KLCI displays resilience, stays above 1,000

Published: 2009/05/23

The KLCI is staging a second attempt to take out its overhead resistance of 1,050. Second and third liners would now head for consolidation, says a research head
SHARE prices on Bursa Malaysia consolidated on Monday before resuming their technical rebounds over the next four trading days.

The Kuala Lumpur Composite Index (KLCI) continued to stay above its major psychological support of 1,000 points when it closed at 1,045.26 yesterday.
The KLCI opened lower at 1,007.95 before drifting to its intra-day low of 1,000.34 on Monday. The KLCI closed at 1,012.01, giving a day-on-day loss of 2.20 points, or 0.22 per cent.

The KLCI gapped up at 1,023.36 before rebounding to its intra-day high of 1,027.38 on Tuesday, leaving a gap of 5.41 points. It closed at 1,023.49 on Tuesday, giving a day-on-day gain of 11.48 points, or 1.13 per cent.

Overall market sentiment remained upbeat on Wednesday when the KLCI out-performed regional stock markets. The KLCI closed at 1,042.63, posting a day-on-day gain of 19.14 points, or 1.87 per cent.

Key heavyweight index-linked counters paused to consolidate their recent gains on Thursday. The KLCI closed lower at 1,035.56, giving a day-on-day loss of 7.07 points, or 0.68 per cent.
The KLCI staged a late-day technical rebound yesterday. It opened at 1,030.68 before closing at its intra-day high of 1,042.56 yesterday, giving a day-on-day gain of 9.70 points, or 0.94 per cent.

The index rebounded in earnest over the last four trading days before closing at 1,045.26 yesterday, a week-on-week gain of 31.05 points, or 3.06 per cent.

Among the other indices, the FTSE Bursa Malaysia Second Board Index added 0.46 point, or 0.01 per cent to 4,526.88 while the FTSE Bursa Malaysia Mesdaq Index lost 46.13 points, or 1.15 per cent, to 3,947.92.

The following are the readings of some of the KLCI's technical indicators:
Moving Averages: The KLCI continued to stay above its 10-, 20-, 30-, 50-, 100- and 200-day moving averages.

Momentum Index: Its short-term momentum index continued to stay precariously above the support of its neutral reference line.

On Balance Volume: Its short-term OBV trend stayed below the support of its 10-day exponential moving averages.

Relative Strength Index: Its 14-day RSI stood at the 73.01 per cent level yesterday.
Outlook

The KLCI staged a technical pullback to its intra-week low of 1,000.34 on Monday, staging a successful re-test of this column's envisaged support zone (976 to 1,010 levels).

Subsequent technical pullbacks sent the KLCI back up to its intra-week high of 1,050.45 on Thursday, moving into the confines of this column's envisaged resistance zone (1.017 to 1,051 levels).

Chartwise, the KLCI's technical pullbacks continued to stay above its immediate downside support (See KLCI's weekly chart A3:A4). It continued to stay above its resistance-turned-support trendline (A7:A8).

The KLCI's daily trend continued to stay above its intermediate-term uptrend (See KLCI's daily chart B5:B6) over the last five trading days. It stayed above its intermediate-term downtrend (B3:B4).

The KLCI's weekly fast MACD (moving average convergence divergence) stayed above its weekly slow MACD yesterday. Its daily and monthly fast MACDs continued to stay above their respective slow MACDs.

The KLCI's 14-day RSI stayed at 73.01 per cent level on Thursday. Its 14-week and 14-month RSI stayed at 66.24 and 48.11 per cent levels respectively.

Last week, this column commented that the KLCI would continue to try to maintain its technical composure above its major psychological support of 1,000. It did. The KLCI staged a successful re-test of its immediate downside support of 1,000 when it hit intra-week low of 1,000.34 on Monday.

The KLCI will continue to maintain its technical composure on renewed play in key heavyweight index-linked counters. The KLCI is staging a second attempt to take out its overhead resistance of 1,050. Second and third liners would now head for consolidation.

Next week, the KLCI's envisaged resistance zone hovers at the 1,048 to 1,082 levels while its immediate downside support is at the 1,008 to 1,042 levels.

The subject expressed above is based on technical analysis and opinions of the writer. It is not a solicitation to buy or sell.