Sunday, June 10, 2007

Market Outlook for the week ...

Last weeks’s market sentiment was affected by a number of negative news such as (i) bird flu, (ii) Megan Media’s >RM300m irregular accounting and (iii) the sharp retracement of CPO due to the market talk of delaying the increment of export duty by the Indonesian Government. On a positive note, Volkswagen is back into the picture with Proton. Technically speaking, we believe the KLCI to fluctuate within a lower trading range between 1340 and 1365, for the week due to weaker technical setups. Nonetheless, we expect the lower liners to shine as per the “more promising” technical picture.

Broadly inline, but … As expected the KLCI oscillated within the range of 1345/75 in the previous week. Though more positive, we have yet to see any meaningful improvement in trading volume,. We reckon the thinly traded volume could be due to the “school holiday” period and expect trading volume to improve in tandem with the end of the long holidays. Nonetheless, the weak weekly closing of KLCI coupled with the weaker technical indicators , could suggest a lower trading range ahead. Based on TD Range Projection methodology, we expect the KLCI to fluctuate between the levels of 1340 and 1365 for the week. To support the weak upward momentum, the KLCI needs to clear and sustain above the 1365-expected week high during early of the week (with the help of strong overnight Dow’s performance).

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