Saturday September 22, 2012
REVIEW: Shares on Bursa Malaysia started out the week Tuesday on a steadier platform, with the FBM Kuala Lumpur Composite Index (FBM KLCI) jumping 3.94 points to 1,646.89, extending the previous two sessions' big gains amid follow-through buying after the long weekend.
The local bourse was shut on Monday because of a public holiday.
Sentiment was clearly positive on the broad front in early deals and as usual, heavyweights topped the most up list.
But sadly, while the key index hit a high of 1,651.66 in mid-morning and looked set to challenge the historical peak of 1,655.49, the momentum suddenly fizzled out.
Perhaps, a pullback in overnight Dow, losing 40.27 points to 13,553.10, coupled with a dismal showing in almost all of Asian equities amid tensions between China and Japan over a territorial dispute, had dampened enthusiasm.
In the wake of a bout of profit-taking activity, the principal index later drifted sideways to ease in sluggish business to settle down 2.62 points to 1,640.33, also the day's low.
From a technical perspective, the index's closing at an intra-day ebb does not augur well for the market, as it usually would open the window for more downward moves the following day.
However, that was not the case this round. Though crude oil prices plunged US$1.33 to US$95.29, pressured by worries about sputtering global economic growth and news about Opec's top producer Saudi Arabia working overtime to drive down prices by increasing production, a mild rebound in Wall Street overnight and a strong rise in stocks in the Asia-Pacific region amid rising speculation of a possible stimulus announcement from Bank of Japan on the heels of the Fed's quantitative easing, somewhat saved the local bourse
Besides that, anti-Japan protests in China, which was not as violent as some had feared, also helped soothe investors.
In active trade, the FBM KLCI recovered to a high of 1,647.32 during intra-day session before trimming gains slightly in late trade to end at 1,646.11, up 5.78 points on Wednesday.
Thereafter, the local bourse mirrored overseas pattern and with negative news like manufacturing in the world's second-largest economy contracting sending investors to the sidelines. Bursa Malaysia succumbed to tremendous stress to retreat, falling a steep 20.52 points to 1,625.59 in lacklustre session on Thursday.
Although markets abroad staged a mild rebound yesterday, Bursa Malaysia simply was not convinced, shedding another 1.89 points to 1,623.70 on sustained liquidation.
Statistics: On a weekly basis, the major index sagged 19.25 points, or 1.2% to 1,623.70 yesterday, against 1,642.95 at the close on Sept 14.
Total turnover for the four-day holiday-shortened week stood at 3.848 billion units valued at RM6.990bil, compared with 4.733 billion shares worth RM8.532bil done during the regular previous week.
Technical indicators: The oscillator per cent K and the oscillator per cent D of the daily slow-stochastic momentum index were on the slide after triggering a short-term sell at the top on Thursday.
In addition, the daily moving average convergence/divergence (MACD) histogram resumed the downward expansion against the daily signal line to stay bearish.
The past several days witnessed the 14-day relative strength index pulling back from a reading of 62 to the 42 points level before halting, ending at 45 points yesterday.
Weekly indicators were little changed, with the weekly slow-stochastic momentum index extended declines and the weekly MACD keeping the sell signal.
Outlook: Bursa Malaysia slipped back into correction mode owing to an apparent profit-taking activity, which saw the FBM KLCI pulling back from a high of 1,651.66 to a low of 1,620.68 during intra-week session.
Trading over the past week was a letdown, with most investors practising the “sell on news” strategy after the recent announcement of stimulus programme by the Federal Reserve and bond buying by the European Central Bank, depressed further by the lack of fresh catalyst on the horizon.
With the latest economic indicators from China and European painting a slowdown, we can expect investors to continue to fret over the health of the global economy. Certainly, their action is likely to weigh and limit the upside potential of the market in the short-term.
Technically, indicators such as the daily and weekly MACDs are deteriorating, suggesting the local bourse may stay in consolidation mode, hopefully within a moderate band this week until a clearer picture emerges.
Initial resistance is envisaged at the 21-day simple moving average (SMA), resting at the 1,638 points, followed by the historical peak of 1,655.49 points.
Support is pegged at the 100-day SMA of 1,608 points. An additional floor is lying at 1,600-1,601 points range, of which a clear violation may to drag the FBM KLCI down to the 200-day SMA of 1,577 points.