Weekly technical analysis

  • Business
  • Saturday, 15 Feb 2003


THE news that California Public Employees’ Retirement System (CalPERS) may be making a come back to the local equity market, after pulling out a year ago, lifted sentiment on the Kuala Lumpur Stock Exchange (KLSE) initially.  

Share prices failed to hold on to earlier gains on lack of follow-through buying support as investors were unsure whether CalPERS is definitely making a return to Malaysia. 

Meanwhile, increasing geopolitical concerns over the US-Iraq issue and rising tension in the Korean peninsula also kept investors at bay. 

While buying interest remained low, trading sentiment was further affected by the newly released tape purported to be from the al-Qaeda leader Osama bin Laden urging support for Iraq.  

Renewed fears of another possible terrorist attack in the US or on its interests abroad added pressure to the local bourse. Local investors are expected to maintain a cautious stance and the present sentiment is expected to prevail until the uncertainties surrounding the marketplace become clearer.  

The key market barometer, the Kuala Lumpur Composite Index (CI) extended its sideways trending on a tight range to close the week slightly lower. 

Trading range for the key index was again tight, at 8.55 point this week. It hit a high of 662.04 on Tuesday and touched a low of 653.49 on Thursday. 

The CI ended yesterday’s trading at 656.95 for a marginal loss of 4.30 points, or 0.7 per cent this week against 661.25 the previous week. 

Weekly turnover for the four-day holiday-shortened week stood at 638.863 million shares valued at RM1.277 billion against the previous week’s three-day sessions of 530.602 million shares worth RM1.063 billion. 

While the daily slow-stochastics upheld its last Thursday’s sell signal, the oscillator per cent K and the oscillator per cent D maintained its downward momentum towards the oversold territory. 

Meanwhile, the daily moving average convergence/divergence (MACD) indicator retained its sell signal but managed to stay above the zero thresholds. 

At the same time, the weekly slow-stochastics remained bearish after hooking down from the overbought territory the previous week. 

The upward momentum of the weekly MACD has paused for sideways trending this week but it is still hovering above the weekly signal-line. 

Technical indicators were weak but the local bourse is still expected to be ranged-bound and may stage a mild technical rebound to correct its oversold condition next week. 

The underlying sentiment remained strong since Valuecap came into the picture. Although the CI has fallen quite a bit from a recent peak of 675.97, there was no evidence of panic selling so far. 

In addition, our market has proven to be resilient again this week. Despite a more volatile Wall Street and the lacklustre performance of the regional markets, the CI stayed firm at current levels. 

And, if CalPERS has finally decided to return to the Malaysian market, such a favourable decision would certainly help boost the KLSE. 

Therefore, we maintain a positive outlook on the KLSE for the medium term, provided the CI holds above the 650-point crucial support and a lower support of 645, in case of a “whipsaw”. 

Immediate resistance is at 675 and the next overhead hurdle would be the 690-700 band. 

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