Market Outlook as at February 20, 2019

21st February 2019 Off By binary
Market Outlook as at February 20, 2019
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Our market had a big rally today. FBMKLCI rose 19.62 points to close at 1726.18. The rally was fairly broad-based with 724 gainers and 252 losers.
From Chart 1, we can see that FBMKLCI broke above the pennant formation, ABCD at 1706 as well as the horizontal line at 1710. Tomorrow, we may see FBMKLCI rising to meet the downtrend line, RR (at 1729) which dates back to April 2018. The next resistance will be the 200-day SMA line at 1740. That will have to wait for another day.    
Chart 1: FBMKLCI’s daily chart as at Feb 20, 2019 (Source: Malaysiastock.biz)

The target for this breakout rally above the pennant formation is 1775-1780. Check out this article from Stockcharts.com.

Chart 2: FBMKLCI’s daily chart as at Feb 20, 2019 [zoomed in] (Source: Malaysiastock.biz)

Recently I came across an article by Malaysia Finance which opined that 2019 may be a good year for emerging market (‘EM’), such as Malaysia. This is based on the historical record that EM tends to post a double digit gain after a double digit loss in the preceding year. I have reproduced a more complete table from another source, Novel Investor.


Annual Asset Class Returns from 2004 to 2018

Based on the above, I believe that you should accumulate stocks which have not gone up too much and add more to your position if the index can break above the downtrend line at 1729-1730. Good luck.

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