After my last week’s blog release, we were hoping the US market to rise near its historical height and attempting to test and either break up or fail to break up the strong resistance line. If it fails, it would most probably reverse market trends into decadal bearishness.
However, when the market opened on Monday (US trading hours), the US market dropped back affecting, of course, the global market folded back as well. The news article said the fall was caused by the rumors that the Chinese delegates would have early left the trade talks due to unhappiness. However, President Trump denied the news and said that both sides are happy making significant progress. The market then resumed bullish and ended the week slightly higher than the previous week close.
Key Market Movers
When we move into the next week’s scenario, some significant market movers are determining the US market’s move. It will be significant whether these indexes can come near to the respective resistance line or fall back again.
The on-going US-China trade talk will be a major market mover, or it can be a market killer too. Analysists are divided in their hope for a long-term solution between these two countries. The main reason is that Trump has made a similar claim of “significant” progress in the past. But only to announce trade talk failure a few days later as the eventual outcome.
Therefore, analysts are holding their breath at the moment without any positive comment and hope even though President Trump has announced they have achieved first round of talk negotiation and the US has determined to postpone the tariff hike on October 15th and December 15th. If there is anything negative, the market wouldn’t be surprised at all, but it will fall back, nevertheless. If there is any positive development, of course, the US market will cheer up the “progress” whether it is for long term or short term.
But the most important factor to move US market higher will be nonetheless the corporate earnings report next week. There will be some US major banks releasing their quarterly earnings reports. Citigroup Inc, Wells Fargo and Co, JPMorgan Chase & Co, and Goldman Sachs will have their reports coming out by Tuesday (US hours) and Bank of America on Wednesday. Looking at the market behavior by Thursday (Asian trading hours), you will roughly know how these banks’ earnings reports are showing.
Back to the Malaysia market, we mentioned last week that the Malaysia market has been noticed a downward spiral bearish trend and called a precaution to quit at the rebound. However, a 15 years’ chart view has enlightened another perspective for us. The level at 1550 points could be the lowest level where KLSE could go. It has found its significant support for almost 10 years. The general economic impression of Malaysia does not justify a continue bearish trend unless the world is heading toward a recession.
With the new economic budget being announced last week, I believe it will give some clarity for market direction. It would most probably reverse from now on. There is still a possibility that the index will come back to test the support making it double bottom rebound phenomena. As long as the index does not break down below and closes below 1550, the index will reverse in its future trend. It will turn from bearish to bullish. If this is true, it is time to add more to average down entry prices instead of quitting.
It will be very interesting to keep some more observation in the coming trading days or weeks or so. If the international front such as trade talk and US corporate reports are positive, it will aid the recovery of the Malaysia market.
Please stay tuned and keep watch!
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The view and opinion expressed are personal views of the author and are subject to change based on market and other conditions. This write up does not constitute sole advice for investment decision. Investors are advised to do further reading and research to conclude individual decision.