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Saturday, September 26, 2009

FBM KLCI >>> Further Consolidations Ahead

Market sentiments in Bursa Malaysia are expected to be rangebound next week but with gains likely to be limited on concerns over external factors, in particular the US economy. There are worries about the pace of the US recovery and also the posibility that the government might curb stimulus measures too soon, a dealer said. He expects the market to open weak on Monday following the slide on Wall Street on Friday when the Dow Jones industrial average fell 42.25 points to 9,665.19.

Share prices on Bursa Malaysia consolidated within tight trading ranges in tandem with the weak performances on the Wall Street and regional stock markets. The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) continued to stay above its major psychological support of 1,200 when it closed at 1,217.39 points on Friday.

Continuing weaknesses on the regional stock markets sent the FBM KLCI marginally lower on Thursday. It closed at 1,218.06 points, giving a day-on-day loss of 1.01, or 0.08 per cent.
The counter eased back in tandem with the weaknesses on the Wall Street and regional stock markets, closing at 1,217.39, giving a day-on-day loss of 0.67 point, or 0.06 per cent.

On a weekly basis, giving a week-on-week loss of 3.81 points, or 0.31 per cent.

The FTSE Bursa Malaysia Small Cap Index eased 24.22 points, or 0.24 per cent to the 9,965.99 level while the FTSE Bursa Malaysia ACE Index lost 15.02 points, or 0.37 per cent, to the 4,074.08 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 (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 69.42 per cent level yesterday.

The FBM KLCI's brief technical rebound hit its intra-week high of 1,231.49 on Wednesday, encountering resistance zone at 1,224 to 1,258 levels. Subsequent technical pullback hit its intra-week low of 1,213.88 yesterday, staging a re-test of envisaged support zone 1,183 to 1,217 levels.

The FBM KLCI's weekly chart continued to stay above the support of 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). It continued to stay precariously above its immediate overhead resistance (B1:B2).
The FBM KLCI's daily, weekly and monthly fast MACDs (moving average convergence divergence) stayed above their respective slow MACDs.
The FBM KLCI's 14-day RSI stayed at the 69.42 per cent level yesterday. Its 14-week and 14-month RSI stayed at 74.76 and 60.50 per cent levels respectively.
Last week, it was commented that the FBM KLCI might pause to catch a short breather in a holiday-shortened week. Consolidations are in technical order for the three-trading-day week. The FBM KLCI traced out a week-on-week loss of 3.81 points.
Due to lack of fresh market leads and dwindling market volume, the FBM KLCI is likely to consolidate further to stage a retest of its immediate downside support of 1,210.

Next week, the FBM KLCI's envisaged resistance zone hovers at the 1,221 to 1,255 levels while its immediate downside support is at the 1,180 to 1,214 levels.

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