Despite the sharp volatility in the past few days, our market looks better than many stock markets around the globe. Our FBMKLCI broke above its flag formation, ABCD at 1665 on December 28. It then continued to rise to an intraday high of 1706 on December 30 (courtesy of window-dressing activities). The first day saw a sharp plunge in our market which sent FBMKLCI to the upper line of the flag formation. Here it remained for the past 2 days.
Chart 1: FBMKLCI's daily chart as at Jan 6, 2016 (Source: ShareInvestor.com)
US stock markets dropped sharply yesterday. We can see both DJIA & Nasdaq have broken below their pennant or flag formation.The last time, these indices broke these patterns, the market plunged sharply over the next few days. Their drop coincided with the drop in our market.
Chart 2: DJIA's daily chart as at Jan 6, 2016 (Source: Shtockcharts)
Chart 3: Nasdaq's daily chart as at Jan 6, 2016 (Source: Shtockcharts)
Notwithstanding our mildly positive technical outlook, I believe we should all be cautious in our trading over the next few weeks based on possible impact of bearish development in the US stock markets.
http://nexttrade.blogspot.my/2016/01/market-outlook-as-at-january-7-2015.html
