FKLI Outlook by AmFuture - 25 May 2010

KLCI Index fell for a seventh day, losing 12.04 pts, or 0.9%, to close 1,273.69, its lowest close since Feb. 25 as Sime Darby the country's second-biggest company by market value, tumbled on concerns that it may have to write off more losses at its energy division. On the fkli, the May contracts tumble 14.5 points to settle at 1372, a points discount.

The outlook is no good. As the fkli spot month fast approaching the 200SMA support at 1264. We do not advise players to buy at the moment due to external factor  providing all the risk. Admits doubts about the strength of the global economy recovery and European struggle to contain the region debt crisis as well as the correction in Dow, KLCI is likely to see more correction ahead. Cross-below the 200 SMA will pull more losses ahead. However, the selling a bit overdone at the moment could lead to a slight rebound in the near term but we recommend selling on any rebound. Immediate support revise lower to 1265-1250 while resistance at 1288-1295

US MARKET

U.S. stocks slid on Monday after Spain's bailout of a small bank raised concern about Europe's financial system, boosting safe-haven demand for gold and U.S. Treasuries. Stocks had a volatile session, with the Dow and the S&P 500 sinking more than 1% in the final trading minutes. In Europe, however, stocks snapped a three-day losing streak as rising mining shares offset declines in bank stocks.   The Dow ended down 126.82 points, or 1.24%, at 10,066.57 while The Nasdaq Composite Index slid 15.49 points, or 0.69%, to 2,213.55