THE FTSE Bursa Malaysia Kuala Lumpur Composite Index October contract on Bursa Malaysia Derivatives closed lower at 1,204 with an open interest of 14,802 contracts last week.
The inability of the contract to consolidate between 1,210 and 1,240 saw the October futures breaking the support at 1,200 on Friday before ending the week slightly higher.
The bulls showed reluctance to take charge at the 1,220 level for fear of having to long cover their positions should the equity market correct further. Some traders attributed the correction last week to a change in global sentiment that resulted in the futures contracts' premium to the cash index being converted into a discount. The futures closed at a 2-point discount to the underlying index.
Technically, the Commodity Channel Indicator has moved back to oversold territory but the selling has yet to dry up, delaying any initiative for a technical rebound. The supportive momentum in the futures market may not be enough for the October contract to defend the 1,200 level this week. In this regard, should the October contract move lower, it may in turn entice short-term traders to increase their long positions for a short play, as was noticed last week.
Given the absence of a strong bull presence, the futures contract is unlikely to trend anywhere above the resistance line at 1,240.
Tactically, despite the small discount to the cash index, there may still be trading opportunities in the futures market, especially when it touches its support line. A negative crossover has been initiated on the Moving Average Convergence Divergence indicator which could add pressure on the current 1,200 support line. On this note, we have shifted the October's contract support line to 1,180.
Technical outlook
The Moving Average Convergence Divergence indicator turned negative with the faster below the signal line. Both lines remain at the positive region.
The daily Relative Strength Index closed at the neutral.
The daily Commodity Channel Index finished at the oversold.
About Me
- Nuang
- Ibrahim bin Ramli@Nuang started his career with CIMB Wealth Advisors Berhad as Agency Manager in April, 2008.Previously he was an Internal Auditors and Accounts Executive with Perodua Sales Sdn Bhd since 17 August, 1994. His background:- 1.Certified of Achievement for Master Sales Leadership from Dr Lawrence Walter Ng of President of The Art Of Learning and International Of Learning Without Learning 2.Certified for eXtra Ordinary Performance of Lawrence Walter Award Certificate for One Million Ringgit Club 2007 3. Certified Life & General insurances 4. Conferred with Diploma in Business Studiess & Bachelor of Business Admin(Hons)Finance from UiTM, Terengganu Branch & Shah Alam respectively;
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