Technical Analysis - August 25 2008

S&P500 (1,292, last week 1,298 or -0.46% w.o.w)

The daily MACD, although still in a positive uptrend is in a danger of negative hook down due to some selling during the beginning of week. The daily DMI(+ and -) which was in an early positive crossover is also in a danger of turning bearish again. This week will be a crucial week to determine the direction of the daily index. The weekly charts has improved but awaiting positive crossover if daily index can improve during this week. The index is likely to trade between 1,260 and 1,330. Incidentally, the resistance level of 1,330 is the index’s 200 day-ema.

KLSE CI (1,086, last week 1,095 or -0.82% w.ow)

The daily charts continued to be weak. There was a weak technical rebound last week. There is a possibility of a continued technical rebound this week evident in the daily stochastics. It is advisable to sell into this rebound. A new low was created last week at 1,065. The index has fallen into bearish mode again with the strong 1,120 (ie 200-day ema) broken convincingly. The index is expected to trade between 1,050 and 1,150.

HangSeng (20,392 , last week 21,161 or -3.6% w.o.w ).

Similar with KLCI, the daily charts continued to be weak. There is a possibility of a technical rebound this week evident in the daily stochastics. It is advisable to sell into this rebound. A new low was created last week at 20,389. It is advisable to sell into this rebound. The index has fallen into bearish mode again. Immediate support is at 19,800 while resistance at 21,000 and 22,000.

Nikkei 225 (12,666, last week 13,019 or –2.7% w.ow)

The daily MACD and DMI(+ and -) have broken down are all in a bearish mode. The weekly MACD has also hooked down during last week. The index is expected to trade between 12,500 to 13,500. The index face major resistance at 13,300.

* Following China? AP: Japan is drawing up an economic stimulus package worth USD73b to help business and consumers cope with the high fuel and commodity prices. An article about Japan/China was posted here before. Japan's nominal GDP is about USD4.3T and as such the effect of the stimulus is about 1.7% of GDP.

* Bloomberg: Thailand's economy expanded slower at 5.3% in 3 months ended June 30.(earlier estimates 5.8%). The central bank is likely to leave the key rate unchanged at 3.5% as it needs to keep growth from stalling. Inflation in July was 9.2%.

* BT: Malaysian monetary policy commitee will also like to keep OPR unchange at 3.5% when they meet today. A poll done shows 10 of the analysts expect the OPR to be unchanged while 4 were of the opinion that the rate would be increased by 0.25% to 3.75%. Meanwhile our ringgit got slammed again at mid day- 1USD: RM3.3645. Are we not getting poorer by the day?

* BT: Shell Malaysia: Enough oil and gas for the next 400 years- the challenge now is finding ways to get at the reserves.

* AP: US gas prices dropped by 15% in the last 2 weeks. It peaked at USD4.11 per gallon in July and currently hovers around USD3.70 per galloon.