Market trend to stay bearish this week


LAST close (Feb 21) 646.1 points, off 4.6 points from a week ago. Week’s high: 661.5 points: Week’s low: 645.5 points. 

The Malaysia Derivatives Exchange (Mdex) KLCI futures prices returned all of its early gains and traded lower for most of the sessions on long-liquidation pressure before finishing the week with moderate losses. The deepening Iraqi crisis discouraged many who were earlier long to closed books ahead of the weekend.  

The February 2003 contract trended from a weekly high of 661.5 points to 645.5 points and settled the week slightly lower at 646.1 points, off 4.6 points from previously.  

Total volume for the week improved to 2,318 contracts from 2,127 contracts a week ago. Open-interests as at Thursday’s close dipped fractionally to 2,481 contracts from 2,487 contracts previously.  

Tensions over the Iraq crisis will determine the mood and movements in the market this week. Any sharp sell-off on account of the crisis would encourage bullish traders to bargain-hunt in anticipation of a strong buying up operation from Valuecap later.  

Chart-wise, the February 2003 index futures prices closed the week negative and are expected to come under fresh selling pressure this week.  

The daily charts are showing an immediate support at the 645.0-640.0 level. Violation of this support could turn the chart-picture bearish and send the market lower to establish fresh base below the 625 level.  

Chart-resistance for this week is seen at the 655-650 level.  

The daily and weekly technical indicators finished the week mostly negative and suggested that the bearish pressure would dominate trading this week.  

The daily Money Flow Index (MFI): The daily MFI declined from a weekly-high of 36.96 points on Feb 20 and settled sharply lower at 19.73 points. Analysis of the daily MFI shows that the market is technically oversold. The weekly MFI closed higher at 48.92 points and signalled that the near-term market could still decline. 

The 3-day and 7-day exponentially smoothed moving-average price-line (ESA) turned negative and resumed its bearish divergence during Friday’s close. The 3-day and 7-day ESA-lines settled the week lower at 648.00 and 651.00 points respectively. Analysis of this oscillator shows that the market is in a bearish wave. 

Daily stochastics: The daily stochastic triggered the sell-signal on Feb 20 and signalled that the downward cycle would continue in the coming sessions. The daily oscillator per cent K and D settled the week lower at 24.01% and 43.58% respectively.  

The weekly stochastics remained bearish for the near-term market and ended the week with the perc ent K and D at 25.34% and 44.24% respectively.  

Daily moving-average convergence/divergence (MACD): The daily MACD (not shown in the chart) remains bearish during Friday’s close and called for more negative trading this week. The daily MACD and trigger-line ended lower in the negative territory at minus 1.64 and 0.67 point respectively.  

The weekly MACD failed to indicate a trend-change for the near-term market and closed the week slightly positive. The weekly MACD and trigger-line finished the week slightly higher at minus 9.81 and minus 11.51 points respectively.  

Daily relative strength index (RSI): The daily RSI fell from a weekly-high of 50.19 points on Feb 17 and closed the week lower in the negative territory at 42.92 points.  

Analysis of the daily RSI shows that the index futures prices immediate underlying strength is bearish. The weekly RSI ended the week slightly lower in the negative territory at 44.41 points and indicated that the market near-term underlying tone is bearish. 

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