Market Stays Above Key Support Level.

SHARE prices on Bursa Malaysia rebounded in tandem with the sharp rebounds on the Wall Street and regional stock markets over the last five trading days. The FTSE Bursa Malaysia Composite Index (FBM KLCI) continued to stay above its critical support of 1,100 when it closed at 1,155.88 points yesterday.

The FBM KLCI opened on a weak note before resuming its prior technical rebounds on Monday. The FBM KLCI closed at 1,139.25 points, posting a day-on-day gain of 18.35 points, or 1.64 per cent. Share prices on Bursa Malaysia paused for a brief consolidation on Tuesday. The FBM KLCI closed at 1,184.70 points, giving a day-on-day loss of 4.55 points, or 0.40 per cent.

Overall market sentiment improved significantly on Wednesday. The FBM KLCI rebounded to higher to its intra-day high of 1,160.61 before closing at 1,148.70 points, posting a day-on-day gain of 14.00 points, or 1.23 per cent. The FBM KLCI gyrated around its overnight level for the major part of the trading session on Thursday. The FBM KLCI closed marginally higher at 1,152.15 points, giving a day-on-day gain of 3.45 points, or 0.30 per cent.

Once again, the FBM KLCI moved sideways in consolidating its recent gains yesterday. It fluctuated around its overnight level for the major part of the trading session. It managed to close marginally higher at 1,155.88 points, giving a day-on-day gain of 3.73 points, or 0.32 per cent. On the foreign front, The Dow Jones Industrial Average (DJIA) rebounded in earnest on some economic recovery news over the last four trading days. The DJIA closed higher at 9,069.29 points on Thursday, recording a four-day gain of 325.35 points, or 3.72 per cent.

The tech stock heavy Nasdaq Composite Index staged a successful re-penetration of its overhead resistance of 1,900. It closed at 1,973.60 points on Thursday, posting a four-day gain of 86.99 points, or 4.61 per cent. The Tokyo stock market staged a strong follow-through technical rebound over the last five trading days. The Nikkei 225 Index closed at 9,944.55 points yesterday, posting a week-on-week gain of 549.23 points, or 5.85 per cent. The Hong Kong stock market climbed back above its critical support of 19,000. The Hang Seng Index closed at 19,982.79 points, recording a week-on-week gain of 1,177.13 points, or 6.26 per cent.

The FBM KLCI rebounded to close higher at 1,155.88 points yesterday, posting a week-on-week gain of 34.98 points, or 3.12 per cent. The FTSE Bursa Malaysia Second Board Index gained 168.42 points, or 3.48 per cent to 5,010.79 level while the FTSE Bursa Malaysia Mesdaq Index added 20.31 points, or 0.50 per cent, to 4,097.99 level.

Following are the readings of some of its technical indicators:

1. *Moving Averages: The FBM KLCI continued to stay above its 10-, 20-, 30-, 50-, 100- and 200-day moving averages.
2. * Momentum Index: Its short-term momentum index stayed above the support of its neutral reference line.
3. * On Balance Volume: Its short-term OBV trend stayed above the support of its 10-day exponential moving averages.
4. * Relative Strength Index: Its 14-day RSI stood at the 80.32 per cent level yesterday.

Outlook

The FBM KLCI continued to rally to its intra-week high of 1,160.61 on Wednesday, moving into the confines of this column's envisaged resistance zone (1,124 to 1,163 levels). The FBM KLCI's weekly chart moved to the underside of its immediate overhead resistance (See FBM KLCI's weekly chart - A5:A6) yesterday.

It continued to stay above its resistance-turned-support trendline (A3:A4). Chartwise, the FBM KLCI's daily trend rebounded closer to its overhead resistance (See FBM KLCI's daily chart - B1:B2) yesterday. It continued to stay below its intermediate-term uptrend (B7:B8). The FBM KLCI's daily, weekly and monthly fast MACDs (moving average convergence divergence) stayed above their respective slow MACDs yesterday.

This augurs well for its near-term perspectives. The FBM KLCI's 14-day RSI stayed at 80.32 per cent level yesterday. Its 14-week and 14-month RSI stayed at 73.84 and 56.52 per cent levels respectively. Last week, this column commented that the FBM KLCI was poised to stage a re-challenge of the Fibonacci-based 50 per cent retracement objective at 1,163 level.

This column was spot on as the FBM KLCI hit its intra-week high of 1,160.61 on Wednesday. There were intermittent profit-taking liquidations over the last four trading days. The FBM KLCI is likely to pause for a short and brief consolidation before resuming its prior technical rebounds. Next week, the FBM KLCI's envisaged resistance zone hovers at the 1,159 to 1,193 levels while its immediate downside support is at the 1,116 to 1,150 levels.

Article from Business Times Malaysia