CI seen to trend slightly upwards


LAST close (March 28): 634.96 points, up 2.79 points from a week ago. Week’s high: 635.85 points; Week’s low: 627.94 points. 

The KLSE Composite Index (CI) trended sideways most of the sessions and edged higher in late trading on Friday boosted by institutional buying of some key blue-chip stocks. 

Traders remained cautious as worries of a protracted war in Iraq and the soaring oil prices renewed fears of a worldwide recession.  

For the week, index heavyweight Maybank rose 30 sen to RM8.30 and added 2.26 points to the index.  

MISC, Sime Darby, British American Tobacco and Public Bank all closed higher and supported the CI by a combined 2.05 points. Tenaga Nasional, PLUS Expressways and Genting all settled lower and chipped the index by a combined 1.66 points. Telekom, Petronas Gas and Maxis Communications all ended unchanged for the week. 

Total weekly volume of the 100-stock CI dropped to 188.19 million shares from 250.33 million shares a week ago. Average daily volume for the week declined to 37.63 million shares from 50.04 million shares previously. 

Chart-wise, the CI closed the week on a constructive note and is expected to remain in gradual upward trend this week. An immediate overhead chart-resistance is seen for this week at the 640-645 level, and a successful break above this technical hurdle should clear the way for a test of its minor chart-resistance at the 650-655 level. Chart-support for this week is revised slightly higher to the 630-625 level. Overall chart-picture is expected to be positive if this level ise not successfully breached this week. 

The daily and weekly technical indicators finished the week positive and indicated that the market could extend on its upward recovery this week. 

The daily Money Flow Index (MFI) advanced from a weekly-low of 59.60 points on March 24 and closed the week sharply higher in positive zones at 81.37 points. Sharply high¬er MFI shows that accumulation has taken place and this sort of situation is normally followed by a higher trading level. The weekly MFI stays positive for the near term market and ended higher in the positive zones at 52.16 points. 

Analysis of the weekly MFI shows that the near-term trend of the index is positive. Exponentially smoothed moving-average price line on daily high and low: The daily MAV-lines trended sideways and closed on a neutral note. 

Closing prices near the MAV-high on Friday indicates that the index is entering a trend change. Based on the MAV-lines, the CI has an immediate trend resistance at the 635.00 level, and penetration of this resistance would signal that a trend-reversal has started. Immediate support is seen at the MAV-low line level of 630 points. 

Stochastics: The daily stochastics triggered the buy-signal on March 27 and closed the week on a positive note. Analysis of this daily oscillator shows that the index has room for more upside trading. The daily oscillator per cent K and D ended the week higher at 76.18% and 65.47% respectively. 

The weekly stochastics expanded on its buy signal and continue to indicate that the near-term trend is constructive. The weekly oscillator per cent K and D finished the week higher at 36.14 and 25.05 % respectively.  

The 3-day and 7-day exponentially smoothed moving-average lines continue to indicate that the index’s upward cycle is intact. The 3-day and 7-day ESA-lines ended the week with the 3-day and 7-day ESA-lines higher at 633 and 632 points respectively. For the coming sessions, the trend of the index is considered positive if the ESA-lines do not enter a negative crossover. 

Relative strength index (RSI): The daily RSI (not shown in the chart) rebounded from a weekly low of 40.64 points on March 25 and settled the week higher in positive zone at 47.15 points. 

Analysis of the daily RSI shows that the index's immediate underlying strength is slightly positive. 

The weekly RSI advanced sharply and ended in positive territory at 52.15 points. Analysis of the weekly RSI shows that the nearterm trend of the index is constructive. 

Daily moving-average convergence/divergence (MACD): The daily MACD (not shown in the chart) ended the week with its buy-signal intact and indicated that the three-week old gradual upward cycle would continue. The MACD and trigger-line closed the week higher in negative territory at minus 4.28 points and minus 5.21 points respectively.  

The weekly MACD (not shown in the chart) retained its sell signal during Friday’s close and indicated that the index’s near-term trend is still negative. The weekly MACD ended below the trigger line and closed slightly lower in negative zones at minus 10.49 and minus 10.21 points respectively.

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