Gold posted new record highs yesterday and close above $1600/oz, as debt worries in US and Europe. Investors are concerned that Greece may default on its debt, and countries such as Italy and Spain, who are also struggling with high debt levels, will get pulled into the crisis.
Meanwhile in the US politicians are struggling to reach an agreement on a deficit reduction plan in time to avoid a debt default before the deadline of 2 August.
Those are the issues that trouble the fx market and stock market.
THE STOCK MARKET:
FBMKLCI fell in 4 straight days to pierce through the 50d MA. It also penetrated the lower Bollinger Band (BB) on high volume.
The fall from early July is reflection of market correction in early January when the index plunge for 6 straight days. It then drifted further for more than two months. The sharp early January fall was more on profit taking after end of the year window dressing.
Thus, does the early July correction due to mid-year window dressing?
Technically, the market is still bullish with 200d MA underneath it and 50d is upward sloping.
The January correction pushed the index downward to cross the 200d MA from above and then mid March.
With the local market affected by US and Europe debt problem, it is pointing southward. I am expecting the downward move to take a breather in the next coming days. If the index keep tagging the lower BB than the correction will be quite sometimes.
