Sentiment Index - Malaysian Stock Market

Constructed and Written by Smartbiz

Asian stock markets were higher Tuesday, with Tokyo and Hong Kong tapping multi-week highs as regional banking stocks surged following a Franco-German pledge over the weekend to resolve Europe's banking and sovereign debt problems.

"Of course, the devil will be in the detail of the European plans to revive European banks to reinforce the rest of the euro zone, but I don't believe anyone is really convinced that moving debt from one entity to another will make the real problems disappear," said Sydney-based sales trader Ben Taylor at CMC Markets. (WSJ)

Market Sentiment
Local sentiment boosted by the 3% gain of US market opened with high mood and stayed in optimistic tone for the whole session. The Intra-day Oscillator moved sideways after a good opening and remained well above the zero level to end at +990.15; lost 134.76 when compares with its starting point. The Average recorded a gain of 963.89.

At the end of the day, %K (Yellow) of MSCD computed as +162.16 (+145.72), %D (Red) -21.16 (+78.83) and the Histogram +104.97 (+19.59).

Both indicators were seen shooting stars and the Histogram printed yet another longer bar - its ninth positive bar.

Conclusion
In MSCD, %K rested exactly on the projected uptrend line after today’s trade. Will it continue to move higher? The odds are high.

Firstly, the Histogram kept on printing longer positive bars and there is no sign of round topping yet.

Secondly, %D has surged nearer to the positive zone. Once %D turns positive, the strong base was considered successfully built. The Indicator gave an early pessimistic signal by tumbling into negative zone about seven months ago.

Thirdly, market volume increased on gains but decreased significantly on losses. This indicated that selling was shallow and investors were in the process of building up their portfolio. The fast appreciation of the Ringgit for today is yet another evidence of possible foreign participation.

Having said that, one still has to be careful while sailing in the rough sea. The problems that created by the European Pigs cannot be totally dismissed by now yet.

Key Index

(Chart posted with courtesy of ChartNexus)

FBMKLCI broke through the 1,400 but capped by the 30EMA to finish at 1,411, today. Based on various indicators, the momentum should continue to test its next resistance around 1,443 which is also the 50EMA. That might be the peak for this rally.

(Note: Explanation for Intra-Day MSO and MSCD are archived under "Labels" at the lower portion of the sidebar.)