Index futures contract may continue to be bullish

SHORTERS TO BEAR THE PAIN
FKLI September contract on the Bursa Malaysia Derivatives Bhd closed at 1,470 last Friday with an open interest of 20,581 contracts.

The local stock market rallied to its all time high last week driving the composite index futures on the FBM Bursa Derivatives Malaysia to its highest level yet at 1485.50. This beat the resistance target at 1444 by a mile as the momentum in the market picks up further.

Reaching its all time high last week, many were caught underestimating the strength of the recent run judging by the clear absence of a strong positive catalyst. Gauging by its weekly chart, the market momentum reached the overbought territory last week when it touched 1485.50, and its subsequent pullback to end the week at 1470 reflects some degree of the profiteering activities by some traders.

The series of the white daily candlestick pattern reflects the aggressiveness of the buying activities in the market on the weekly chart as traders continue to back up the truck and load up the market. It can be deduced that whenever the price retreats to a decent support level the buyers will soon emerge only to lead the market higher by the end of the day.

This is the true essence of a committed bull run. Tactically, the September contract may continue with its bullish performance this week. As the underlying trend is still strong, any pullback to support lines will only draw buyers back in. Resistance can be expected at the 1510 level.

Technical Reports

* The Moving Average Convergence (MACD) remains positive with the faster above the signal line. Both lines remain at the positive region.

* The daily Relative Strength Index (RSI) closed at the overbought level.

* The daily Commodity Channel Index finished at the overbought level.

HAPPY TRADING