Analysts upbeat about SE Asian bourses<\/p>\n
SINGAPORE (Dow Jones): While there is a sea of red across
\nSoutheast Asian stock indexes Monday after sharp falls Friday on
\nWall Street, technical analysis suggests there may soon be reason
\nfor optimism on some regional bourses.<\/p>\n
These hopes are tempered somewhat by a bearish close Friday on
\nthe technology-heavy Nasdaq Composite index.<\/p>\n
Nevertheless, the Kuala Lumpur Stock Exchange Composite Index,
\nwhich is down 28 percent from its year-high of 1021.20 in
\nFebruary, may be in the process of forming a bullish price
\npattern known as a falling wedge.<\/p>\n
At 0515 GMT, the index was at 736.52, slightly above Fibonacci
\nsupport at 736.11, representing the 61.8 percent retracement of
\nthe rise to 797.93 Oct. 27 from 697.90 Oct. 10. If the index
\nbounces from around current levels, the price action could form
\nthe falling wedge, which would target a move to 800.<\/p>\n
Near-term there is minor underlying resistance at 745.10, the
\nNov. 3 low.<\/p>\n
Elsewhere, the Philippine Stock Exchange Index, which is down
\n33 percent from its year-high of 2,158.21 in January, may have
\nformed a base.<\/p>\n
The index surged 17 percent Nov. 6 to close at 1,500.10 from
\nthe previous close Oct. 31 at 1,287.85 on expectations embattled
\nPresident Joseph Estrada would soon step down to end a political
\nscandal, which has weighed heavily on Philippine financial
\nmarkets in recent months.<\/p>\n
While Estrada says he will remain in office, and fight
\nallegations of bribery against him, the price action on the stock
\nindex is bullish in the longer-term.<\/p>\n
The feature of the daily chart is a massive \"breakaway gap\"
\nbetween the Oct. 31 close and Nov. 6 open at 1,371.00. Technical
\nanalysis says this breakaway gap - so-called as it coincided with
\nbreak of major downtrend resistance - doesn't have to be closed
\nby a price pullback to this area.<\/p>\n
The Straits Times Index in Singapore is trading down toward
\nsupport levels, however, an extremely bearish descending right
\ntriangle price pattern may be forming in this index, which is
\ncause for concern.<\/p>\n
For now, Fibonacci support levels produced by a recent rally
\nto 2,069.47 from 1,796.66 are 1933.07 - a 50 percent correction
\nof the rise - and 1,900.97 - a 61.8 percent retracement. At 0515
\nGMT, the STI was 1,947.95, down 25 percent from a year-high of
\n2,582.94 in January.<\/p>\n
But a decisive break under 1,800, which would take out a
\nseries of lows during October, would target a fall in the index
\nto 1,190. Although this might be improbable from a macroeconomic
\nperspective, the index would look extremely sick technically
\nunder 1,800, and likely trigger heavy selling of STI futures.<\/p>\n
In neighboring Indonesia, the Jakarta Composite stock index
\nhas been in slightly downward sloping trend channel since Sept.
\n22, with an upper edge Monday at 428.10, and lower boundary at
\n397.70. At 0450 GMT the index was at 425.38, down 40 percent from
\na year-high of 707.47 in January.<\/p>\n
Technical analysis says to respect the parameters of this
\nconsolidation pattern until the boundaries are breached, but to
\nbuy either a topside break, or sell a downside break for a 30-
\npoint move - the width of the trend channel.<\/p>\n
And in Thailand, the SET index must overcome resistance at the
\n100-day moving average at 297.40, and a four-point downtrend line
\nfrom 354.08 peak in June at 299.10, before it can undertake any
\nmeaningful rally.<\/p>\n
Underlying support is at 285.90, the high from Oct. 20.<\/p>\n
But the true challenge for indexes of Southeast Asian bourses,
\nmany of which are heavily stacked with technology and
\ntelecommunications issues, may be whether they can resist a
\nbearish technical outlook on the Nasdaq Composite Index.<\/p>\n
The Nasdaq close Friday at 3,028.99 triggered a bearish
\nsymmetrical triangle pattern with a target of 2,690.00 target. If
\nthe tech-laden U.S. index falls to that sort of level, regional
\nindexes may struggle to move higher.<\/p>",
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