ZLBT Chats

Monday, February 14, 2011

FKLI To Remain Bearish But .....

Are You Ready For A Rebound?
The FTSE Bursa Malaysia KLCI (FBM KLCI) futures February contract on Bursa Malaysia Derivatives closed lower at 1,487.50 with an open interest of 19,973 contracts last week.

The spot contract was stretched to a high of 1,540 before ending the week at a 10-point discount to the cash index on the re-emergence of shortists. The plunge has resulted in making the 1,550-1,520 band redundant.
The defensive support level was in shambles judging by the plunge and the failure of any technical rebound to place despite more than 50 points being shaved off. When the market ended, the spot contract was kept near to the week's low of 1,482.

The daily Relative Strength Index and the Commodity Channel Index have clearly retreated beyond oversold territory. At the low of 1,482, the bears hardly winked despite the sight of a recovering cash index. This is one of the reasons for the downward revision of the base support back to the 1,448 level where it may intersect the lower Bollinger Band.
The other significant technical signal came in the form of the negative potential crossover on the weekly Moving Average Convergence Divergence (MACD) indicator. As both lines on this indicator avoided a possible bullish signal last week, it suggests a further threat to the rising weekly trendline cancelling its shorter-term aspiration.

Tactically this week we may see sentiment remaining bearish. While it is reasonable to expect some technical rebound to prevail in the market, the overhead resistance at 1,500 would be its first challenge. The coherent signals highlighted could point to weaker sentiments ahead.

Technical reports
The Moving Average Convergence Divergence indicator remains negative with the faster below the signal line. Both lines remain at the positive region.
The daily Relative Strength Index closed at the oversold.

The daily Commodity Channel Index finished at the oversold.

As usual, ZL seldom follows media reports to the letter...
Well, some technicalities maybe but never A > Z
Look for a LONG / BUY ON DIP at 1470 > 1474 +/- level
Keep Trailing Stop (TS) handy just in case OK?

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