Bleak outlook

The regional market including KLSE plummeted yesterday following the Dow's fall on Monday, a result of the continuing financial crisis in the US. This round it involves the two mortgage giants Fannie Mae and Freddie Mac. Locally, the political uncertainty is a little settle with the PM's announcement of his handover plan.

Technically, the CI is not looking good. It has gone into a bear trend. Fibonacci retracement of the recent up wave points to a extended target of 1116 (127.2 % extension) which is where we are very close to right now, the down move may only complete at the 161.8% extension which point to 1066 if the 1100 psychological support is broken. A 200% extension will bring the CI down to 1007 level (green line). Base on the major head and shoulder pattern neckline breakdown, the medium term target is 990 (brown line). Based on the linear regression channel, in order for the CI to still stay within its long term uptrend, it must find its way to stay at least above the 1160 mark.

That is just the broad picture of the CI's future outlook base on technical studies, which looks bleak. However, one must remember that not all companies are affected by the current financial trouble of US, there are still sectors and counters that may buck the down trend, this will need one to do some serious homework to find them.