Our FBM-KLCI opened with a sharp drop to hit an intra-day low of 1264 at 9.50 am. That was surprising given the positive close for US & European markets. Looking at Chart 1, we can see that DJIA had a fairly successful 'Test of the Low' which failed to make a new low & closed with a gain of 125 points. While FTSE did make a new low, it closed with an bullish hammer as well as a bullish divergence in the RSI. See Chart 2.


Chart 1: DJIA's daily chart as at May 21, 2010 (Source: Stockcharts.com)


Chart 2: FTSE's daily chart as at May 21, 2010 (Source: Stockcharts.com)

This morning, SSEC broke above its medium-term downtrend line ('RR') at 2600. It may test the horizontal resistance at 2900 or the 50-day SMA line at 2947. See Chart 3.


Chart 3: SSEC's daily chart as at May 21, 2010 (Source: Stockcharts.com)

HSI has also rebounded off its strong horizontal support of 19400. If it can surpass the psychological 20000 level, it may test the horizontal resistance at 21000. See Chart 4.


Chart 4: HSI's daily chart as at May 21, 2010 (Source: Stockcharts.com)

Based on the above technical outlook, I believe the global equity markets could be in for a decent rebound over the few days. The big question is whether the worst is over or has it just begun.