KLCI in pullback but stays above 1,050

KEY heavyweight index-linked counters' meaningful consolidations triggered the much awaited technical pullbacks on Bursa Malaysia.

However, the Kuala Lumpur Composite Index (KLCI) continued to stay above its critical support of 1,050 when it closed at 1,059.50 points yesterday The KLCI opened marginally higher at 1,093.04 points before rebounding to its intra-day high of 1,095.72 on Monday. The KLCI index eased back to close at 1,091.17 points, giving a day-on-day gain of 1.02 points, or 0.09 per cent.

Overall market sentiment took a beating in unison with weak performances on Wall Street and regional stock markets on Tuesday. It closed broadly lower at 1,074.12 points, posting a day-on-day loss of 17.05 points, or 1.56 per cent.

Continuing weak performances on the Wall Street and regional stock markets sent share prices on Bursa Malaysia to close lower on Wednesday.

The KLCI closed at 1,070.90 points, giving a day-on-day loss of 3.22 points, or 0.30 per cent.
Once again, key heavyweight index-linked counters' continuing weaknesses dragged KLCI index lower on Thursday. The KLCI closed grossly lower at 1,054.41 points, recording a day-on-day loss of 16.49 points, or 1.54 per cent. The KLCI opened higher at 1,058.90 points before racing to its intra-day high of 1,065.77 yesterday. It eased back to close at 1,059.50 points, giving a day-on-day gain of 5.09 points, or 0.48 per cent.

The Dow Jones Industrial Average (DJIA) continued to consolidate its recent gains over the last four trading days. The DJIA closed at 8,555.60 points on Thursday, posting a four-day loss of 243.66 points, or 2.77 percent.

The tech stock heavy Nasdaq Composite Index continued to maintain its technical composure above its support of 1,800. It closed at 1,807.72 points on Thursday, recording a four-day loss of 51.08 points, or 2.75 per cent.

The Tokyo stock market failed to maintain its technical composure above its critical support of 10,000. The Nikkei 225 Index closed lower at 9,786.26 points yesterday, posting a week-on-week loss of 349.56 points, or 3.45 per cent.

The Hong Kong stock market also failed to maintain its technical composure above its critical support of 18,000. The Hang Seng Index closed at 17,920.93 points, recording a week-on-week loss of 968.75 points, or 5.13 per cent.

The KLCI pulled back over the last five trading days to close at 1,059.50 points yesterday, posting a week-on-week loss of 30.65 points, or 2.81 per cent.

The FTSE Bursa Malaysia Second Board Index lost 172.16 points, or 3.45 per cent to 4,814.15 level while the FTSE Bursa Malaysia Mesdaq Index tumbled 233.35 points, or 5.34 per cent, to 4,139.51 level.

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

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

Momentum Index: Its short-term momentum index stayed below the support of its neutral reference line

On Balance Volume: Its short-term OBV trend stayed above the support of its 10-day exponential moving averages.

Relative Strength Index: Its 14-day RSI stood at the 53.55 per cent level yesterday.

Outlook

The KLCI's brief and short technical rebound sent it to its intra-week high of 1,095.72 on Monday, encountering resistance at this column's envisaged resistance zone (1,093 to 1,127 levels).

Subsequent technical pullbacks sent the KLCI to its intra-week low of 1,052.48 on Thursday, staging a re-test of this column's envisaged zone (1,052 to 1,086 levels).

Despite a sharp technical pullback during the week, the KLCI continued to stay comfortably above its immediate downside support (See KLCI's weekly chart - A3:A4). It continued to stay above its resistance-turned-support trendline (A7:A8). Chartwise, the KLCI's daily trend breached the support of its revised intermediate-term uptrend (See KLCI's daily chart - B7:B8) over the last five trading days. It stayed decisively above its intermediate-term downtrend (B5:B6).

The KLCI's weekly fast MACD (moving average convergence divergence) stayed above its weekly slow MACD yesterday. Its daily and monthly fast MACDs continued to stay marginally below their respective slow MACDs.

The KLCI's 14-day RSI stayed at 53.55 per cent level on Thursday. Its 14-week and 14-month RSI stayed at 63.96 and 49.31 per cent levels respectively.

Last week, the KLCI failed in its bid to take out its critical support of 1,100. Instead, the KLCI headed south when key heavyweight index-linked counters slipped into their meaningful consolidations.

Once again, key heavyweight index-linked counters will continue to maintain their technical composure in holding up the KLCI from slipping further. The KLCI will trend in range-bound activities. Second and third liners will take turn to consolidate their recent gains.

Next week, the KLCI's envisaged resistance zone hovers at the 1,062 to 1,096 levels while its immediate downside support is at the 1,022 to 1,056 levels.

The subject expressed above is based on technical analysis and opinions of the writer. It is not a solicitation to buy or sell.