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Market – The state of global markets and KLCI

Trading room – Mon 17 Dec 2018

Stocks fell sharply on Friday in the US after weaker-than-expected data in China and Europe exacerbated concerns of a global economic slowdown.

The Dow Jones Industrial Average fell 496.87 points to24,100.51, its lowest level since early May, led lower by declines in Apple and Johnson & Johnson. For the year, the Dow is now down 2.5 percent.

Meanwhile, the S&P 500 dropped 1.9 percent to 2,599.95 —its lowest closing level since April. The index also closed down 2.75 percent for 2018 year to date.

The high-beta Nasdaq Composite pulled back 2.26 percent to6,910.66. For the year, the tech-heavy index is now up just 0.11 percent.

Friday also marked the first time since March 2016 that all US major indexes closed in a correction, down at least 10 percent from their52-week highs.

The weak performance in the US was also mirrored across the global markets in Asia, Europe and Australia.

What are some of the big trends leading the global market directions in the week ahead and early 2019?

KLCI and local indices performance – Mon 17 Dec 2018

Global markets performance – Mon 17 Dec 2018

Note: Certain info presented in the tables above has been redacted to comply with the agreement with elite members of the mPower Algorithm program and mPower Trading program and certain institutional clients. The above analysis reflects our personal view only and is subject to terms of use. Please refer to the full report inside for the complete info.

For one, the world economic growth is slowing based on latest data available and this has been playing on the minds of traders and investors in the market.

China just reported industrial output and retail sales growth numbers for November that missed expectations.

According to analysts, this is the latest sign shown by China that its economy may be slowing down.

The data also underscored the rising risks to China’s economy as Beijing works to resolve an ongoing trade war with the U.S.

Industrial production in China grew by 5.4 percent for November on a year-over-year basis, the slowest pace in almost three years. Its retail sales, meanwhile, grew at their slowest rate since 2003.

The IHS Markit Flash Eurozone PMI index for Europe also fell to 51.7 in December, its lowest level in four years.

On the local market, which is mainly taking cues from the global markets, an analyst says that there may be further declines amid LembagaTabung Haji’s announcement that it would cut down on its holdings of equities albeit in small caps.

A media news site reported that there may still be a positive positioning in the global markets but as the up-rallies failed to attract participants, long buyers may be feeling less comfortable start to sell.

The sell-down will be exacerbated if liquidity starts to dry as well near the year-end and if fears grow of a further sell-down.

On the positive side, analysts say that even though global markets are generally slowing, 2019 could be a strong year for emerging markets if there is more consistently positive news on trade.

The sell-down could also be due likely that the initial bar for earnings were set too high and at lower prices, valuations would look to be more reasonable now.

Most analysts still believe that the US economy remains in pretty good shape albeit at slowing pace and the market is just correcting its lofty expectations earlier.

Local KLCI and market indices outlook – Mon 17 Dec 2018


Global markets outlook – Mon 17 Dec 2018

Note: Certain info presented in the tables above has been redacted to comply with the agreement with elite members of the mPower Algorithm program and mPower Trading program and certain institutional clients. The above analysis reflects our personal view only and is subject to terms of use. Please refer to the full report inside for the complete info.

There are several key tactical levels that will been countered by the US market in the weeks ahead as well as the KLCI (see tables above)

At the current juncture, you need to be aware at what stage is the sell-down in for individual markets so that you can position yourportfolio to buy or accumulate stocks at the bottom.

Like in stocks for sectors or categories, we are always looking for correlation and confirmation of any change in trends across markets rather than just a stand-alone market as everything is inter-related in a global trading world today.

Getting in at the earliest of any trend reversal is akin to picking the low hanging fruits in the market. Obviously, your trades should be initiated with money management techniques as well.

Where are the critical levels for the global markets and KLCI to act on this week?

Join and network with us at our mPower Algorithm and mPower Tradingprograms and get the big picture outlook for your stock portfolio shapedby our big data analytics and proprietary trading algorithms.