In a trend analysis in the online STAR, KM Lee provided a across the board report of the mood of global equities and what the coming week should look like. He headlined his article with bold-faced words,
"Bulls Poised to Patch up the Gap".
Back home, Bursa Malaysia started out the week on a solid ground, with the FBM Kuala Lumpur Composite Index (FBM KLCI) rising 1.48 points to 1,439.26, boosted by strong overseas performance.
Overnight Wall Street gained 47.53 points to 10,462.77 the previous Friday, as investors’ worst fears about the US economy slipping back into recession waned after economic data,
while still sluggish, has beaten consensus forecasts since September began.
Elsewhere, equities in the Asia-Pacific region soared between 0.9% to 1.9% on optimism that
Chinese growth would underpin global recovery.
Riding on the bullish ambiance, blue chips, especially
finance-related stocks attracted significant interest on foreign and institutional buying, thus propelling the key index to close at the day’s high of 1,456.96, up 19.18 points on Monday.
Then, the Dow extended the upward thrust, climbing an extra
81.36 points to 10,544.13, the highest in five weeks, on
upbeat Chinese factory data and less onerous new bank rules while the
black commodity surged 74 cents to US$77.19 per barrel amid bright prospects.
Most regional bourses joined the rally on sustained buying interest and given the positive setting from overseas, the
big boys gained more confidence, snapping up the quality issues.
Second and lower liners were also actively traded, with more retail players turning aggressive after the recent healthy consolidation phase.
In brisk business, Bursa Malaysia scaled an additional
17.48 points to a 32-month high of 1,474.44 on Tuesday.
Sadly, after two days of handsome gains, as investors took the excuse of a slightly lower Dow and a minor retracement in crude oil prices overnight to lock in gains. The mixed performance in Asian stocks was another factor weighing on the local market.
However, the
pullback was pretty shallow, as some accumulations in certain blue chips on weakness helped check the slide and keep the local bourse within a tight range in the negative zones throughout the day.
At the end of Wednesday’s session, the FBM KLCI
only shed 1.49 points to 1,472.95.
After a holiday on Thursday, Bursa resumed trading yesterday where the overall sentiment took a change for the better, lifted by
positive offshore tone.
Blue chips topped the winners list, navigating the key index to a new
32-month high of 1,479.59 in early business, but investors opted to sell into strength and consequently, the momentum fizzled out.
At the end of the day, the key index reversed early advances to close down 5.98 points to 1,466.97.
Statistics: On a weekly basis, the FBM KLCI advanced
29.19 points, or
2.0% to 1,466.97 yesterday, compared with 1,437.78 at the close on Sept 9.
Total turnover for the holiday-shortened week amounted to 3.576 billion units valued at RM7.462bil, against 2.442 billion shares worth RM4.493bil traded during the previous week.
Technical indicators:
The oscillator per cent K tripped below the oscillator per cent D of the daily slow-stochastic momentum index to trigger a short-term sell at the top yesterday, but it could not be confirmed for now, simply because they remained flirting above the 80% bullish line.
On the contrary, the daily moving average convergence/divergence (MACD) histogram continued to expand positively against the daily trigger line to stay bullish.
It flashed a buy on Aug 17.
The past week saw the 14-day relative strength index hitting a high of 91 points on Tuesday before turning sideways to settle at around the 88 points level yesterday.
Separately, weekly measurements were promising, with the
weekly slow-stochastic momentum index stretching at the bullish extended-move area and the
weekly MACD ascending steadily in tandem with the weekly signal line.
Outlook:
The local bourse extended the upward momentum amid follow-through interest the past week, which witnessed the FBM KLCI hitting a fresh 32-month high of 1,479.59 during intra-day session yesterday.
The market has risen a quite a bit recently. Despite trading at such a high level, we continue to see encouraging and concrete buying momentum taking place.
This may indicates that investors are more optimistic and confidence of the existing trend going forward.
For now, the
bulls are still dominating the floor and they appear pretty sure on the right track to fill the 1,490-1,497 points gap that they left out in mid-January 2008, according to the chart developments.
From the technical point of view, the growing
overbought position of the short-term indicators may entice jittery investors to book profit, thus leading the market to greater volatility in the immediate term.
If the bulls are able to patch up the 1,490-1,497 points gap, a re-test of the historical peak of 1,524.69, established on Jan 14, 2008 would be imminent.
Initial support is seen at
1,450-1,452 points, followed by the 14-day simple moving average (SMA) of 1,440 and the 21-day SMA of 1,425.
The
next lower floor is resting at the 1,400-points mark.
