Regional Stock Market Indices Commentaries Update - 4 June 2008

As at 29 may 2008;

Kuala Lumpur Composite Index (KLCI): Down trend reversal

The political scene seems to be more interesting than the financial markets, now with stronger opposition voice in parliament and new state governments trying to settle down. In the stock market, the KLCI went into a trading range last month. It did not even try to test the 1,340 points resistance level. The KLCI only managed to went to as high as 1,305.09 points since last month before settling at 1,261.82.

On the daily chart, the KLCI has formed a double top chart formation which indicates that the KLCI is now at a toppish position. The double top formation was confirmed when it broke its neckline at 1,270 points just a few days ago. The RSI indicator indicates a strong resistance and is now below 50, where bears are currently in-charge. The KLCI is now in a down trend reversal and is expected to test its immediate support level at 1,215 points, while stronger support level is at 1,150 points. Resistance is lowered to 1,300 points from 1,340 points because of stronger pressure downwards.

Singapore FTSE Straits Times Index (FTSTI): Heading South

The Singapore market was marred with uncertainty last month with the FTSTI struggling to test the 3,300 points resistance level. The FTSTI closed at 3,160.78 points after only managed to reach a high of 3269.88 points about 3 weeks ago and recently tested the support level of 3,100 points.

The daily chart pattern is forming (not completed as of today) a head and shoulders pattern. The head and shoulders pattern signals price has reached the top (in this case the short term trend). Momentum indicators like RSI and MACD are indicating weak momentum in the up trend and even the volume is declining. The FTSTI is expected to head south to test the immediate support level of 3,100 points and if this support level does not hold, the only technical support level is a psychological one, which is at 3,000 points. Resistance level remains strong at 3,300 points

Hong Kong Hang Seng Index (HSI): Now in short term down trend

The breakout from the consolidation period two months ago was short-lived as the HSI went back in to the trading range which was between 22,000 to 25,000 points. The HSI failed to test the 27,500 resistance level since last month. It went as high as 26,377.99 points before closing at 24,383.99 points. The decline from the high ends the short term up trend as lower lows and lower highs are formed.

The RSI indicator is now below 50 and this shows that the bears are taking over. The HSI is now in a short term down trend. The HSI is currently at its short to long term averages (identified by 30 to 90 day moving averages). The ADX indicator suggests a strong momentum developing downwards. Therefore, we may expect the HSI to test the immediate support level at 23,000 points. Resistance level is lowered to 26,500 points from 27,500 points.

US Dow Jones Industrial Average (DJI): Down trend forming

The DJI struggled and was unable to get out of the major down trend after it failed to test the 13,200 points resistance level since last month. The DJI only managed to climb as high as 13,136.69 points before settling at 12,646.22 points. It broke the immediate support level instead at 12,800 points and this means that the up trend has been reversed.

The confirmed double top chart formation on the daily chart confirms the reversal. However, the down trend is still at the middle formation stage. This formation causes other markets especially the Asian markets to speculate a down trend. Most Asian indices declined lower than the DJI. The down trend can only be formed if the DJI fails to go above 13,132 points. In the mean time, the DJI is expected to fall further and may test the 12,100 points support level. Resistance level remains at 13,200 points.