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Saturday, September 5, 2009

Bursa Malaysia may trend within range-bound activities next week

SHARE prices on Bursa Malaysia continued to consolidate within range-bound trading activities throughout the last four trading days. The FTSE Bursa Malaysia Composite Index (FBM KLCI) continued to stay above its critical support of 1,150 when it closed at 1,178.74 points yesterday.

The FBM KLCI opened grossly lower when it gapped down at 1,166.32 points before drifting lower to its intra-day low of 1,163.90 on Tuesday. It closed at 1,171.28 points, giving a day-on-day loss of 2.99 points, or 0.25 per cent. Overall market sentiment maintained its technical composure despite weaknesses on regional stock markets on Wednesday. The FBM KLCI fell to its intra-day low of 1,163.57 before rebounding to close at 1,168.01, giving a day-on-day loss of 3.27 points, or 0.28 per cent.The FBM KLCI resumed its prior technical rebounds in tandem with rebounds on the Hong Kong and Shanghai stock markets on Thursday. The FBM KLCI closed at 1,173.66 points, giving a day-on-day gain of 5.65 points, or 0.48 per cent.
Share prices on Bursa Malaysia staged follow-through rebounds in tandem with rebounds on Hong Kong and Shanghai markets yesterday.
The FBM KLCI closed at 1,178.74 points, giving a day-on-day gain of 5.08 points, or 0.43 per cent.The FBM KLCI consolidated within range-bound activities before closing at 1,178.74 points yesterday, giving a week-on-week gain of 4.47 points, or 0.38 per cent.The FTSE Bursa Malaysia Small Cap Index added 49.22 points, or 0.50 per cent to 9,861.42 level while the FTSE Bursa Malaysia ACE Index eased 13.36 points, or 0.32 per cent to 4,132.17 level.
Following are the readings of some of its technical indicators:
Moving Averages: The FBM KLCI continued to stay above its 10-, 20-, 30-, 50-, 100- and 200-day moving averages. Momentum Index: Its short-term momentum index continued to stay above the support of its neutral reference line.
On Balance Volume: Its short-term OBV trend continued to stay below the support of its 10-day exponential moving averages.
Relative Strength Index: Its 14-day RSI stood at the 60.36 per cent level yesterday.

Technical Outlook
Momentary weaknesses on Tuesday and Wednesday sent the FBM KLCI to its intra-week low of 1,163.57 on Wednesday, staging a successful re-test of this column's envisaged support zone (1,136 to 1,170 levels). Subsequent mild rebounds on Thursday and yesterday sent the FBMKLCI to its intra-week high of 1,182.50 yesterday, moving into the confines of this column's envisaged resistance zone (1,178 to 1,212 levels).

The FBM KLCI's weekly chart continued to encounter resistance at the neckline (See FBM KLCI's weekly chart - A1:A2) of its head-and-shoulders pattern formation. It continued to stay above its intermediate-term uptrend (A3:A4).
Chartwise, the FBM KLCI's daily trend continued to stay within the confines of its intermediate-term uptrend channel (See FBM KLCI's daily chart - B3:B4 and B5:B6) yesterday. It continued to stay below its immediate overhead resistance (B1:B2).

The FBM KLCI's weekly and monthly fast MACDs (moving average convergence divergence) stayed above their respective slow MACDs yesterday. Its daily fast MACD stayed below its daily slow MACD. The FBM KLCI's 14-day RSI stayed at 60.36 per cent level yesterday. Its 14-week and 14-month RSI stayed at 71.54 and 57.96 per cent levels respectively.

Last week, this column commented that the FBM KLCI would move within range-bound trading activities. It did. The FBM KLCI's weekly trading range shrunk to 18.93 points.

Further, overall market sentiment drifted aimlessly in a directionless market over the last four trading days. Heavyweight index-linked counters played pivotal roles in maintaining its market momentum.

Given the continuing lack of fresh market leads, the FBM KLCI is likely to trend within range-bound activities. The FBM KLCI will maintain its market momentum above its critical support of 1,150. Next week, the FBM KLCI's envisaged resistance zone hovers at the 1,182 to 1,216 levels while its immediate downside support is at the 1,141 to 1,175 levels.

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

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