SBI - another week of sideways trade likely

Stock Market Signals: A weekly column by G.M. Teoh on the performance of the KLSE's Second Board.

Last Close (May 9): 91.99, off 0.63 of a point from a week ago. Week’s high: 92.59 points; Week’s low: 91.55 points. 

The Second Board Index (SBI) eased slightly last week and remained locked in narrow range trading for most of the sessions before closing Friday with small losses. Volume for the week improved to 175 million from 101 million shares a week ago. 

Based on chart the SBI ended the week neutral-to-slightly negative and is expected to resume its sideways drift this week. 

Chart support for this week is adjusted lower to the 91.00–90.00 levels. Violation of these chart supports would signal the resumption of the bearish trend. Chart resistance is unchanged at 94.00–95.00. 

The daily and weekly technical indicators ended neutral and indicated further range trading this week. 

The 3- and 7-day simple moving-average price lines: The 3- and 7-day simple moving-average price lines closed the week negative. The 3-day MAV-line closed the week below the 7-day MAV-line at 91.97 and 92.11 points respectively and signalled the downward trend is continuing. 

Daily Stochastics: The daily stochastics flashed the buy signal at Friday’s close and signalled the start of an upward wave. The daily oscillator per cent K closed above the oscillator per cent D at 36.92% and 34.05% respectively. 

The weekly oscillator per cent K finished below the oscillator per cent D at 11.76% and 28.53% respectively and indicated the index is in an oversold position. 

Daily Moving-Average Convergence/Divergence (MACD): The daily MACD remained negative at Friday’s close and signalled the index could stay negative. The daily MACD and trigger-line settled lower in the negative territory at minus 0.50 and minus 0.48 of a point respectively. 

The weekly MACD remains positive for the near-term trend and settled with the MACD and trigger-line slightly higher at minus 3.51 and minus 3.70 points respectively. 

Daily Relative Strength Index (RSI): The daily RSI recovered from a week's low of 37.46 points on May 6 and closed lower in the negative territory at 39.89. Analysis of the daily RSI indicates the index’s immediate underlying strength is negative. 

The weekly RSI ended lower at 31.70 points and signalled the near-term market is at its technical bottom. 

Daily Momentum Index (MI): The daily MI (not shown in the chart) remained below the 100-point mark and closed slightly higher at 99.47. Closing prices slightly below the 100-point mark show the index is attempting a trend-change. 

The weekly MI closed higher at 99.41 points and indicated the index’s near-term momentum is positive. 

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