Technically Speaking By S.N. Lock. KLCI Slip Below Key Support Level.

SHARE prices on Bursa Malaysia consolidated in step with the major weaknesses on the Wall Street and regional stock markets. The Kuala Lumpur Composite Index (KLCI) had once again slipped below its critical support of 900 when it closed at 896.47 points yesterday.

The KLCI opened higher at 919.40 points before rebounding to its intra-day high of 925.13 on Monday. The KLCI closed at 923.57 points, giving a day-on-day gain of 4.50 points, or 0.49 per cent.

Lack of fresh market leads, share prices on Bursa Malaysia fell back in tandem with the technical pullbacks on the regional stock markets on Tuesday. The KLCI closed at 913.70 points, giving a day-on-day loss of 9.87 points, or 1.07 per cent.

The KLCI fluctuated within range-bound trading activities in its inside-day move on Wednesday. The KLCI closed relatively unchanged at 913.46 points, giving a day-on-day gain of 0.24 point, or 0.03 per cent. Overall market sentiment took a heavy beating when it reacted to the major weaknesses on the Wall Street on Thursday. The KLCI closed broadly lower at 897.45 points, recording a day-on-day loss of 16.01 points, or 1.75 per cent.

The KLCI continued to consolidate within range-bound activities yesterday. The KLCI closed relatively unchanged at 896.47 points, giving a day-on-day gain of 0.98 point, or 0.11 per cent. The Dow Jones Industrial Average (DJIA) drifted sharply lower on bearish news on the economic front as it edged closer to its critical support of 8,000. The DJIA closed at 8,212.49 points on Thursday, posting a four-day loss of 386.69 points, or 4.50 per cent.

The tech stock heavy Nasdaq Composite Index continued to stay above its critical support of 1,500 after briefly slipping below 1,500 when it closed at 1,489.64 points on Wednesday. It closed at 1,511.84 points on Thursday, recording a four-day loss of 59.75 points, or 3.80 per cent.

The KLCI closed broadly lower at 896.47 points yesterday, giving a week-on-week loss of 22.60 points, or 2.46 per cent. The FTSE Bursa Malaysia Second Board Index added 20.41 points, or 0.51 per cent, to 4,001.89 level while the FTSE Bursa Malaysia Mesdaq Index lost 92.47 points, or 2.74 per cent, to 3,288.33 level.

Following are the readings of some of the KLCI's technical indicators:

Moving Averages: The KLCI continued to stay above its 30-, and 50-day moving averages while it continued to stay below its 10-, 20-, 100- and 200-day moving averages.

Momentum Index: Its short-term momentum index continued to stay precariously 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 51.52 per cent level yesterday.

Outlook

The KLCI's brief follow-through rebound hit its intra-week high of 925.13 on Monday, encountering resistance at this column's envisaged resistance zone (922 to 956 levels). Subsequent technical pullbacks sent the KLCI below its critical support of 900 before hitting its intra-week low of 889.45 on Thursday, staging a re-test of this column's envisaged support zone (882 to 916 levels).

Chartwise, the KLCI's intra-week technical pullbacks staged a re-test of its resistance-turned-support trendline (See KLCI's weekly chart - A7:A8). It continued to stay above its immediate downside support (A1:A2) at the market close yesterday.

The KLCI's daily trend staged a re-test of its immediate downside support (See KLCI's daily chart - B3:B4) over the last five trading days. It continued to stay above its short-term uptrend (B5:B6).

The KLCI's daily and weekly fast MACDs (moving average convergence divergence) continued to stay above the support of their respective slow MACDs at the market close yesterday. Its monthly fast MACD continued to stay below its slow MACD.

The KLCIs 14-day RSI stayed at 51.52 per cent level yesterday. Its 14-week and 14-month RSI stayed at 37.53 and 32.25 per cent levels respectively. Once again, the KLCI failed in its bid to take out its previous resistance high of 936.63. Instead, the KLCI breached its critical support of 900 on Thursday and remained below it yesterday.

As the market is moving closer to the long Chinese New Year holiday, overall market activities are likely to remain quiet. The KLCI is likely to trend within range-bound activities. Next week, the KLCI's envisaged resistance zone hovers at the 899 to 933 levels while its immediate downside support is at the 859 to 893 levels.

Technically Speaking by S.N. Lock from Business Times.com