On Wednesday, the Dow closed at 12270.17, up 298.98. If you checked the news, it started with another drop at opening and loss of more than 300 points at noon, later it changed course and flied higher to close at positive 298.98.
Let me quote what our analyst from SJ Securities has said:
"It was a good thing that the US Fed reduced rates before the FOMC. Had the US Fed waited until the January 30-31 FOMC to reduce interest rate, the Dow would have collapsed by at least 700 pts, based on the sharp drop on the S&P futures the day before. Instead, the sell-off on the Dow was halted at the Double Bottom of 11634, and it recovered to close at12,270, up 2.5%. On this positive event, the Dow is likely to recover further to the October 2007 high of 12,930.
Supporting the view that oil price is heading lower, pressured by the weakening demand due to the global economic growth slowing, the oil price closed lower at USD 87. In fact US fuel demand hit an 11 week low of 20.5 mln barrels for the week ended January 11. Tonight's news on the US crude oil stockpiles is likely to indicate an estimated gaining of 1.5 mln barrels as at January 18. We had said earlier, that on the chart, oil price is technically weak as reflected on the chart pattern of Island Reversal. While it may be on USD 86 support, it is likely to go lower to USD 80.
On the local market, the share plunge to 1340 was halted as the Novermber 2007 Double Bottom of 1338. the KLCI closed at 1354. It is important for the key support at 1330 to be intact. Market will be at a weaker situation if the 1330 is violated.
Following the sharep recovery of the Dow, the KLCI is likely to recover to the price gap at 1386. It could even go as high as the 61.8% retracement of 1454. Our view is that the KLCI has bottomed at 1340, and there is a high probability for the market to take out the previous high at 1524."
At 12.18 pm, the KLCI is recorded at 1382.19(+27.71). The morning high was 1409.93 and the low was 1376.21. The 1386 gap was closed in the morning.