Sunday, January 25, 2009

Weak Tone Keeps KLCI Below 900.

SHARE prices on Bursa Malaysia extended their follow-through consolidations in tandem with the major weaknesses on the Wall Street and regional stock markets. The Kuala Lumpur Composite Index (KLCI) continued to stay below its critical support of 900 when it closed at 872.69 points yesterday. The KLCI opened marginally higher at 897.90 points before rebounding to its intra-day high of 900.24 on Monday. The KLCI closed lower at 890.28, giving a day-on-day loss of 6.19, or 0.69 per cent.

Overall market sentiment weakened on lack of fresh market leads on Tuesday. The KLCI gapped down before closing lower at 880.37, giving a day-on-day loss of 9.91, or 1.11 per cent. The KLCI gapped down before slipping to its intra-day low of 868.65 on Wednesday. It closed off its day's low at 873.41 points, giving a day-on-day loss of 6.96 points, or 0.79 per cent.

Overall market sentiment improved on rate cut of 75 basis points on the local front on Thursday. The KLCI closed higher at 879.02 points, giving a day-on-day gain of 5.61 points, or 0.64 per cent. The KLCI resumed its consolidation yesterday, closing lower at 872.69, giving a day-on-day loss of 6.33, or 0.72 per cent.

Elsewhere in the region, the Tokyo stock market's continuing consolidation sent its benchmark below the support of 8,000. The Nikkei 225 Index closed at 7,745.25 yesterday, posting a week-on-week loss of 484.90, or 5.89 per cent.

The Hong Kong stock market continued to tumble in tandem with the technical pullbacks on the Wall Street. It breached its critical support of 13,000 over the last four trading days. The Hang Seng Industrial Index closed at 12,578.60 yesterday, recording a week-on-week loss of 676.91, or 5.11 per cent.

The KLCI closed broadly lower at 872.69 yesterday, giving another week-on-week loss of 23.78 points, or 2.65 per cent. The FTSE Bursa Malaysia Second Board Index lost 74.33 points, or 1.86 per cent, to 3,927.56 level while the FTSE Bursa Malaysia Mesdaq Index gained 73.35 points, or 2.23 per cent, to 3,361.68 level.

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

* Moving Averages: The KLCI had since stayed below its 10-, 20-, 30-, 50-, 100- and 200-day moving averages.

* Momentum Index: Its short-term momentum index continued to stay 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 42.12 per cent level yesterday.


The KLCI's very brief follow-through rebound hit its intra-week high of 900.24 on Monday, encountering resistance at this column's envisaged resistance zone (899 to 933 levels). Subsequent technical pullbacks sent the KLCI below its support of 890 and 880 before hitting its intra-week low of 867.35 yesterday, staging a re-test of this column's envisaged support zone (859 to 893 levels).

Chartwise, the KLCI's technical pullback rested on resistance-turned-support trendline (See KLCI's weekly chart - A7:A8). It breached 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 three trading days. It rested on the recently established uptrend (B5:B6).

The KLCI's weekly fast MACD (moving average convergence divergence) continued to stay above the support of its weekly slow MACD at the market close yesterday. Its daily and monthly fast MACDs continued to stay below their respective slow MACDs. The KLCI's 14-day RSI stayed at 42.12 per cent level yesterday. Its 14-week and 14-month RSI stayed at 34.74 and 29.90 per cent levels respectively.

Overall market sentiment remained weak throughout the last five trading days. It continued to react negatively to the major weaknesses on Wall Street and regional bourses. Market undertone is not going to improve significantly in the coming festive holiday-shortened week. The KLCI is expected to drift aimlessly in a directionless market. Next week, the KLCI's envisaged resistance zone hovers at the 876 to 910 levels while its immediate downside support is at the 835 to 869 levels.

Techinical Speaking By S.N.Lock - Article from Business

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