KLCI stays above key support level

Published: 2009/05/16

SHARE prices on Bursa Malaysia consolidated for the first four trading days before posting a minor rebound yesterday. The Kuala Lumpur Composite Index (KLCI) continued to stay above its major psychological support of 1,000 points when it closed at 1,014.21 yesterday.
The KLCI opened at 1,032.98 before rebounding to its intra-day high of 1,034.37 on Monday. The index eased back to close at 1,025.50, giving a day-on-day loss of 1.28 points, or 0.12 per cent.

The KLCI gapped down at 1,020.18 points before slipping to its intra-day low of 1,013.36 on Tuesday. It staged a mild rebound from its intra-day low of 1,013.36 to close at 1,023.02, giving a day-on-day loss of 2.48 points, or 0.24 per cent.

The market staged an attempt to unfold a technical rebound on Wednesday but failed. The KLCI closed at 1,022.84, giving a day-on-day loss of 0.18 point, or 0.02 per cent.

Key heavyweight index-linked counters' consolidation dragged the index lower the next day. The KLCI closed at 1,011.99 on Thursday, giving a day-on-day loss of 10.85 points, or 1.06 per cent.
A minor technical rebound was seen yesterday. The KLCI opened higher at 1,017.42 before moving to its intra-day high of 1,020.51. The index eased back to close at 1,014.21, giving a day-on-day gain of 2.22 points, or 0.22 per cent.

The KLCI consolidated for the major part of the week. It posted a week-on-week loss of 12.57 points, or 1.22 per cent.

Among the other indices, the FTSE Bursa Malaysia Second Board Index eased 24.21 points, or 0.53 per cent to 4,526.42 level while the FTSE Bursa Malaysia Mesdaq Index lost 213.09 points, or 5.06 per cent, to 3,994.05 level.

Following are the readings of some of the KLCI's technical indicators:
Moving Averages: The KLCI continued to stay above its 20-, 30-, 50-, 100- and 200-day moving averages. It has since stayed below its 10-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 67.62 per cent level yesterday.
Outlook

The KLCI staged a mild and brief rebound to its intra-week high of 1,034.37 on Monday, encountering resistance at this column's envisaged resistance zone (1,030 to 1,064 levels).
Subsequent technical pullbacks sent the KLCI to its intra-week low of 1,011.99 on Thursday, staging a re-test of this column's envisaged support zone (989 to 1,023 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 Moving Average Convergence Divergence (MACD) 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 Relative Strength Index (RSI) stayed at 67.62 per cent level on Thursday. Its 14-week and 14-month RSI stayed at 62.58 and 45.52 per cent levels respectively.
Last week, this column commented that the overall market sentiment would remain upbeat with continuing speculative plays in second and third liners. Key heavyweight index-linked counters might take a short breather. This column was correct on both counts.

The KLCI will continue to try to maintain its technical composure above its major psychological support of 1,000 points. From the looks of it, the KLCI is likely to gyrate around its major psychological support. Second and third liners will remain the trading focus of the week.
Next week, the KLCI's envisaged resistance zone hovers at the 1,017 to 1,051 levels while its immediate downside support is at the 976 to 1,010 levels.