Price of commodities pulled back after rallying making new highs this year amid concerns about global demand which seems to hit a snag as inflation rises. The price of Crude oil closes below US$60 per barrel after staying above US$70 for a few weeks early June.

The price of Crude Palm Oil in the futures market fell 25% in a month from RM2,700.00  to RM2,000 per metric ton. Price of Gold fell as well from US$980 per ounce to USS910.

To add salt the wound in the market sentiment, the increasing H1N1 flu outbreak has become a great cause of concern if companies have to slow down production if employees are being infected. The market finally fell on-month after increasing for three consecutive months. The KLCI closed at 1,067.76 points on the 10th of July, 15.21 points or 1.4% lower than the previous month. The KLCI traded relatively more volatile in a trading range between 1,028.14  and  1,095.91 points last month.

Trading volume was relatively lower. Daily average trading volume fell from 2 billion shares to 1 billion shares on-month. This reflects the weak market sentiment.

As compared to other Asian markets, the Malaysian market is still one of the most defensive market, and notice that the western markets are the weakest performers even for the past 6 months.

The uptrend is still intact as the KLCI is still above the mid and long term 60-and 90-day moving average. The KLCI has tested the short term 30-day average twice and is now below this average market momentum is much weaker as compared to last month. The KLCI is only 7.7 percent above the long term 90 day moving, average (90-SMA) which is currently at 990 points. The difference in the previous month is 11%.

The momentum of the current up trend is getting weaker. The bears have started to take some grip in the market. Momentum indicators like the 14-day

RSI, 14-day Momentum and MACD have heels making new lows since last month. The indicator values are currently near the middle mark whirls separates the bulls and bears dominance. It has been favoring the bulls since end of March this year. The leading Ichimoku Cloud indicator has started to contract as well which means that the uptrend support is getting weaker, but does not sign a major bearish reversal yet at least for the next one month.

The Bollinger Bands which were expanding has also started to contract and this simply means that the KLCI is trading near its 20-day average. The mid­term swing of the Barros Swing indicator shows a lower swing high. The swings were higher since March. The weekly Average True Range (ATR) indicator has also declined almost half on-month. All these volatility indicators are suggesting a weaker momentum.

Conclusion

There were some weak technical indications last month that urges investors and trades to trade cautiously and in the past few weeks, the technical indicators have started to show stronger signs of the market getting more bearish.

Last month, I mentioned that the market may test the next resistance at 1,160 points but with heavy resistance and the KLCI did find strong resistance at 1,095 points. The probability of the KLCI testing the next resistance level has become thin. We may see a start of a bearish trend, as long as the KLCI remains below the 1,160 resistance level.

Expecting the KLCI to go into one more bear rally to complete the price cycle in the 3. or 4′ quarter and we already in the third. The forecast for KLCI is 700 points and is only valid IF the KLCI stays below 1.160 points. I have written my analysis about the price cycle in my previous two articles. Stay out of the market and if you have large positions, liquidate some of them and get them back when price gets lower.

HSBC trading profit drops 7.5% in the first half of the year, to 58,825,000,000 HK dollars; before the tax, the profit falls 20.1%, to 30,580,000,000 HK dollars. This line of average net assets returns ratio is 22.3%. The total assets raises 2.9%, amounts to 43,850 hundred million HK dollars.

HSBC’s directors – Mr. Zheng Haiquan indicated that even if facing each kind of periphery challenge, HSBC in 2009 the first half of the year’s Asian service may say that is successful, moreover makes the progress, had irrevocably proven its multiplication covers the region widespread mechanics of banking pattern alone superiority. HSBC group’s bank and the capital market service performance ideal round the world, the mortgage and the card service obtains the growth, but the customer’s deposit also rose 9.4%, amounts to 28,170 hundred million HK dollars, reflects the depositor to the HSBC brand trust. At the beginning of the year, Malaysia Hong Kong and Shanghai Bank merges the group, if middle does not include the benefit which produces, the customer’s deposit rise also achieves 5.8%.

Director Zheng indicated that in the China, HSBC continues maintains the leading foreign bank the status, altogether additionally built eight mesh points in the first half of this year, makes the entire Internet (including five between villages and small towns banks) not to expand to 87 take Huifeng as the brand mesh point, spreads 20 cities. In 2009 the first half of the year, HSBC becomes to distribute the foreign RMB bond the foreign bank, is also first provides the RMB settlement service for the interstate trade the bank.

In addition, the HSBC group obtains the Chinese government authorization with to gather the capital in inland being established to occupy half stockholder’s rights respectively the joint capital insurance company, the new company is decided third quarter of 2009 starts doing business. HSBC will begin using in the second half of the year in China’s new headquarters in 2009 in Shanghai. The group service aspect, HSBC will continue with the Shanghai regulatory authority to discuss the HSBC holding stock closely in the Shanghai stock market going on the market plan.

HSBC controls stock (00005.HK) to issue in 2009 today in the Hong Kong Stock Exchange the semi-annual reporting. The semi-annual reporting demonstrated that stops the intermediate stage achievement by the end of June 2009, the shareholder should account for excess profit 3,347,000,000 US dollars (approximately 25,949,000,000 HK dollars), 08 year same time’s 7,722,000,000 US dollars back up 56.66%, each stock gains 21 cents, the propose sending in the second quarter dividend each 8 cents; In the time the net interest income falls 3.02% to 20,538,000,000 US dollars.

Before this, the market universal forecast collects controls the intermediate stage profit to fall yearly 38 to 70%, to lies between 2,340,000,000 US dollars to 4,800,000,000 US dollars. HSBC controls stock announces, stops the intermediate stage achievement by the end of June, 2009, in the time loans the depreciation and other credit risk preparation is 13,931,000,000 US dollars, in 2008 in the first half of the year increases 3,873,000,000 US dollars or 38.51%. Stops by 09 year at the end of June, group’s first level of capital ratio and the total capital ratio maintain strongly, respectively is 10.1% and 13.4%; 12.1% dropped to 6.4% as for the average shareholder total equity repayment by the end of last June.