FBM KLCI >>> Pullback takes key index below 1,250

SHARE prices on Bursa Malaysia shifted into post-Budget consolidation mode in tandem with the weak performances on Wall Street and regional stock markets this week. The FTSE Bursa Malaysia Composite Index (FBM KLCI) slipped below its critical support of 1,250 points when it closed at 1,243.23 yesterday.

On the foreign front, the New York Stock Exchange's benchmark indicator
The Dow industrials suffered its worst slide since July on Friday on concerns that the economic recovery won't be robust enough to sustain the seven-month stock rally, while financials sank on renewed worries about Citigroup's balance sheet.

The DJIA slid 249.85 points, or 2.51 percent, to end at 9,712.73. The Standard & Poor's 500 Index .SPX tumbled 29.92 points, or 2.81 percent, to 1,036.19. The Nasdaq Composite Index dropped 52.44 points, or 2.50 percent, to close at 2,045.11.

For the week, the Dow fell 2.6 percent, the S&P 500 lost 4 percent and the Nasdaq declined 5.1 percent.

On Bursa Malaysia, the FBM KLCI posted a week-on-week loss of 23.87 points, or 1.88 per cent.
Among the other indices, the FTSE Bursa Malaysia Small Cap Index lost 245.34 points, or 2.38 per cent, to 10,073.71 while the FTSE Bursa Malaysia ACE Index eased 36.18 points, or 0.83 per cent, to 4,305.69.

The following are the readings of some of the FBM KLCI's technical indicators:

Moving Averages: The FBM KLCI continued to stay above its 30-, 50-, 100- and 200-day moving averages. It stayed below the support of its 10- and 20-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 below the support of its 10-day exponential moving averages.
Relative Strength Index: Its 14-day RSI stood at the 54.41 per cent level yesterday.

Technical Outlook
The FBM KLCI shifted into a consolidation window immediately after the unveiling of the 2010 Budget on October 23.
A pre-Budget rally had taken the FBM KLCI to its intra-day high of 1,270.44 on October 21 before the index fell back to an intra-week low of 1,236.20 on Thursday, giving a technical pullback of 34.24 points, or 2.70 per cent.

The FBM KLCI's weekly chart momentarily breached the support of its intermediate-term uptrend (see FBM KLCI's weekly chart A3:A4) at the market close yesterday. It continued to stay above the neckline (A1:A2) of its head-and-shoulders pattern formation.

Chartwise, the FBM KLCI's daily trend continued to stay below the lower support (see FBM KLCI's daily chart B3:B4) of its intermediate-term uptrend channel (B3:B4 and B5:B6) yesterday. Also, the FBM KLCI continued to stay above the neckline (B1:B2) of its head-and-shoulders pattern formation.

The benchmark index's weekly and monthly fast Moving Average Convergence Divergence indicators (MACDs) stayed above their respective slow MACDs yesterday. Its daily fast MACD continued to stay below its slow MACD.

The FBM KLCI's 14-day RSI stayed at the 54.41 per cent level yesterday. Its 14-week and 14-month RSI stayed at the 70.41 and 62.22 per cent levels respectively.

In line with market expectations, the FBM KLCI has since moved into the post-Budget consolidation window. With that, the FBM KLCI will continue to consolidate further next week.
Heavyweight index-linked counters are likely to play pivotal roles in cushioning the market's technical pullback.

Next week, the FBM KLCI's envisaged resistance zone hovers at the 1,247 to 1,281 levels while its immediate downside support is at the 1,206 to 1,240 levels.