sellers are willing to sell on a day people are supposed to be off.

Don't erase your trend lines, KLCI outlook

I'm beginning to wonder if trendlines are some arbitrary pricing action manipulated by big players.  The reason being that a lot of trendlines that fail to materialize to a downtrend or uptrend are still valid after they've been proven invalid.  That's a mouthful.

A failed trend down in October for palm oil has simply just been flat out wrong.  Nevertheless, all that selling has seemed to be a large position as the seller who started that downtrend swiftly reversed his position at where the downtrend would be just yesterday.

It's as if the seller said...okay guys I know i'm wrong at this time but I've got a backup sellers behind me that should push the market down.  If it gets back to my area, i'm gonna take a load off.

Boy was that load big!

The FKLI pretty much lives and dies by the price of oil.  They simply get tons of money from the commodity and with Malaysia on a spending spree as well as oil at such a low price, the Ringgit is not so hot.



Fret not though, all is not lost!  We still have hope in the last remaining trend line at near 1710.  This breakout was inspired by infinite QE.  Of course the failed trend line at 1790 will be the resistance.  I won't be erasing the failed trendline just yet.

FCPO and FKLI/KLCI Technical Analysis update

The FKLI  is trying to test the long term trend line at 1790.  The next few months will be crucial.  If the market still breaks significantly lower, the uptrend will need some time to form again.

FCPO has started a new downtrend.  The support at RM2,193 was handily broken.  At the moment, it is not certain just how low FCPO will go, but by all accounts most palm oil producers will have a difficult future.

In a previous post I was speculating perhaps FCPO was forming a breakout by staying above the RM 2,040 mark.  That turned out to be totally wrong.  Instead RM 2,193 gave out like a rusty old car on a rainy morning.  And we are at RM 2,100.

Long term technical outlook for FKLI, and the stock market and updates to FCPO.

The FKLI is one of the more difficult charts to plot trend lines for and interpret, My interpretation is that the uptrend is still in tact, set back in 2011.  But is losing steam especially with the current short term up trend over the last few days  fizziling out.

Given the weakness in oil price, I believe Malaysia might not be as attractive an investment destination as it once was due to the country basing its budget on higher price oil.  With all those dividends from Petronas used to fund the budget federal, There could be a shortfall.

But, the country also gains on subsidy savings, so perhaps it's not so bad.  The weakness in the ringgit tends to lead me to think Malaysia will be hurting more from lower oil prices than subsidy savings though.

If we are to consider the FKLI as an uptrend market, yes, the uptrend is still in tact.  But I actually think that we might hit down towards the 1400-1600 area some time in the future.  We certainly have the catalyst with lower oil prices.  If the market is able to come down, the next test of the trend line near 1780 could be a massive failure.

The trendline at 1770 in October is running at an increasing rate of about 8 points per month for those wanting to predict where the trend line will run in the near future.

Short term Outlook

Palm oil did an about face to the downside, pretty much at the area which i mentioned last week, the July breakdown point.  The resistance zone just took the uptrend and smacked it on its head.  Support is at RM2,220



The FKLI looks to be ending the upward movement after 3-4 red days.  Usually uptrends have just one down day followed by reversals higher.  This uptrend looks dead.  When we zoom in on the micro trends, we have two areas, the lower box and the middle box as possible support points.

Top 100 Malaysian companies by market cap 2014

Since it is hard to find a list on the internet with the top 100 companies in Malaysia by market cap, I've went and created a list from scratch using basic tools.  This is probably close to what is in the FBM 100 index.  Along with each company,  I've listed the approximate market cap.

Company	Market Cap
MAYBANK	88.59	bil
TENAGA	73.7	bil
PBBANK	72	bil
AXIATA	60.7	bil
SIME	57	bil
CIMB	51.46	bil
MAXIS	50.1	bil
PCHEM	48	bil
DIGI	45.8	bil
PETGAS	43.3	bil
IHH	40.6	bil
GENTING	35.2	bil
IOICORP	30.669	bil
MISC	30.6	bil
HLBANK	26.9	bil
TM	25.45	bil
GENM	25	bil
KLK	23.4	bil
RHBCAP	22.4	bil
SKPETRO	21.2	bil
AMBANK	20.28	bil
BAT	19.96	bil
PETDAG	19.4	bil
YTL	18.68	bil
HLFG	18.57	bil
PPB	17	bil
ASTRO	16.9	bil
NESTLE	15.9	bil
UMW	13.62	bil
FGV	12.7	bil
KLCC	12.005	bil
YTLPOWR	11.85	bil
GAMUDA	11.62	bil
WPRTS	10.2	bil
AIRPORT	10.18	bil
IJM	9.78	bil
ARMADA	9.5	bil
HAPSENG	9.46	bil
SPSETIA	8.6	bil
LAFMSIA	8.488	bil
UEMS	8.485	bil
IOIPG	8.29	bil
BKAWAN	7.969	bil
GENP	7.8	bil
MMCCORP	7.7	bil
AFG	7.4	bil
UMWOG	7.37	bil
MBSB	7	bil
AIRASIA	6.67	bil
BIMB	6.4	bil
AFFIN	6.35	bil
SUNWAY	5.925	bil
F&N	5.82	bil
HARTA	5.49	bil
UTDPLT	5.41	bil
IJMLAND	5.3	bil
BSTEAD	5.24	bil
AEON	5.07	bil
BJTOTO	4.958	bil
ORIENT	4.59	bil
SUNREIT	4.54	bil
KULIM	4.53	bil
IGBREIT	4.51	bil
GASMSIA	4.48	bil
PAVREIT	4.43	bil
CMSB	4.37	bil
MAS	4.34	bil
DRBHICOM	4.31	bil
BURSA	4.24	bil
MAGNUM	4.2	bil
QL	4.17	bil
BJLAND	4.15	bil
KPJ	4.029	bil
IGB	3.91	bil
LPI	3.89	bil
MHB	3.84	bil
GAB	3.7	bil
MAHSING	3.48	bil
MSM	3.44	bil
CARLSBG	3.42	bil
HLCAP	3.4	bil
BIPORT	3.2	bil
TOPGLOV	3.1	bil
TSH	3.1	bil
SHANG	3.09	bil
UOADEV	3.06	bil
E&O	2.989	bil
DLADY	2.951	bil
KOSSAN	2.92	bil
YINSON	2.89	bil
TCHONG	2.87	bil
TIMECOM	2.819	bil
PARKSON	2.8	bil
IJMPLNT	2.757	bil
MRCB	2.69	bil
POS	2.685	bil
DAYANG	2.657	bil

Bursa monitor to include local trading commentary

Bursa Monitor will now have a "Fast Money" type feel of a trader in addition to the material on this site.


We will tell you what is hot and where the trading momentum is. Currently we are recruiting for contributors to the site. Email bursamonitor@gmail.com if you would be interested in a trader like commentary.

Fast Money is an American financial stock trading talk show that began airing on the CNBC cable/satellite TV channel on 2006-06-21. Since October 10, 2007, it has broadcast every weeknight at 5pm ET, one hour after the close of trading on the New York Stock Exchange.^[3] The show originates from the NASDAQ MarketSite in New York City.