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Saturday, February 6, 2010

Bursa Malaysia Technical Outlook Next Week

All Systems More KO Than OK :-D
On Friday the local bourse resumed the downward correction process, with the key index slumping 17.13 points to 1,247.90 on renewed selling, depressed by the poor offshore market trend.

Statistics on a Friday-to-Friday basis, the FBM KLCI finished marginally lower, losing 11.26 points, or 0.9%, to 1,247.90 yesterday, versus 1,259.16 on Jan 29.

Regional stock market continued to consolidate in tandem with the fragile market sentiments in Wall Street. The Shanghai, Tokyo & Hong Kong bourses all closed lower in unison with the NYSE.

The FBM KLCI's weekly chart continued to stay below its immediate overhead resistance (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 its intermediate-term uptrend support (See FBM KLCI's daily chart - B3:B4) yesterday.
The FBM KLCI continued to stay below its immediate overhead resistance (B1:B2).

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

The FBM KLCI's 14-day RSI stayed at the 30.59 per cent level yetserday. Its 14-week and 14-month RSI stayed at the 55.52 and 61.11 per cent levels respectively.

Indicators & Oscillators

* Moving Averages: The FBM KLCI continued to stay above its 200-day moving averages. It stayed below its 10-, 20-, 30-, 50- and 100-day moving averages.
* Momentum Index: Its short-term momentum index stayed below 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: Its 14-day RSI stood at the 30.59 per cent level yesterday.

Weekly measurements looks frail, with the weekly slow-stochastic momentum index extending the slide and the weekly MACD continuing to expand negatively against the weekly trigger line.

Based on the daily chart, the key index had already violated the 50-day simple moving average (SMA) line the previous week.

With the 14-day SMA staging a negative crossing against the 21-day SMA and the index dropping below the important 100-day SMA, they suggest the local bourse may continue to stay under pressure in the immediate term.

Apart from the negative chart developments, the bearish reading from the technical tools indicate Bursa Malaysia will remain in correction mode this week, with initial support anticipated at 1,230 - 1238 points range.

The lower floor rests at 1,200 points, followed by the 200-day SMA of 1,175 points. To the upside, the index will encounter resistance at the following bands: 1,250 - 1,260 points, 1,275-1,285 points, 1,290 points, 1,300 points and the 1,305-1,308 points range.

Intermittent technical rebounds are likely to cushion off the impact of the week's consolidations. Will there be a Chinese New Year rally?

Next week, the FBM KLCI's envisaged resistance zone hovers at the 1,250 to 1,285 levels while its immediate downside support is at the 1,210 to 1,244 levels.

Last week's critical support 1250 already violated. 1250 has truned resistance for the immediate term.

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