FBM KLCI may stay above 1,400

THE FTSE Bursa Malaysia Composite Index (FBM KLCI) resumed its prior technical rebounds over the last four trading days. It continued to stay above its critical resistance of 1,450 when it closed at 1,466.97 points yesterday.

The FBM KLCI rebounded strong on Monday. The FBM KLCI gapped up at 1,439.26 points before closing at the day's high of 1,456.96, giving a day-on-day gain of 19.18 points, or 1.33 per cent.

Share prices on Bursa Malaysia continued to rebound higher for the second trading day on Tuesday. The FBM KLCI trended between its intra-week low of 1,456.79 to its intra-day high of 1,474.44. It closed at 1,474.44 points, giving another day-on-day gain of 17.48 points, or 1.20 per cent.

The market paused to consolidate within tight trading range on Wednesday. It trended from its intra-day low of 1,469.86 to its intra-day high of 1,474.00. It closed at 1,472.95 points, giving a day-on-day loss of 1.49 points, or 0.10 per cent.

Overall market sentiment on Bursa Malaysia weakened on Thursday. It closed marginally lower at 1,466.97 points, giving a day-on-day loss of 5.98 points, or 0.41 per cent.

The Dow Jones Industrial Averages (DJIA) rebounded over the last four trading days. The DJIA closed at 10,594.83 points on Thursday, giving a four-day gain of 132.06 points, or 1.26 per cent.

The tech stock heavy Nasdaq Composite Index rebounded in tandem with the general market trend over the four trading days. The Nasdaq Composite Index closed at 2,303.25 points on Wednesday, giving a four-day gain of 60.77 points, or 2.71 per cent.

The FBM KLCI rebounded in two of the four trading days over the week to close at 1,466.97 points yesterday, posting a week-on-week gain of 29.19 points, or 2.03 per cent.

The FTSE Bursa Malaysia Small Cap Index gained 234.13 points, or 2.07 per cent, to close at 11,528.04 points while the FTSE Bursa Malaysia ACE Index gained 99.41 points, or 2.63 per cent, to 3,880.06 level on Thursday.

Following are the readings of some of its technical indicators:

Moving Averages: The FBM KLCI stayed firmly above all its 10-, 20-, 30-, 50-, 100- and 200-day moving averages at the market close yesterday.

Momentum Index: Its short-term momentum index continued to stay above the support of its neutral reference line yesterday.

On Balance Volume: Its short-term OBV trend continued to stay above the support of its 10-day exponential moving averages.

Relative Strength Index: Its 14-day RSI stood at the 79.32 per cent level yesterday.

Outlook

The FBM KLCI hit its intra-week high of 1,479.59 yesterday, momentarily breached the confines of this column's envisaged resistance zone (1,441 to 1,475 levels).

A quick glance at the performances of the FBM KLCI's 30 components, its gainers managed to outpace its losers by 16 to 13. PPB Group, Genting, Public Bank and Hong Leong Financial Group's combined gains of RM1.06, 59 sen, 48 sen and 38 sen helped the FBM KLCI in tracing out a week-on-week gain of 29.19 points, or 2.03 per cent. Axiata remained the top performing component with a total year-to-date gain of RM1.51, or 49.51 per cent.

The FBM KLCI's weekly chart continued to stay above its immediate downside support (See FBM KLCI's weekly chart - A3:A4) at the market close yesterday. Also, it continued to stay below the support of its intermediate-term uptrend (A5:A6).

Chartwise, the FBM KLCI's daily trend continued to trend above its revised uptrend support (See FBM KLCI's daily chart - B3:B4) at the week's close yesterday.

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

The FBM KLCI's 14-day RSI stayed at 79.32 per cent level on Thursday. Its 14-week and 14-month RSI stayed at 79.66 and 72.20 per cent levels respectively.

Last week, this column commented that the FBM KLCI was likely to consolidate above its psychological support of 1,400. It did. The FBM KLCI closed at 1,466.97 points yesterday.

Heavyweight index-linked counters will continue to play pivotal roles in consolidating their recent gains. The FBM KLCI is likely to consolidate above its psychological support of 1,400.

Next week, the FBM KLCI's envisaged resistance zone is at the 1,470 to 1,500 levels while its immediate downside support is at the 1,427 to 1,463 levels.

The subject expressed above is based on technical analysis and opinion of the writer. It is not a
solicitation to buy or sell.