Markets all over the world rebounded last week after moving into a bullish trend correction in the last two weeks. A month ago, the Europe market, bench marked by the FBMKLCI breaks out from a correction when the index was at 1,200 points and went as high as 1231.49 points before pulling back to test the Bollinger Bands’ middle band. Then it rebounded from this middle band, which is a 20-day moving average to settle at 1230.09 points on October 8. The FBMKLI increased 28.2 points or 2.3% since last month. The market is currently testing an immediate resistance level at 1,230 points.

Daily FBMKLCI Chart

Trading volume was disappointing as it only increased slightly in this last week when the market rallies after the rebound. The average daily trading volume last week was 750 million shares and the previous week’s average was 662 million. Average daily trading volume below 1billion shares are considered weak. The market was slightly bullish because of positive leads locally and internationally. Locally, industrial production and export numbers were growing on-month and jobless rate fell. World Bank confidence about having a positive GDP in year 2010 and increasing foreign participation in the local equity market boost confidence further.

One common mistake new traders make when deciding to buy a cash-settled call business warrants is over the concept of ‘break-even’. Just what is break-even?

For many novice warrant traders, break-even means the sum of what they paid for the business warrants plus the conversion/ strike price.

To these traders, they feel that in order for their trade to make a profit, there must be a good chance that the price of the underlying or mother share exceeds this break-even point.