KLCI- Critical support point

Critical support point.

Forex-Eurousd - Price moved lower but in oversold position

Euro moved lower as expected. But Daily chart indicates its oversold position, so there is a likelihood that price will rebound soon.

Forex- EuroUSD -Falling off the cliff?

Please look at the weekly and monthly charts. Don't they seem that they are falling off a cliff? Expect more downside with the support of fundamentals as reported in the news relating to Greece and Spain.

Roubini Never More Pessimistic on Euro Area, Calls Spain a Risk

By Simon Kennedy and Thomas R. Keene

Jan. 27 (Bloomberg) -- New York University Professor Nouriel Roubini said he’s never been more pessimistic about the future of European monetary union, saying Spain poses a looming threat to the euro region holding together.

“Down the line, not this year or two years from now, we could have a breakup of the monetary union,” Roubini said in a Bloomberg Radio interview from the World Economic Forum’s annual meeting in Davos, Switzerland. “It’s a rising risk.”

Roubini’s concern contrasts with the view of European Central Bank President Jean-Claude Trichet who said it’s “absurd” to imagine that the 16-nation euro area could splinter. Speculation of a breakup has mounted in financial markets as Greece struggles to cut the continent’s biggest budget deficit and countries from Spain to Ireland face rising debt burdens.

“The euro zone could drift essentially with a bifurcation, with a strong center and a weaker periphery and eventually some countries might exit the monetary union,” said Roubini, who predicted the recent financial crisis a year before it began. “This is the very first test” of the single currency bloc.

Economies including Spain and Greece are threatened by fiscal imbalances and declining competitiveness, Roubini said. Membership in the euro means they can no longer devalue the currency to export their way out of recession, he said.

Commission Deadline

The Greek budget deficit ran more than four times the European Union limit of 3 percent of gross domestic product last year and Greece is one of 13 nations facing deadlines from the European Commission to cut its shortfall. The country’s debt is set to top 120 percent of GDP this year, the highest in the euro region and twice the limit for adopting the single currency.

Trichet on Jan. 14 dismissed as an “absurd hypothesis” the argument that Greece could be forced to exit the euro area. The country should remain in the union where its problems “will be unequivocally easier to solve,” central bank governor George Provopoulos said in the Financial Times on Jan. 22.

Roubini said for all the focus on Greece, Spain may eventually pose a bigger threat to the euro zone because it’s the region’s fourth-largest economy and has higher unemployment and weaker banks. Spain’s jobless rate is more than 19 percent, almost twice the EU average.

“If Greece goes under that’s a problem for the euro zone,” he said. “If Spain goes under it’s a disaster.”

Bond Vigilantes

Roubini described rising sovereign risk as a “new phenomenon” for advanced economies that will complicate their recoveries from the worst global recession since World War II.

So-called bond vigilantes, or investors who punish governments by dumping their debt, “have been asleep at the wheel,” outside of Europe, Roubini said. The risk premium investors demand to buy 10-year Greek debt over comparable German bonds rose to an 11-year high of 312 basis points on Jan. 22.

“Eventually they could wake up” in Japan and the U.S. and sell off their bonds as they did with Greece.

“We have a massive fiscal problems in most of the advanced economies, and we’re not really dealing with it,” he said.

After Standard & Poor’s yesterday lowered its sovereign credit rating outlook on Japan, Roubini said he was “worried” about the world’s second-largest economy as its debt mounts, deflation returns and population ages. While it can currently finance itself thanks to domestic savers, at some point they may “flee the yen,” pushing up borrowing costs and crippling the economy, he said.

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Traderone : Will this be the catalyst that will drive Euro lower? Apparently it is difficult to find a currency that is safe. This is what makes forex trading interesting. Is there a professional course on forex trading? Yet to meet a PHD on forex trading.

KLCI - Bear may not be done yet

Take note of the support line and also the formation of the other side. The Bear may not have given up yet.

FKLI - Bear showed its strength.

Bear wacked the Bull all the way down and resting exactly on Fib 161.8%.

FKLI and KCLI -Bear knocked Bull

With so many confirmations no wonder the Bear hit the Bull hard to push it down. Any attempt by the Bull to get up will be fought hard by the Bear, unless with the help of invisible hand.

FCPO-25-1-10

Hardly can say that market has made any significant move. Those conservative should wait for market to make its clearer stand by making its move above 50 MA or move down below Fib 38.2%.

FKLI and KLCI -25-1-10 Bull refused to give up to Bear.

Bull stubbornly refused to let MACD to move down to give way to the Bear. Let see how stubborn this bull can get. So better let these two fight it out and see who is the winner before moving in.

FCPO-22-1-10 Failed to follow up with a candlestick formation.

Candlestick failed to follow up with a candlestick formation to confirm a buy call. So the wisdom that candlestick pattern should be supported with other indicators is a wise one (refer to my previous posting). The price is resting around Fib 38.2%. It is better to wait for the market to show its direction as it is showing its indecisiveness.

FKLI and KCLI - 22-1-10

Wait for confirmation of retracement with the crossing of MACD and Stoc as per red arrow. First support at around 1285 and critical support at around 1272.


Confirmation of retracement with the crossing of the MACD. Support at around 1288.


Bear in mind that divergence was noted on 18-1-10 in my earlier posting and retracement is forthcoming.

Why a Company's Stock Falls Even After Positive Earnings

By: Reuters

While a majority of companies have reported better-than-expected profits in the current earnings season, a few key firms have missed their "whisper number," a metric that is similar but considerably tougher to beat.

A trader at the New York Stock Exchange.
Missing the whisper number has been a factor in the market's inability to maintain its recent positive momentum, analysts say.

Whisper numbers, according to www.WhisperNumber.com, the financial research firm that publishes the data, are unofficial estimates for corporate earnings. They are based on such metrics as fundamental research, past performance and "gut feel," and the numbers are often higher than analyst consensus estimates, making them harder to surpass.

"It would be too much to put all of a stock's movement on a whisper number, but I would say they're more important than consensus expectations," said Christopher Zook, chairman of CAZ Investments in Houston, Texas.

Perhaps the most notable example of a whisper number's influence in the current season is International Business Machines.
.
On Jan. 19, the tech giant reported fourth-quarter earnings of $3.59 a share, above the consensus expectation of $3.47 but below the $3.76 a share whisper number. After rising in anticipation of the results, IBM fell after they were released, pressuring tech stocks.

"IBM is a clear example of whisper numbers being more important than consensus estimates," said John Scherr, president of WhisperNumber.com, in Sparta, New Jersey. "Expectations move markets, and whisper numbers are information based on expectations rather than estimates."

While few doubt the influence whisper numbers have on share movement, some question how credible the numbers are, as they can be used by traders to talk up their own positions.

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Traderone: Now we have to listen to the whisper numbers too? So the information that is released to the market is not so true after all. Can analysts give a disclaimer that the information released is true, fair and LOUD. No whisper please!!!!!!

FCPO -Candlestick call for a buy?

If you are a follower of candlestick, it shows a buy signal, right? Well, they said it is better to back candlestick with other indicators. So for those conservative, you might want to wait for the price to cross the 50 MA or MACD to move up.

Forex-EURUSD -21-1-10 ( Where will the technical rebound be?)

With the price breaking the 200 moving average and heading all the way down, the next question will be- when will there be a technical rebound? Will it likely to rebound at Fib 161.8% as per the chart? That would be the likely support level. Well, if you have better suggestion, please feel free to comment.

FCPO-20-1-10 mid-day: Failed to give confirmation.

Seem that it failed to pass the confirmation test to maintain its breakout of the down channel. Look likely will be heading to Fib 50% as per the daily chart as posted earlier, or it will make an attempt this afternoon? Whatever, only the breaking of the bollinger band movement will convince me, and not otherwise.

Charts: Dow Set to Move Down to 9,350

By: CNBC.com

The Dow Jones Industrial Average is struggling at current levels and could be set to move close to 9,350 points over the next few weeks, Roelof van den Akker from ING Wholesale Banking told CNBC Tuesday.

"This uptrend is petering out and momentum is not showing any strength, not making any new highs and that's suggesting that we could see a decline within the next few weeks," van den Akker said.

A close below the "solid horizontal support" level of 10,275 points would suggest the start of a steep fall in prices toward the “200-day moving average line,” which is currently at the 9,350 points, he said.

"Be prepared for a trend change and a close below 10,275 (points) is confirming a sell signal toward the 200-day moving average line," van den Akker said.

Even though van den Akker expects the U.S .index to fall over the next few weeks, he thinks it will rally higher again after that.

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Traderone : Isn't this the scenerio of the symmetrical formation as highlighted in one of my postings. If this is true, the two go hand- in- hand.

Forex-Eurusd 19-1-10 heading towards Fib 100%.

Price headed down to Fib 100% after it broke the Fib 61.8% as perdicted earlier. Most likely it will continue its downward movement until it is supported by bollinger band as shown on the daily chart.

FCPO-19-1-10 Mid-day breaking out of channel

Broke out of the down channel. Change of the short-term downtrend? I would wait for the it to break out of the bollinger band to have a better confirmation. Some aggresive ones might go for the break of the channel but different people have different risk tolerance.

FKLI and KLCI - Divergence and retracement forthcoming

Do you see the divergence both in FKLI and KLCI? As the price moves higher, the MACD moves lower. The big retracement may be forthcoming and the Fib would provide the degree of the retracement.

FCPO-15-1-10.

On 15-1-10, it has reached the point as predicted back then on 12-1-10. Now it is sitting on Fib 38% and bollinger band, supported with a 50 moving average. This is a significant support point. If it breaks this point and maintain broken at the end of the trading day, we would likely to see it moving towards Fib 50% or near there.

FKLI and KLCI - Beware of the symmetrical formation

Beware of the symmetrical formation. If the resistance is not broken with significant upward movement, be careful of a symmetrical formation with a similar retracement, this is bearing in mind that it is already in a overbought position.

Growing stocks to pressure CPO prices

Crude palm oil (CPO) futures on Bursa Malaysia Derivatives are expected to trade in ranges next week amid concerns over growing stockpiles this month, dealers said.

"The stock level is very high and the output is expected to grow by about 5-10 per cent this year. This would put pressure on prices," one of the dealers said.

Inventory has increased to 2.239 million tonnes in December 2009 -- the second highest on record. The highest was 2.266 million tonnes in November 2008.

"A key factor for the rise in stockpile was the sharp decline in shipment, suggesting that prices have reached levels high enough to douse demand, bearing in mind that December's average price was RM2,456 per tonne, which was more than RM100 per tonne lower than the current level.

"Unless prices ease sufficiently, the inventory level may keep rising, given the normalisation in both Malaysia and Indonesia after last year's poor crop," he said.

CPO prices could move downward during the high production season, the dealer said, adding that prices were expected to hover around RM2,200 and RM2,300 per tonne next week after being traded above RM2,400 per tonne throughout the week.

The local CPO market would also track closely other vegetable markets as well as crude oil prices for direction, he said.On a Friday-to-Friday basis, the CPO futures contract for January 2010 dropped RM90 to RM2,480 per tonne while February 2010 went down RM125 to RM2,467 per tonne. March 2010 lost RM136 to RM2,490 per tonne and April 2010 dived RM141 to RM2,495 per tonne.

The week's turnover broadened to 111,844 lots compared with last week''s 71,052 lots. Open position, however, fell to 75,701 contracts on Friday from 80,208 contracts at the end of last week. On the physical market, January South traded lower at RM2,490 per tonne compared to RM2,590 per tonne previously. -- Bernama

KL share uptrend set to continue

Malaysian shares are set to move higher in a pre-Chinese New Year rally, analysts said.

Maybank Investment Bank Head of Retail Research Lee Cheng Hooi said the market rotational play would continue for the next two to three weeks across all sectors in small and big-cap stocks. The strong buying momentum, he said, would push the FBM Kuala Lumpur Composite Index (FBM KLCI) to the 1,305-resistance level in the near term after the 1,300-level was breached on Friday. "However, profit-taking will cap the index's upside," he added.

MIMB Investment Bank Technical Analyst Mohd Nazri Khan said the market sentiment would remain upbeat in the first half of 2010 as government stimulus packages began to make presence felt in the country's economy. He said the huge economic stimulus packages by all countries to fight the effects of global slowdown also boosted local and foreign investors' interest in stock markets. "Stimulus packages will aid market sentiment not only in FBM KLCI but global markets as well," he said. Jupiter Securities Sdn Bhd Head of Research Pong Teng Siew said the index would continue to be on the uptrend but in a slow climb until February. He said investors believed the market sentiment would remain bullish and most of them were eagerly awaiting Public Bank's earnings result and the unveiling of the new economic model -- the basis and direction of the country's economy in the future.

"FBM KLCI would trade with an upward bias as ample liquidity would keep the market buoyant," he said.

For the week just ended, the FBM KLCI added 5.6 points to end the week at 1,298.58. The Finance Index rose 90.55 to 11,330.05, the Plantation Index fell 24.62 points to 6,515.04 and the Industrial Index was 24.27 points higher at 2,716.73. The FBM Emas Index added 75.92 points to 8,771.56, the FBM Top 100 Index rose 46.74 points to 8,512.7, the FBM70 Index jumped 86.85 points to 8,612.86 and the FBM ACE Index ended the week higher by 140.63 points at 4,588.94. Total turnover increased to 8.014 billion shares worth RM9.018 billion from 6.161 billion shares valued at RM7.966 billion. Volume on the main market rose to 6.964 billion units valued at RM8.733 billion from 5.945 billion units worth RM7.706 billion. Turnover for call warrants declined to 151.238 million units worth RM27.737 million from 283.166 million units valued at RM52.822 million. The ACE Market volume advanced to 781.886 million units valued at RM213.769 million from 736.040 million units worth RM171.304 million. -- Bernama

Chartology: Is Market About To Tumble?

By: Lee Brodie
Producer

Selling dominated on Friday after JPMorgan dashed hopes that consumer credit was on the mend.

Adding to the bearish tone, a survey showed U.S. consumer sentiment was little changed in early January, as worries over income and high unemployment offset news of an improving economy.

Also energy [XLE 59.26 -0.48 (-0.8%) ] and materials [XHB 15.63 -0.31 (-1.94%) ] names were hammered after the dollar [US@DX.1 77.36 0.475 (+0.62%)] made gains against a basket of currencies dragging down commodity prices; lately a stronger dollar has been bearish for the market.

Considering all the catalysts, is the market breaking down? The fundamentals sure seem to point lower but how about the technicals? Seems like a good time to consult the charts with Todd Gordon of Forex.com.

Patterns in the chart of the S&P [.SPX 1136.03 -12.43 (-1.08%) ] suggest to Gordon that stocks are consolidating, and are ready for a pullback.

"Just prior to the breakdown in May 2007 the S&P was trading with 13-handles in any given session. And today we're trading 13-handles in any given session. Markets are complacent and it's a sign for concern."

Also Gordon says trends in the Nasdaq 100 [.NDX 1864.52 -22.00 (-1.17%) ] are bearish too.

But not everyone is negative. Steve Grasso of Stuart Frankel suggests the sell-off could be bullish - especially the sell-off in financials.

"I’m wondering if the bears are getting it all out of the way," Grasso muses on the Fast Money Halftime Report. "They’re selling the financials hard but I think we might see a little bit of a pop next week."

"Remember we have a 3-day weekend and I think investors are getting out of bank stocks because they don’t want to get caught by surprise over the holiday. And the government surprised investors this week with the proposed TARP tax."

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Traderone : When they used a question instead of an affirmation statement as a heading, it means they are not so sure about the direction.

Euro Struggling to Maintain its Range as Greek, Dollar Troubles Loom

Written by John Kicklighter

Euro Struggling to Maintain its Range as Greek, Dollar Troubles Loom

Fundamental Forecast for Euro: Neutral

While the EURUSD exchange rate can be somewhat misleading as a gauge of strength for the euro (as it has recently been more responsive to the US dollar), the benchmark pair is currently offering an accurate portrayal of the single currency. A breakdown of the position the world’s most liquid currency pair is in reveals a steady three-week trend channel (imbued with a bullish bias due to the dollar’s general weakness) whose most recent trend was in full position of the bears. Taking a quick glance across the majors, it becomes apparent that nearly every one of the euro crosses is sitting at the bottom of a broad range. It is make-or-break time for the unloved currency; and the catalyst for its ultimate bearing will likely fall to one of three pressing issues: the financial stability of the European Community (with a big highlight on Greece); a solid run from the US dollar; or a meaningful change in interest rate forecasts.

Taking the euro’s most prominent concerns in order of their respective threat level; we have to first defer to the US dollar. As the world’s most liquid currency, the greenback has incredible pull in the currency market. It is only natural that its most actively traded pairing (EURUSD) should feel the effects of a meaningful drive from the ubiquitous security. In the past three weeks, this link hasn’t proven a burden as the dollar has essentially passed the time without a clear direction; but then again, this stability could very well act as an anchor on the euro. Looking ahead, stability will be difficult to maintain. This is especially true considering EURUSD has adopted the role of the market’s stable carry trade. While there is actually a very small yield differential attached to this pair, the dollar’s role one of the favored funding currencies naturally transmits its risk convictions to its most liquid pairing. Should risk appetite rally or plummet, expect EURUSD to follow suit.

The next major concern is perhaps not universal as underlying investor sentiment; but it has proven a distinct driver for the euro itself over the past few weeks. Fundamental troubles are not unusual for the regional economy; but it seems that the failing financial health of Greece has taken a particular toll on the outlook of the European community and their currency. What makes the ballooning deficit of this Mediterranean nation more threatening than Ireland’s banking crisis, potential Eastern European defaults or lasting recessions in key members’ economies? Realistically, all of these concerns are playing into the attention on Greece. And yet, the situation with this country poses a threat to the stability of the European Union. The downside of developing a single market among different nations has been bared through the recent economic difficulties. While German and France have been quick to recovery as the group’s largest members, others have struggled to recover. Furthermore, with membership, each government gives up its right to adjust monetary policy, manipulate its currency, increase its debt load and many other points of flexibility that have in the pace helped economies to adapt to unfavorable conditions. It will be a tall order to meet the goals policy makers have set out and officials have warned no exceptions will be made.

After the ECB’s decision this past week to hold its benchmark lending rate unchanged and President Trichet’s suggestion that there was no threat of medium-term inflation, interest rate considerations have been pushed into the background. However, as the global economy recovers, this source of yield will be an essential element of value. Currently, the market is pricing in 89 basis points worth of hikes through the next 12 months, which puts the euro ahead of its US, UK, Swiss and Canadian counterparts. However, British officials have already warned that short-term inflation pressures were a concern and US inflation has pushed above the central bank’s target. Perhaps a shift in growth will bolster these forecasts. The PMI figures due on Thursday are often considered leading indicators of growth. – JK

Forex-EURUSD 15-1-10

With news as stated below, no wonder the price turned downward. This is supported by the fact that the stoc is in overbought territory in its daily chart. However, price is resting on Fib 61% and stoc is turning upwards. There might be a chance that it will rebound from that point, or break through the Fib's critical point. If breaks, we will see it falling towards or near its 100% mark. So if thinking of shorting it, it may do well to wait for it to break this point.

The Euro has been hit hard across the board following ECB Trichet’s comments in which the central banker made no hints over a potential exit strategy,

Written by Joel Kruger

The Euro has been hit hard across the board following ECB Trichet’s comments in which the central banker made no hints over a potential exit strategy, while also sounding extremely cautious.

MORNING SLICES

FUNDYS

The Euro has been hit hard across the board following ECB Trichet’s comments in which the central banker made no hints over a potential exit strategy, while also sounding extremely cautious. Also seen weighing on the single currency has been the escalating concerns over Greece and the potential default of its loans. Trichet has said that Greece will not get any special treatment. As if that was not enough, rumors of the resignation of German Chancellor Merkel, following the release of a scathing Time magazine article, has added more fuel to the fire of negative Euro sentiment. Meanwhile, in Japan, the latest studies show that economists and consumer both expect the country to remain entrenched in deflation. Elsewhere, the World Bank’s chief economist has been out warning of the potential for a double dip recession, but also expresses optimism over the outlook for the Chinese economy.

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Traderone : Fundamental issues have the power the turn chart around.

FKLI- Broke Out

FKLI and KLCI -14-1-10

MACD and Stoc have still not crossed the critical lines. So the stage for a breakout is still hopeful and likely ( bearing there is no critical fundamental issue ).

FKLI- staging for breakout.

With the rebounced from the bottom of the range and not breaking it, it is staging for a breakout.

Dollar Crisis Looms if US Doesn't Curb Debt: Experts

By: Reuters

The United States must soon raise taxes or cut government spending to curb its debt, and failure to act will risk a crippling dollar crisis as investor confidence ebbs, a panel of experts said on Wednesday.

"It has got to be done. It will be done some day. It may be done with enormous pain. Or it may be done more rationally," said Rudolph Penner, a former head of the nonpartisan Congressional Budget office who co-chaired the 24-strong Committee on the Fiscal Future of the United States.

President Barack Obama's administration will present his budget for fiscal 2011 early next month amid intense pressure to live up to election campaign promises not to raise taxes on middle class Americans, while confronting a record deficit.

As a result, Obama is expected to focus on long-term fiscal discipline, while maintaining policy support for an economic recovery in the near-term as the country rebuilds after its worst recession since the Great Depression.

The two-year study by the panel, assembled by the highly respected National Research Council and the National Academy of Public Administration, said that the White House had some time on its side to restore growth, but must then act.

"In the next year or two, large deficits and more borrowing are unavoidable given the severity of the economic downturn. However, action ought to begin soon thereafter," they said.

RELATED LINKS

Current DateTime: 03:24:53 13 Jan 2010
LinksList Documentid: 34848795

• Slideshow: The 15 Biggest Holders of US Debt
• Economy Weak but Mending: Beige Book
• Predictions 2010: The US Dollar

The national debt has risen above 50 percent of GDP (gross domestic product) from 40 percent two years ago, and within 20 years will blow past a previous record above 100 percent of GDP set after World War Two without stern official steps.

Mounting debt could sap investor confidence in the economy, and the nation's ability to honor its obligations, pushing up interest rates and causing a steep fall in the value of the dollar as international creditors seek safer returns elsewhere.

Cut Health Care

The committee identified curbing Medicare, Medicaid and Social Security spending as the top challenge, and had a lukewarm assessment of cost containment in health care reform currently before Congress that Obama hopes to sign soon.

Committee co-chair John Palmer said the reforms might lay the foundation for improvements in the future, but he was skeptical about presumed saving levels and said that "passage would not change in any substantial way our analysis."

The committee, which included three former heads of the CBO, outlined a range of options to lower the ratio of the national debt to 60 percent of the size of the economy.

The 60 percent threshold of debt to GDP, a target that is also used by the nations sharing the euro common currency, was a "judgment choice", said Penner, who is a senior fellow at the Urban Institute, a Washington think-tank.

He said it was deemed to be the most that could be borne without incurring debt levels that would drive up long-term interest rates, and the least that was politically feasible in terms of reductions in government spending.

At one end of the options, the committee reviewed a policy mix based on low spending and low taxes. This envisaged payroll and income tax rates staying as they are, around 18-19 percent of GDP, but healthcare and retirement program costs sharply curtailed and defense and domestic spending cut 20 percent.

The other end of the scale looked at a high spending/high taxes policy mix that would maintain the projected growth in Social Security and allow higher spending on federal programs.

However, this would see taxes rise above 40 percent of GDP, or in the neighborhood of Denmark or Sweden, in order to hold the national debt to 60 percent, unless a value added sales tax was also introduced to augment government revenue.

Between the two were several intermediary solutions relying on a blend of higher taxes and lower spending. The committee made no recommendations but warned there was no time to waste.

"If action is taken soon, the country has a wide choice of options to help achieve fiscal sustainability. All are difficult; but if action is postponed, the options will be fewer and the choices even more difficult," they said.

• Related Story: US Cities Could Face Deficits for Years

KLCI and FKLI-13-1-10

FKLI - price closed within trading range as indicated in the 60 min chart. Resting at the bottom of the range and closing the gap. The confirmation of further retracement will come with the crossing of MACD on the daily chart, and it will likely retrace to Fib 38%.


KLCI -confirmation of further retracement will come with the crossing of macd and stoc. And there is a likelihood that it might move further down to Fib 38%.