FBM KLCI to stage follow-through rebounds

Published: 2009/09/12

SHARE prices on Bursa Malaysia rebounded in unison with follow-through rebounds on the Wall Street and regional stock markets. The FTSE Bursa Malaysia Composite Index (FBM KLCI) continued to stay above its major psychological support of 1,200 when it closed at 1,208.28 points yesterday.

The FBM KLCI opened grossly higher when it gapped up at 1,180.66 points before rebounding to close at the day's high of 1,190.39 on Monday, giving a day-on-day gain of 11.65 points, or 0.99 per cent.

Overall market sentiment remained upbeat on follow-through rebounds on the regional stock markets on Tuesday. The FBM KLCI rallied from its intra-day low of 1,190.87 to close at the day's high of 1,202.07 points, giving a day-on-day gain of 11.68 points, or 0.98 per cent.

The FBM KLCI paused for a short and brief consolidation on Wednesday, in tandem with the technical pullbacks on the regional stock markets. The FBM KLCI closed at 1,196.46 points, giving a day-on-day loss of 5.61 points, or 0.47 per cent.

Share prices on Bursa Malaysia resumed their prior technical rebounds in tandem with the rebounds on the regional stock markets on Thursday. The FBM KLCI hit its intra-day high of 1,210.11 before easing off to close at 1,201.28 points, giving a day-on-day gain of 4.82 points, or 0.40 per cent.

The FBM KLCI remained upbeat yesterday when the local market reacted to the better-than-expected economic data from China. The FBM KLCI rallied from its intra-day low of 1,201.28 to its intra-day high of 1,210.36. It eased off to close at 1,208.28 points yesterday, giving a day-on-day gain of 7 points, or 0.58 per cent.

The FBM KLCI rebounded to close higher at 1,208.28 points yesterday, posting a week-on-week gain of 29.54 points, or 2.51 per cent.

Among other indices, the FTSE Bursa Malaysia Small Cap Index added 39.69 points, or 0.40 per cent to 9,901.11 level while the FTSE Bursa Malaysia ACE Index lost 52.43 points, or 1.27 per cent, to 4,079.74 level.

The following are the readings of some of the FBM KLCI's technical indicators:

Moving Averages: The FBM 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 (OBV): Its short-term OBV trend stayed above the support of its 10-day exponential moving averages.

Relative Strength Index (RSI): Its 14-day RSI stood at the 70.57 per cent level yesterday.

Outlook

The FBM KLCI's follow-through rebound hit its intra-week high of 1,210.36 yesterday, moving into the confines of this column's envisaged resistance zone (1,182 to 1,216 levels).

The FBM KLCI's weekly chart staged an overhead breakout of the neckline (See FBM KLCI's weekly chart - A1:A2) of its head-and-shoulders pattern formation. It continued to stay above its intermediate-term uptrend (A3:A4).

Chartwise, the FBM KLCI's daily trend continued to stay within the confines of its intermediate-term uptrend channel (See FBM KLCI's daily chart - B3:B4 and B5:B6) yesterday. It continued to stay above its immediate overhead resistance (B1:B2).

The FBM KLCI's daily, weekly and monthly fast MACDs (moving average convergence divergence) stayed above their respective slow MACDs yesterday. It augurs well for its near-term perspectives.

The FBM KLCI's 14-day RSI stayed at 70.57 per cent level yesterday. Its 14-week and 14-month RSI stayed at 74.68 and 59.93 per cent levels respectively.

Last week, this column commented that heavy-weight index-linked counters played pivotal roles in maintaining its market momentum. It did. The FBM KLCI closed at 1,208.28 points yesterday.

AMMB, BAT, CIMB and KLK posted week-on-week gains of 21-sen, RM1.02, 72-sen and 44 sen respectively. Their combined gains of RM2.39 provided the momentum thrust for the FBM KLCI in tracing out a week-on-week gain of 29.54 points, or 2.51 per cent.

Share prices on Bursa Malaysia will continue to stage their follow-through rebounds next week. Once again, heavy-weight index-linked counters will continue to lift the FBM KLCI onto higher technical grounds, heading towards the Hari Raya festive holidays.

Next week, the FBM KLCI's envisaged resistance zone hovers at the 1,211 to 1,245 levels while its immediate downside support is at the 1,170 to 1,204 levels.