Last close (March 7): 635.66 points, off 11.14 points from a week ago. Week’s high: 649.58 points; Week’s low: 633.60 points.
The KLSE Composite Index (CI) fell to its lowest level in eight weeks on Friday following US President George W. Bush’s speech declaring that America would disarm Iraqi President Saddam Hussein of his weapons of mass destruction with or without United Nations’ support. Prospects of war dampened sentiment and the limited buying support from local funds allowed some of the main index-linked stocks to slip lower.
For the week, Maxis Communications declined 35 sen to RM5.05 and caused the index to lose 1.78 points. Telekom and Tenaga both lost 20 sen and resulted in the CI dropping by a combined 2.61 points. Maybank, Plus Expressways and Genting closed in the negative column and chipped away a combined 1.73 points from the index. MISC, BAT and Public Bank ended the week with minor gains and supported the CI by a total of 1.84 points.
Volume of the 100-stock CI during the four-day trading week fell to 140.17 million shares, down from 163.65 million a week ago. Average daily volume increased to 35.04 million shares from 32.73 million.
Based on chart, the CI finished the week bearish and is expected to remain in downtrend this week. An immediate chart support for the CI is seen for this week at the 633.00–630.00 levels. Violation of this crucial immediate support could send the CI lower to test its next chart support at 625.00–620.00. A minor chart support is seen at the 615.00 level. Chart resistance for this week is revised lower to the 640.00–645.00 levels.
Technical analysis of the top eight index stocks shows the index is likely to continue with its downward trend in the immediate term. Based on the 3- and 7-day exponential moving-average lines, seven of the top eight stocks are showing the negative signal and indicating the bearish cycle would be sustained.
The daily and weekly technical indicators closed mostly bearish and indicated the downward momentum would continue this week.
The daily Money Flow Index (MFI) declined from a week’s high of 32.67 points on March 3 and closed lower in the negative zones at 25.22. The daily MFI indicates the index is still in distribution phase and is expected to remain under pressure this week.
The weekly MFI ended slightly lower in the positive zones at 52.87 points. Analysis of the weekly MFI shows the near-term market would stay neutral to slightly negative.
Exponentially smoothed moving-average price line on daily high and low: The daily MAV-lines remained in downward trend and signalled the bearish condition would persist this week. Closing prices below the MAV-low level for the past 11 days show the index’s main trend is bearish. Based on the MAV-lines the CI has an immediate cycle resistance at the 652.00–646.00 levels.
Stochastics: The daily stochastics remained choppy and triggered the sell signal on March 3. Analysis of this daily oscillator shows the index is in a bearish extended-move. The daily oscillators per cent K and D ended the week lower at 15.34% and 21.08% respectively.
The weekly stochastics closed deep in the bearish extended-move zones and called for the downward trend to continue in the near term. The weekly oscillators per cent K and D settled sharply lower at 5.50 and 26.95 % respectively.
The 3- and 7-day exponentially smoothed moving-average price lines expanded on their bearish divergence at Friday’s close and indicated the index is still in a negative cycle. The 3- and 7-day ESA-lines closed the week lower at 639.00 and 644.00 points respectively.
Relative Strength Index (RSI): The daily RSI (not shown in the chart) edged lower from a week’s high of 42.82 points on March 3 and closed lower in the negative zone at 31.64. Analysis of the daily RSI indicates the market has room for more downside trading and shows the immediate underlying strength is bearish.
The weekly RSI ended lower in the negative territory at 38.85 points. Analysis of the RSI shows the near-term trend could remain negative.
Daily moving-average convergence/divergence (MACD): The daily MACD (not shown in the chart) ended the week bearish and continued to indicate the index’s immediate trend is negative. The MACD and trigger-line ended the week lower in the negative territory at minus 2.88 and minus 2.51 points respectively.
The weekly MACD (not shown in the chart) closed with a strong bearish convergence and signalled the near-term market would remain negative. The weekly MACD closed above the trigger-line and settled lower in the negative zones at minus 9.10 and minus 9.72 points respectively.
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