Technical Speaking S.N.Lock 22-02-2009

The Composite Index is bracing for further consolidation in staging a re-test of its immediate downside support at 867 level.

SHARE prices on Bursa Malaysia pulled back in tandem with Wall Street and regional stock markets after their recent rebounds. The Kuala Lumpur Composite Index (KLCI) slipped below its critical support of 900 when it closed at 889.71 points yesterday.

The KLCI opened at 908.36 points before drifting lower to close at 907.19 on Monday, giving a day-on-day loss of 2.65 points, or 0.29 per cent. Share prices on Bursa Malaysia gapped down in its opening before succumbing to persistent selling pressure on Tuesday. The KLCI closed lower at 898.53 points, giving a day-on-day loss of 8.66 points, or 0.95 per cent.

The KLCI extended its follow-through consolidations on Wednesday. The index closed off its day's low at 895.23 points, giving a day-on-day loss of 3.30 points, or 0.37 per cent. Overall market sentiment paused for a mild technical rebound after three consecutive days' of technical pullbacks. The KLCI rebounded to close at 899.59, giving a day-on-day gain of 4.36 points, or 0.49 per cent.

The KLCI resumed its prior technical pullbacks, in step with the major weaknesses on Wall Street and regional stock markets yesterday. It closed broadly lower at 889.71 points, giving a day-on-day loss of 9.88 points, or 1.10 per cent.

The KLCI closed lower at 889.71 points yesterday, giving a week-on-week loss of 20.13 points, or 2.21 per cent. The FTSE Bursa Malaysia Second Board Index eased 25.46 points, or 0.64 per cent, to 3,980.49 level while the FTSE Bursa Malaysia Mesdaq Index lost 164.94 points, or 4.99 per cent, to 3,142.17 level.

Following are the readings of some of its technical indicators:

Moving Averages: The KLCI had since stayed above its 20- and 50-day moving averages. It continued to stay below its longer term 10-, 30-, 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 49.39 per cent level on Friday.

Outlook

The KLCI's technical pullbacks hit its intra-week low of 888.70 yesterday, staging a re-test of this column's envisaged support zone (871 to 905 levels).

Chartwise, the KLCI staged a re-test of its immediate downside support (See KLCI's weekly chart - A1:A2). It continued to stay above its resistance-turned-support trendline (A7:A8).
The KLCI's daily trend rested on the support of its recently established uptrend (See KLCI's daily chart - B5:B6) yesterday.

It stayed above its intermediate-term downtrend (B3:B4). The KLCI's daily fast MACD (moving average convergence divergence) stayed precariously above its daily slow MACD yesterday. Its weekly fast MACD continued to stay above its weekly slow MACD while its monthly fast MACD continued to stay below its monthly slow MACD.

The KLCI's 14-day RSI stayed at 48.39 per cent level yesterday. Its 14-week and 14-month RSI stayed at 39.57 and 31.57 per cent levels respectively. As it turned out, the KLCI failed in its bid to completely cover its 3.13-point gap (907.15 to 910.28 levels) traced out on January 15.

With that, the KLCI is bracing for further consolidation in staging a re-test of its immediate downside support at 867 level. Next week, the KLCI's envisaged resistance zone hovers at the 893 to 927 levels while its immediate downside support is at the 852 to 886 levels.

Article from Business Times.com