Global indices ended mixed in February, and this followed an impressive three-month rally (November 2012 to January 2013) that saw a few of the major benchmarks retesting their five-year highs. Of note, the US Dow Jones Industrial Average ("DJIA") had risen more than 1500 points (+12.7%) since its November lows, underpinned by the string of positive economic data, as well as better than predicted corporate earnings. In fact, the 30-stock index was still up by a respectable 194 points (+1.4%) in the February month alone. This compares to the European counterpart Stoxx 50 ("STOXX50") which was down 2.6% for the month, while the Asian MSCI Asia Ex Japan index ("MSCI AXJ") had also lost 0.2%.
The Late Bloomer. Naturally, we expected some degree of profit taking when the technical indicators started to weaken on all three indices earlier in the month. As a whole, the broader MSCI World index was almost flat (-0.1%), and had not retreated at the magnitudes we were anticipating. On the domestic front, the benchmark FBM KLCI added 10.08 points or 0.62% in February in what was a volatile month of trade. The uncertainty surrounding the upcoming general elections had a bearing on the index, and as a result, investors were easily spooked by the slightest of speculation. Trading was choppy throughout the month and the local benchmark ranged between 1,597 - 1,634 to form a short-term trading channel. Just when we were expecting the technical picture to retreat, a late session rally yesterday was able to push the month-to-date index performance into the black.
On Our Technical Watch Monthly Review. Recall that in our last Monthly technical review (report dated 4th February), we mentioned that our technical approach would likely be on a more cautious tone. True enough, we remained mostly on the sidelines in view of the cluster of public holidays as well as the jittery investor sentiment and instead opted for a more selective approach to technical stock picking. Of the 19 stock highlights, just 4 were outright Technical BUY recommendations (BENALEC, ALLIANZ, DRB and POS), while the remaining 15 were Non-Rated.