FBM KLCI rebounds further, nears 1,300 resistance level

Published: 2009/11/14

SHARE prices on Bursa Malaysia continued to stage mild follow-through rebounds over the last five trading days. The FTSE Bursa Malaysia Composite Index (FBM KLCI) re-penetrated its critical resistance of 1,250 when it closed at 1,270.96 points yesterday.

The FBM KLCI opened higher at 1,262.48 points before rebounding to close at its intra-day high of 1,267.75 on Monday, giving a day-on-day gain of 6.99 points, or 0.55 per cent.

Share prices on Bursa Malaysia rebounded higher when the FBM KLCI gapped up on Tuesday. The FBM KLCI rebounded to 1,277.81 before drifting to close at 1,274.08 points, giving another day-on-day gain of 6.33 points, or 0.50 per cent.

The FBM KLCI opened at 1,277.59 points before hitting its intra-day high of 1,279.39 on Wednesday. The FBM KLCI eased back to close at 1,270.15 points, giving a day-on-day loss of 3.93 points, or 0.31 per cent.

Share prices on Bursa Malaysia moved sideways on Thursday. The FBM KLCI hit its intra-day low of 1,262.48 before closing at 1,271.75 points, giving a day-on-day gain of 1.60 points, or 0.13 per cent.


The FBM KLCI gapped up at 1,273.23 before hitting its intra-day low of 1,267.82 points yesterday. It closed at 1,270.96 points, giving a day-on-day loss of 0.79 point, or 0.06 per cent.

The Dow Jones Industrial Average (DJIA) continued to stay above its major psychological support of 10,000 on Thursday. The DJIA closed at 10,197.47 points on Thursday, giving a four-day gain of 174.05 points.


The tech stock heavy Nasdaq Composite Index continued to stay above its critical support of 2,100 when it closed at 2,149.02 points on Thursday, giving a four-day gain of 36.58 points.


The Tokyo stock market continued to stay below its major psychological support of the 10,000 level over the last five trading day. The Nikkei 225 Index closed at 9,770.31 points yesterday, giving a week-on-week loss of 19.04 points, or 0.19 per cent.


The Hong Kong stock market stayed a re-penetration of its critical resistance of 22,000. The Hang Seng Index closed at 22,553.63 points, posting a week-on-week gain of 723.91 points.

The FBM KLCI staged a mild follow-through rebound to close at 1,270.96 points yesterday, giving a week-on-week gain of 10.20 points, or 0.81 per cent.

The FTSE Bursa Malaysia Small Cap Index added 5.39 points, or 0.05 per cent to close at 10,234.94 points while the FTSE Bursa Malaysia ACE Index fell 163.78 points, or 3.49 per cent, to 4,523.87 level.


Following are the readings of some of its 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 stayed 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 67.23 per cent level on Friday.

Outlook


The FBM KLCI's mild consolidation hit its intra-week low of 1,259.23 on Monday, staying above this column's envisaged support zone (1,223 to 1,257 levels).


Subsequent technical rebounds sent the FBM KLCI to its intra-week high of 1,279.52 on Wednesday, moving into the confines of this column's envisaged resistance zone (1,264 to 1,298 levels).


The FBM KLCI's weekly chart continued to stay below the support of its intermediate-term uptrend (See FBM KLCI's weekly chart - A3:A4) at the market close yesterday. It continued to stay above the neckline (A1:A2) of its head-and-shoulders pattern formation.


Chartwise, the FBM KLCI's daily trend continued to stay below the lower support (See FBM KLCI's daily chart - B3:B4) of its intermediate-term uptrend channel (B3:B4 and B5:B6) yesterday. Also, the FBM KLCI continued to stay above the neckline (B1:B2) of its head-and-shoulders pattern formation.


The FBM KLCI's daily, weekly and monthly fast MACDs (moving average convergence divergence) stayed above their respective slow MACDs yesterday.

The FBM KLCI's 14-day RSI stayed at 67.23 per cent level yesterday. Its 14-week and 14-month RSI stayed at 73.60 and 63.95 per cent levels respectively.

Last week, this column commented it had an even chance of scaling higher highs, edging closer to its critical resistance of 1,300. It did. The FBM KLCI hit its intra-week high of 1,279.52 yesterday.


With the FBM KLCI's price action moving in sync with its technical indicators, the FBM KLCI will continue to edge closer to its critical resistance of 1,300.

Heavyweight index-linked counters will continue to uphold the market momentum for the FBM KLCI to have a serious crack at the 1,300 resistance.


Next week, the FBM KLCI's envisaged resistance zone hovers at the 1,274 to 1,308 levels while its immediate downside support is at the 1,233 to 1,267 levels.