FBMKLCI - bull is running out of steam!

FBMKLCI has been on mini recovery bull run, up for 5 consecutive sessions. When will this end and how bad will it be?

Technical: the market is heading into a rising wedge after closing the 1369-1419 price gap and expect breakout either side. Price has recovered 50% from the bottom if we use 2 Jan as the recent high. The next level on the upside is to close the 1459-1479 price gap while the downside is revisit the low of Mar 19th at 1208 level.

Fundamental: Market is closely mirroring overseas price action for clues. Despite the billions of dollars in Covid stimulus package, market is still cautious of economic recovery post-Covid. Many companies will go bankrupt and the new normal will affect industries that are "high-touch" because social distancing has changed the way we live and socialize. The extent of the damage done by Coid and oil price decline will only be known months after MCO is lifted.

The bullish ones will expect a quick market recovery as the stimulus package can help businesses weather the Covid storm comfortably whereas experience tells me that investors are irrationally optimistic until the reality hits them. The experience will be similar to the first week of MCO when everyone is quite relaxed about the situation until someone they know got infected or arrested by the police for MCO violation.

Trade idea: be patient and wait for the breakout before opening a new position. I favour shorting the market on any quick rally because I believe this is a bear wearing a bull's clothes to deceive us.

Trade active:

As predicted, market has turned south as a result of more oil shock. This is negative for oil-producing countries like Malaysia that is heavily dependent on oil revenue. Expect more choppy sessions this week and I will still look to short on any market rebound unless there is significant positive news like Covid vaccine to bring some joy to feed the bull.

Comment:

The bull will try to test 1,420 again and if it fails, the market will retreat to 1,360 level as it searches for clues for a breakout.

The lifting of MCO helped lift the spirits but is still overshadowed by weak oil prices and post-Covid recession.

Comment:

The threat of Covid 2nd wave and political uncertainty will discourage any bulls to hold on to their positions. There will be a consolidation at this stage with bias towards downside due to external and internal shocks.