KLCI set to adjust upward

Stock Market Signals: A weekly column on the Main Board of the MSEB by G.M. Teoh 

LAST CLOSE (March 10): 921.96 points, up 5.03 points (0.55%) from the previous week. Week’s high: 925.15 points; Week’s low: 910.80 points. 

The Kuala Lumpur Composite Index (KLCI) fell to its lowest levels in seven weeks in early trading last week and recovered on a late technical bounce boosted by impressive gains in Tokyo. It finally settled the week with moderate advances. 

Most of the key index stocks ended with minor gains. Maybank, Tenaga Nasional, Public Bank, Maxis Communications, Petronas Gas, Bumiputra-Commerce and IOI Corp ended with gains ranging from five to 40 sen and supported the index by a combined 4.94 points. 

Genting and Sime Darby ended in the negative territory and erased a combined 0.62 point from the KLCI. MISC and Telekom settled unchanged. 

Volume for the week increased slightly to 523 million from 505 million shares a week ago. The average daily volume rose to 104.60 million from 101 million shares. 

Based on chart, the KLCI is expected to stay buoyant this week and resume its upward recovery. 

Chart support for this week is revised slightly higher to the 918–916 levels. The chart outlook for the immediate term would remain neutral to positive if the index stays above these levels this week. 

The weekly candlestick chart indicated an immediate chart resistance around the 923–926 levels. Fresh positive momentum would likely develop if the index succeeds in vaulting this important chart hurdle this week. 

The weekly candlestick chart closed positive and indicated the index was in a correctional phase. Last week's white candle suggests the index has lost its downward momentum. 

The weekly indicators closed mixed and signalled the index would move into a congestion trading phase this week. 

Stochastic: The weekly stochastic held on to its sell signal on Friday and signalled the index was not completely out of its negative phase. The oscillators per cent K and D settled lower at 56.71% and 67.84% respectively. 

The weekly Money Flow Index (MFI) settled lower at 38.34 points and indicated negative money flow took place last week. 

The 3- and 7-week exponentially smoothed moving-average price lines (ESA-lines) failed to trigger the sell signal last week and ended Friday with its positive divergence intact. Analysis of the weekly ESA lines shows the main trend is still constructive. 

The 3- and 7-week ESA lines ended higher at 921.21 and 919.42 points respectively. 

Relative Strength Index (RSI): The 9-week RSI (not shown in the chart) suggests the immediate-term strength of the index is positive after closing the week higher at 56.56 points. 

Weekly moving-average convergence/divergence (MACD): The weekly MACD (not shown in the chart) remained in positive divergence at Friday’s close and indicated the main trend was still positive. 

The weekly MACD ended above the trigger-line and settled higher in the positive zones at 3.77 and 3.49 points respectively. 

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