BURSA MALAYSIA >>> General Outlook 28/01/2010

Plantations Heavyweights Drag Down FBM KLCI; Lower Liners Rebounded Off Lows

Share prices on Bursa Malaysia closed mostly firmer Thursday after three days of profit-taking, but losses in plantation heavyweights dragged down the main index, dealers said.
At 5pm, the benchmark FTSE Bursa Malaysia Composite Index (FBM KLCI) fell 1.26 points to 1,264.51 after opening 1.52 point firmer at 1,267.29 in the morning.

The market has broken the 1,300 level to the downside and is expected to be bearish in the short term.
Most major indices have also broken their support levelOf the 30 components of KLCI, 13 closed in the positive territory, nine ended lower while the remaining eight were unchanged. Volume for the component stock was 125 million shares worth RM810 million.

Market breadth was however positive with gainers outnumbering losers 534 to 190. Volume contracted to 935 million shares worth RM1,426 million from 1,083 million shares valued at RM1,827 million Wednesday.Bursa Malaysia's Finance Index gained 14.92 points to 11,074.77, the Industrial Index shed 5.39 points to 2,630.22 and the Plantation Index fell 46.21 points to 6,225.0.
The FBM Emas Index increased 18.25 points to 8,517.09, the FBM Ace Index advanced 33.67 points to 4,397.58 and the FBM70 Index was 53.90 points higher at 8,330.46.
Top gainers included Nestle which rose 76 sen to RM33.78, British American Tobacco which increased 46 sen to RM42.96 and KYM which went up 24 sen to RM1.13.
As for heavyweights, Sime Darby fell seven sen to RM8.66, Maybank and CIMB declined two sen each to RM6.80 and RM12.74 respectively, while IOI Corp dropped 11 sen to RM5.20 and Tanjong shed 12 sen to RM17.28.
FBM KLCI >>> Technical Analysis

On Thursday, the KLCI only loss a marginally 1.26 points after falling heavily for two days. The KLCI closed at 1264.51 points, with its support at 1250 Automatic Fibonacci Retracement while the resistance is at 1272 Fibonacci Retracement.
As shown on the chart above, the Bollinger Bands expansion rate has reduced from the previously 65% to only 26%, this suggests that the volatility of the KLCI has reduced, but the immediate bearish outlook remains intact. If the Bollinger Bands should begin to contract, it would be a signal suggesting a consolidation for the KLCI, with the Bollinger Middle Band being the first target.
As indicated by B, total market volume declined 13.6%, with volume falling to the 40-day VMA level. It seems like the overall market participation has reduced, and if the volume should fall below the 40-day VMA level, it means that the market is getting quiet again, thus the KLCI is likely to consolidate with weakness.
As indicated by C, the Stochastic is still below 10% level, this suggests that the short term movement of the KLCI is still weak with some over-sold condition. Therefore, the KLCI is due for a technical rebound in the near term..
In short, the technical picture of the KLCI is still weak, at least for the short term, but with the KLCI is likely to consolidate as the Bollinger Bands is showing a possible consolidation signal. But still, provided that the KLCI is still resisted by the Bollinger Middle Band, while the Stochastic is still below 30% level, the short term movement for the KLCI is expected to be weak.