KLCI fails to cross 1,000 mark

Published: 2009/05/02

Judging from its renewed rebound on Thursday, the KLCI is likely to stage another attempt to take out its major psychological resistance of 1,000.

SHARE prices on Bursa Malaysia moved sideways in consolidating their six-week gains over the last four trading days. The market's uptrend came to a stop when it took a breather. The Kuala Lumpur Composite Index (KLCI) continued to stay above its critical support of 950 points when it closed at 990.74 on Thursday.

The KLCI paused to catch a breather when it consolidated its recent gains on Monday. The index closed lower at 980.12, giving a day-on-day loss of 12.56 points, or 1.27 per cent.

The KLCI continued to stage a follow-through consolidation on Tuesday. It closed at 965.70, giving a day-on-day loss of 14,42 points, or 1.47 per cent.

Overall market sentiment remained upbeat on Wednesday. The KLCI continued to consolidate to its intra-day low of 952.37 before reversing our of its intra-day low into a marginal gain. It closed at 967.46, giving a day-on-day gain of 1.76 points, or 0.18 per cent.

Key heavyweight index-linked counters led the market recovery. The KLCI opened with a gap on Thursday. It closed higher at 990.74, posting a day-on-day gain of 23.28 points, or 2.41 per cent.

On the foreign front, New York's Dow Jones Industrial Average remained above its support of 8,000 over the last four trading days. The Dow closed at 8,168.12 on Thursday, giving a four-day gain of 91.83 points, or 1.14 per cent.

The tech stock heavy Nasdaq Composite Index staged an overhead breakout of its immediate resistance of 1,700 points. It closed at 1,717.30 on Thursday, giving a four-day gain of 23.01 points, or 1.36 per cent.

The KLCI's uninterrupted run-up was checked with a marginal loss at the market close on Thursday. The KLCI moved sideways to close at 990.74, giving a week-on-week loss of 1.94 points, or 0.20 per cent.

Of the other indices, the FTSE Bursa Malaysia Second Board Index added 6.46 points, or 0.15 per cent to 4,305.73 level while the FTSE Bursa Malaysia Mesdaq Index lost 155.45 points, or 3.20 per cent, to 3,488.07 level.

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 above the support of its neutral reference line.

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

Relative Strength Index: Its 14-day RSI stood at the 70.73 per cent level on Thursday.

Outlook

The KLCI staged a minor rebound to its intra-week high of 996.60 on Monday, stopping out at this column's envisaged resistance zone (996 to 1,030).

Subsequent technical pullbacks sent the KLCI to its intra-week low of 952.37 on Wednesday, staging a successful re-test of this column's envisaged support zone (951 to 985).

Chartwise, the KLCI's technical rebound staged a successful re-test of its immediate downside support (See KLCI's weekly chart A3:A4) before bouncing off to close above its support of 990. 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) on Thursday. Earlier on Wednesday, the KLCI staged a successful re-test of its intermediate-term uptrend. It stayed above its intermediate-term downtrend (B3:B4).

The KLCI's daily and weekly fast Moving Average Convergence Divergence (MACD) indicators stayed above their respective slow MACDs on Thursday. Its monthly fast MACD continued to stay above its monthly slow MACD.

The KLCI's 14-day RSI stayed at 70.73 per cent level on Thursday. Its 14-week and 14-month RSI stayed at 60.68 and 43.39 per cent levels respectively.

The KLCI failed in its first technical attempt in taking out its major psychological resistance of 1,000 over the last four trading days. Instead, it consolidated with a trading range of 44.23 points.

Judging from its renewed rebound on Thursday, the KLCI is likely to stage another attempt to take out its major psychological resistance of 1,000. Key heavyweight index-linked counters will continue to drive the KLCI higher while second and third liners will continue to provide the excitement in trading.

Next week, the KLCI's envisaged resistance zone hovers at the 994 to 1,028 levels while its immediate downside support is at the 951 to 983 levels.