FBM KLCI breaches key resistance level

THE FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) staged another follow-through rebound for the week just ended yesterday. It continued to stay above its psychological resistance of 1,300 points when it closed at 1,360.92 yesterday.

The FBM KLCI staged a follow-through technical rebound on Monday. It trended between its intra-day low of 1,348.58 to its intra-day high of 1,352.78 points. It closed at 1,351.82, giving a day-on-day gain of 6.14 points, or 0.46 per cent.

Share prices on Bursa Malaysia paused to consolidate their recent gains on Tuesday after a two-day rebound. The FBM KLCI traced out a "doji" candle when it closed relatively unchanged at 1,352.23, giving a day-on-day gain of 0.41 point, or 0.03 per cent.

The FBM KLCI resumed its technical rebound when it trended between its intra-day low of 1,350.62 to its intra-day high of 1,356.13 on Wednesday. It closed at 1,355.19 points, giving a day-on-day gain of 2.96 points, or 0.22 per cent.

The benchmark index continued to rebound on Thursday, trending between its intra-day low of 1,351.16 to its intra-day high of 1,359.24. It closed at 1,358.41, giving a day-on-day gain of 3.22 points, or 0.24 per cent.

Overall market sentiment on Bursa Malaysia remained firm yesterday. The FBM KLCI opened marginally higher at 1,357.49 before rebounding to close at the day's high of 1,360.92, giving a day-on-day gain of 2.51 points, or 0.18 per cent.

On the regional front, the Tokyo stock market rebounded over the week. The Nikkei 225 Index closed at 9,537.30 points yesterday, giving a week-on-week gain of 106.34 points, or 1.13 per cent.

The Hong Kong stock market staged a follow-through technical rebound over the last five trading days. The Hang Seng Index closed at 21,029.81 points yesterday, giving a week-on-week gain of 214.48 points, or 1.03 per cent.

Back home, the FBM KLCI posted a week-on-week gain of 15.24 points, or 1.13 per cent.

Among other indices, the FTSE Bursa Malaysia Small Cap Index gained 110.92 points, or 0.97 per cent, to close at 11,540.27 points while the FTSE Bursa Malaysia ACE Index eased 21.24 points, or 0.56 per cent, to 3,794.77 level yesterday.

The following are the readings of some of the FBM KLCI's technical indicators:

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

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 71.09 per cent level yesterday.

Outlook

The mild consolidation on Tuesday hit its intra-week low of 1,348.29 on Tuesday before staging follow-through rebounds over the next three trading days to close at the week's high of 1,360.92 yesterday, moving into the confines of this column's envisaged resistance zone (1,349 to 1,383 levels).

A glance at the performances of the FBM KLCI's 30 components shows that gainers outpaced losers by 24 to 5. BAT, Petronas Dagangan, DiGi and Genting's gains of RM1.04, 56-sen, 38-sen and 34-sen accounted for the major portion of the FBM KLCI's week-on-week gain of 15.24 points, or 1.13 per cent. Axiata was the top performing component with a total gain of RM1.21, or 39.67 per cent to-date.

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 stay above its short-term downtrend (See FBM KLCI's daily chart - B3:B4) at the market close yesterday. It continued to stay below its intermediate-term uptrend (B1:B2).

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

The FBM KLCI's 14-day RSI stayed at 71.09 per cent level yesterday. Its 14-week and 14-month RSI stayed at 64.65 and 66.09 per cent levels respectively.

Last week, this column commented that the FBM KLCI was likely to overcome its immediate overhead resistance of 1,349.92 on May 4, 2010. It did. The FBM KLCI scaled past its previous high on May 4 when it closed at 1,352.23 points on Tuesday.

The FBM KLCI will continue to move higher next week on follow-through market momentum, edging closer to its next psychological resistance of 1,400.

Second and third liners will continue to dominate trading activities.

Next week, the FBM KLCI's envisaged resistance zone hovers at the 1,365 to 1,399 levels while its immediate downside support is at the 1,323 to 1,357 levels.

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