FBM KLCI futures northbound

THE FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) futures April contract on Bursa Malaysia Derivatives closed at 1,342.50 on Friday with an open interest of 18,570 contracts.


The April contract broke the 1,320 resistance line, thus establishing a new hurdle for the spot contract after the futures market's previous attempt to break through the barrier early this year. Trading last week was consolidative with an upside bias in the later part of the week after Invest Malaysia 2010. With no signs of a selldown threat this week, optimism about an extension to the technical recovery may materialise again.


The technical signals continue to move upwards as traders remain bullish. The long-term trend remains northbound with a similar trend found in the shorter range projection as bullish sentiments reign in the market. The oscillators were pushing deeper into the overbought level by last Friday as worries of selldown at resistance levels tapered off. Further upside pressure could rekindle these signals deeper into overbought territory should momentum deepen into a trending pace.


Judging by sentiment and volatility in the market, it is evident that structural traders are committing themselves. This could be one of the reasons the market has consistently sustained itself above 1,320 as more traders enjoy the ride.


Tactically, this week will not be any different than the past weeks as the futures contract may once again try to push higher. The April contract may graduate to a higher band should it succeed in pushing and closing beyond 1,350. A deeper recovery will likely induce the spot contract to move between 1,350 and 1,380.