FBM KLCI consolidates further in narrow trade

Published: 2009/12/19

SHARE prices on Bursa Malaysia consolidated within the confines of rangebound activities. The FTSE Bursa Malaysia Composite Index (FBM KLCI) continued to stay above its critical support of 1,250 points when it closed at 1,266.97 on Thursday.

The FBM KLCI was relatively unchanged at 1,259.96 before rebounding to close at the day's high of 1,265.45 on Monday, giving a day-on-day gain of 5.45 points, or 0.43 per cent.

The benchmark index opened marginally lower at 1,263.98 before rebounding to close at the day's high of 1,270.81 on Tuesday, giving a day-on-day gain of 5.36 points, or 0.42 per cent.

The FBM KLCI opened marginally lower at 1,269.03 before drifting to its intra-day low of 1,264.76 on Wednesday. It closed at 1,269.03, giving a day-on-day loss of 1.78 points, or 0.14 per cent.



Share prices on Bursa Malaysia consolidated in tandem with the weak performances on the regional stock markets on Thursday. The FBM KLCI drifted lower to close at 1,266.97, posting a day-on-day loss of 2.06 points, or 0.16 per cent.

On the foreign front, the Dow Jones Industrial Average (DJIA) continued to stay above its major psychological support of 10,000 points for yet another trading week. The DJIA closed at 10,308.26 on Thursday, giving a four-day loss of 163.24 points, or 1.56 per cent.

The tech stock heavy Nasdaq Composite Index continued to stay above its critical support of 2,100 when it closed at 2,180.05 on Thursday, giving a four-day loss of 10.26 points, or 0.47 per cent.

The Tokyo stock market continued to stay above its major psychological support of the 10,000 level yesterday. The Nikkei 225 Index closed at 10,142.05, giving a week-on-week gain of 345.18 points, or 0.34 per cent.

The Hong Kong stock market consolidated its recent gains over the last five trading days. The Hang Seng Index closed at 21,175.88, posting a week-on-week loss of 726.23, or 3.32 per cent.

On Bursa Malaysia, the FBM KLCI staged a mild technical rebound to close at 1,266.97 on Thursday, giving a week-on-week gain of 6.97 points, or 0.55 per cent.

Among other indices, the FTSE Bursa Malaysia Small Cap Index eased 45.33 points, or 0.46 per cent to close at 9,834.75 while the FTSE Bursa Malaysia ACE Index lost 44.70 points, or 1.05 per cent, to the 4,195.50 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 30-, 50-, 100- and 200-day moving averages. It stayed below its 10- and 20-day moving averages.

* Momentum Index: Its short-term momentum index stayed below the support of its neutral reference line.

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

* Relative Strength Index (RSI): Its 14-day RSI stood at the 52.88 per cent level yesterday.

Outlook

The FBM KLCI's initial technical pullback hit its intra-week low of 1,256.07 on Monday, staging a successful re-test of this column's envisaged support zone (1,222 to 1,264 levels).

Subsequent technical rebounds sent the FBM KLCI to its intra-week high of 1,272.59 on Thursday, 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 on Thursday. 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) on Thursday. Also, the FBM KLCI continued to stay above the neckline (B1:B2) of its head-and-shoulders pattern formation.

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

The FBM KLCI's 14-day RSI stayed at the 52.88 per cent level yesteriday. Its 14-week and 14-month RSI stayed at 70.02 and 63.75 per cent levels respectively.

Last week, this column commented that the FBM KLCI was likely to stage a follow-through consolidation for another trading week. The FBM KLCI's trading range of the week was at 16.52 points.

As the FBM KLCI is moving towards the final lap of its year-end window-dressing exercise, overall market sentiment is likely to remain at current levels. The FBM KLCI will trend within tight trading ranges for the next four trading days.

Next week, the FBM KLCI's envisaged resistance zone hovers at the 1,270 to 1,299 levels while its immediate downside support is at the 1,229 to 1,263 levels.

The subject expressed above is based purely on technical analysis and opinions of the writer. It is not a solicitation to buy or sell.