FRED TAM’S DAILY STOCK MARKET OUTLOOK
FOR
FEBRUARY 03, 2012 (FRIDAY)

P.I. COMMENTS FOR FRIDAY (FEB 03, 2012): On Thursday’s close the KLCI was up 15.80 points or 1.04% at 1540.89 on steady volume of 2.58 billion shares traded. Advancers led decliners by 643 to 286 with 298 stocks unchanged.

1.     STOCK INDEX FUTURES POINT TO FLAT START: Stock index futures pointed to a flat open on Wall Street on Thursday, with futures for the S&P 500 down 0.1 percent, Dow Jones futures flat and Nasdaq 100 futures up 0.2 percent at 4:45 a.m. ET. European shares were slightly higher on Thursday morning, renewing a six-month high as mining stocks rallied after Xstrata (LSE:XTA.L - News) said it was in talks with Glencore (LSE:GLEN.L - News) over a merger that could create a combined mining and trading group worth more than 50 billion pounds ($79 billion).Mining shares were also boosted by expectations China, the world's largest consumer of metals, would further ease monetary policy to stimulate its economy. Facebook could raise as much as $10 billion in the biggest ever internet IPO, after which chief executive Mark Zuckerberg will retain almost complete control, leaving investors with little say. JPMorgan Chase (NYSE:JPM - News) surprised Wall Street by winning a leading role in Facebook's public offering, besting other banks that have competed for months for the coveted position.On the earnings front, Compass Group (LSE:CPG.L - News), the world's biggest caterer, said first-quarter sales rose more than 8 percent, as continued strength in North America and emerging markets offset weakness in Europe, putting it on track to achieve its full-year outlook. Barry Diller's Internet holding company IAC/InterActive Corp (:IACI.O) posted better-than-expected quarterly profit, driven by strong results at its online search and dating businesses, sending its shares up as much as 11 percent to 52-week highs. Dow Chemical, the largest U.S. chemical maker by revenue, reports results for the fourth quarter of 2011 on Thursday and aims to show Wall Street it is further diversifying its portfolio into specialty materials for the alternative energy, electronics and construction markets. Analysts see Dow posting earnings of 30 cents per share, down from 47 cents in the same quarter of 2010. Other companies due to report results on Thursday include Kellogg, Mastercard, Merck & Co and Sara Lee. Away from earnings, the head of the Commodity Futures Trading Commission has ordered an extensive review of how futures brokerages are regulated, following the collapse of MF Global three months ago, a CFTC official told Reuters on Wednesday. Wall Street's own watchdog filed a complaint against Charles Schwab Corp (NYSE:SCHW - News) on Wednesday accusing the online brokerage of requiring customers to waive their rights to pursue class actions against the firm, a violation of industry rules. On the macroeconomic front, Challenger, Gray & Christmas Inc releases its report on job cuts for January at 7:30 a.m. ET. Challenger reported 41,785 layoffs in the prior month. Labor Dept releases first-time claims for jobless benefits for the week ended January 28 at 1330 GMT, which are expected to come in at 375,000 compared with 377,000 in the prior week. Labor Dept also publishes preliminary Q4 Productivity and Unit Labor Costs at 1330 GMT. Economists in a Reuters survey forecast productivity to rise 0.8 percent versus a 2.3 percent rise in the final Q3 report. Unit Labor costs are expected to rise 0.8 percent compared with a 2.5 percent decrease in the final Q3 report. Chicago Federal Reserve Bank President Charles Evans meets for joint breakfast interview with four wire reporters at the Chicago Fed at 9 a.m. ET. Federal Reserve Chairman Ben Bernanke testifies on the state of the U.S. economy before the House Budget Committee at 10 a.m. ET. The Institute for Supply Management-New York releases January index of regional business activity. In December, the index read 534.0. The Dow Jones industrial average (DJI:^DJI - News) gained 83.55 points, or 0.66 percent, to 12,716.46 on Thursday. The Standard & Poor's 500 Index (SNP:^GSPC - News) rose 11.67 points, or 0.89 percent, to 1,324.08. The Nasdaq Composite Index (Nasdaq:^IXIC - News) climbed 34.43 points, or 1.22 percent, to 2,848.27. After the S&P 500 rose 4.4 percent last month, some strategists see the benchmark approaching a short-term top.

2. GOLD ADVANCES TO HIGHEST LEVEL IN 8 WEEKS AS GLOBAL MANUFACTURING IMROVES: Gold advanced to the highest level in eight weeks, gaining alongside equities, as manufacturing improved across the world, boosting the global growth outlook. Spot gold rallied as much as 0.6 percent to $1,753.20 an ounce, the most xpensive since Dec. 8, and traded at $1,752.05 at 4:45 p.m. in Singapore. Gold holdings in exchange-traded products rose 0.2 percent yesterday to 2,376.205 metric tons, the highest level since Dec. 16 and within about 0.7 percent of the Dec. 13 record, according to data tracked by Bloomberg. “The underlying bid tone in the gold market suggests that another leg higher is only a matter of time,” Edel Tully, an analyst at UBS AG in London, wrote today in a report. “ETF investors remain keen to add to their exposure.” Manufacturing grew from the U.S. to India and China, fueling optimism the global recovery is weathering the debt crisis in Europe and driving a rebound in stocks. India and China are the world’s largest bullion consumers. Bullion for April delivery gained 0.3 percent to $1,754.20 an ounce on the Comex in New York. Spot gold’s so-called 14-day relative-strength index was at 72.02 today, above the level of 70 that may indicate an imminent retreat in prices.
3. OUR COMMENTS: Yesterday the market undoubtedly showed its buying power. There were 600+ gainers and only 200+ losers and KLCI was up 15.80 points to hit 1540 – our first target! We see continuing strength from now to test the next target of 1603. Besides price rise, volume was seen on an increase suggesting buying power. You should continue to rid this bull! Our view is therefore unchanged, and we remain bullish on Malaysian stocks for the short term.
4. Stocks to watch are: BENALEC, IJM*, MRCB, MITRA, WCT, ZELAN, BIMB, BURSA, PBBANK, TA, DIGI*, 3A, COASTAL, DRBHCOM*, PERISAI, MBSB, SAPCRES*, GENTING, KENCANA, KFIMA*, KPJ*, MPHB, PCHEM, PETDAG, UNISEM, GENM, MUDAJAYA, MFLOUR. 
5. New stocks to watch: Nil.

6.     Technically speaking, the KLCI is still in rally mode (Wave 5) and a measurement puts the next target at least 1540/1603.

7.     Gold is still a “buy”. We are long now and place sell stop at 1703 or lower. We see gold climbing out of a W4 triangle pattern into a strong rally to test 2000.

8.     The ringgit was stronger at 3.0160 FROM 3.0400.        

CONCLUSION: Our technical view remains unchanged, and we look for rebounds in the KLCI to test 1540(HIT)/1603. The KLCI is in a mini wave 5 rally. A 1.618 Fibonacci extension target is 1500 and a 2.0 times extension target would be 1540/1603. Best buy MFLOUR

Upside Targets: 1540 HIT/1603 (Revised targets on 30/12/11)

Immediate downside targets: 1283/1233 (Revised on 24/09/11)

Ichimoku kumo support (Span B): 1537 (Revised on 28/07/11)

F1-Trader (Daily) – Triggered a “BUY” signal on Feb 2, 2012 at 1540.89 (Will trigger sell signal @ 1509.48 OL by today’s close)

F1-Trader (Weekly) – Triggered a “buy” signal on Dec 2, 2011 at 1489.02 (Will trigger a weekly sell signal @ 1512.02 OL by Friday, Feb 3, 2012 close).

F-1 Trader (Monthly) – Triggered a “buy” signal on Dec 30, 2011 at 1530.73 (Will trigger a monthly sell signal @ 1424.18 or lower by Jan 31, 2012 close).

 Disclaimer: This analysis is based on pure technical analysis. Statements and comments are subject to the limitations inherent in this technique of analysis and may change as the market unfolds. Those wishing to trade are advised to seek professional opinion. Our comments should not be construed as market advice and is not a solicitation to buy or sell any stock/futures referred to herein, if any PI Graduate Studies Sdn Bhd or its staff may have positions in stocks/futures covered in our newsletter.