Market continues to consolidate

SHARE prices on Bursa Malaysia moved sideways to consolidate their recent gains within tight trading ranges. The FTSE Bursa Malaysia Composite Index (FBM KLCI) continued to stay above its critical support of 1,250 when it closed at 1,274.36 yesterday.

The FBM KLCI opened higher at 1,273.73 before rebounding to close near its intra-day high of 1,278.31 on Monday, giving a day-on-day gain of 7.35 points, or 0.58 per cent.

Share prices on Bursa Malaysia rebounded higher when the FBM KLCI hit its intra-day high of 1,288.42 on Tuesday, easing back to 1,277.81, giving another day-on-day gain of 1.64 points, or 0.13 per cent.

The counter opened relatively unchanged at 1,279.11 before hitting its intra-day high of 1,280.51 on Wednesday. Then It eased back to 1,275.10, giving a day-on-day loss of 4.85 points, or 0.38 per cent.

Share prices on Bursa Malaysia moved sideways on Thursday. The FBM KLCI hit its intra-day low of 1,273.69 before closing at 1,276.65, giving a day-on-day gain of 1.55 points, or 0.12 per cent.

The FBM KLCI continued to move sideways to consolidate their recent gains yesterday. It closed at 1,274.36, giving a day-on-day loss of 2.29 point, or 0.18 per cent.

The Dow Jones Industrial Average (DJIA) continued to stay above its major psychological support of 10,000 on Thursday. It closed at 10,332.44, giving a four-day gain of 61.97 points, or 0.60 per cent.

The tech-stock heavy Nasdaq Composite Index continued to stay above its critical support of 2,100 when it closed at 2,156.82 on Thursday, giving a four-day loss of 11.06 points, or 0.51 per cent.

The Tokyo stock market continued to stay below its major psychological support of 10,000 level over the last five trading days. The Nikkei 225 Index closed at 9,497.68 yesterday, giving a week-on-week loss of 2272.63 points, or 2.79 per cent.

The Hong Kong stock market stayed above its critical support of 22,000. The Hang Seng Index closed at 22,455.84, posting a week-on-week loss of 97.79 points, or 0.43 per cent.

The FBM KLCI staged a very mild follow-through rebound to close at 1,274.36 yesterday, giving a week-on-week gain of 3.40 points, or 0.27 per cent.

The FTSE Bursa Malaysia Small Cap Index fell 141.12 points, or 1.38 per cent, to close at 10,093.82 while the FTSE Bursa Malaysia ACE Index lost 87.25 points, or 1.93 per cent, to the 4,436.62 level.

Following are the readings of some of its technical indicators:

* Moving Averages: The FBM KLCI continued to stay above its 10-, 20-, 30-, 50-, 100- and 200-day moving averages.

* Momentum Index: Its short-term momentum index stayed above 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 (RSI): Its 14-day RSI stood at the 64.39 per cent level yesterday.

Outlook

The FBM KLCI's mild follow-through rebound and subsequent consolidations hit an intra-week low of 1,270.74 yesterday, staying way above this column's envisaged support zone (1,233 to 1,267 levels).

Its intra-week rebounds saw the FBM KLCI hitting its intra-week high of 1,288.42 on Tuesday, encountering resistance at this column's envisaged resistance zone (1,274 to 1,308 levels).

The FBM KLCI's weekly chart continued to stay below the support of its intermediate-term uptrend (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 the lower support (See FBM KLCI's daily chart - B3:B4) of its intermediate-term uptrend channel (B3:B4 and B5:B6) yesterday. It also continued to stay above the neckline (B1:B2) of its head-and-shoulders pattern formation.

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

The counter's 14-day RSI stayed at the 68.08 per cent level yesterday. Its 14-week and 14-month RSI stayed at the 73.73 and 64.00 per cent levels respectively.

Last week, this column commented that the FBM KLCI would continue to edge closer to its critical resistance of 1,300. It did. The FBM KLCI hit its intra-week high of 1,288.42 on Tuesday.

Heavyweight index-linked counters would continue to uphold the market momentum for the FBM KLCI to have a serious crack at the 1,300. However, the re-challenge is delayed for another trading week.

Following the inclusion of Maxis into the components of the FBM KLCI, it is likely to provide the market with some resilience in the coming week. Once again, share prices on Bursa Malaysia will continue to consolidate their recent gains within tight trading ranges.

Next week, the FBM KLCI's envisaged resistance zone hovers at the 1,277 to 1,311 levels while its immediate downside support is at the 1,236 to 1,270 levels.

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