G.M. Teoh does a technical analysis of the Main Board's performance
LAST CLOSE (Oct 13): 983.54 points, up 12.56 points (1.29%) from the week before. Week’s high: 983.54 points; Week’s low: 967.54 points.
The volatility of the KL Composite Index (KLCI) expanded last week as the index resumed its upward momentum, boosted by easier crude oil prices, and tested its April 2000 highs before settling Friday at its highest point so far in 2006.
Most of the key index-linked stocks ended the week with minor gains.
Index heavyweights Maybank, Tenaga Nasional, MISC, Public Bank, Bumiputra-Commerce, Genting, Petronas Gas, Sime Darby and Plus Expressways ended with gains ranging from five sen to RM1.50 and added a combined 7.15 points to the index.
Maxis Communications, IOI Corp, Astro and DiGi.Com eased slightly and shaved 1.33 points from the KLCI.
Telekom and British American Tobacco finished unchanged.
Volume of the KLCI for the week advanced by 8.2% to 483.13 million shares compared with 446.53 million the week before. The average daily volume for the week rose to 96.62 million from 89.30 million shares.
The weekly candlestick chart ended positive. A big white candle occurred last week and generally this is considered bullish as prices ended significantly higher than they had opened last week.
The appearance of the white candle during the breakout above a resistance area and setting of a fresh rally high last week added credibility to the upward move.
The extended holidays next week, when the market opens for only two days, would likely encourage many to cash in on their profits and likely to cause a mild downward correction.
Chart support for this week is adjusted slightly higher from a week ago to the 975–970 levels. The overall trend would likely remain buoyant if these levels are not breached.
The immediate chart resistance is now seen at 985–995.
The weekly indicators closed mostly positive and signalled the index was toppish.
Stochastic: The weekly stochastic retained its buy signal last week and continued to indicate the index was in a bullish extended move phase and, at the same time, grossly overdone. The oscillators per cent K and D finished the week higher at 95.51% and 86.55% respectively.
The weekly Money Flow Index (MFI) advanced and closed in the overbought territory at 88.03 points. Analysis of the weekly MFI shows the index is overbought and that light accumulation occurred last week.
The 3- and 7-week exponentially smoothed moving-average price lines (ESA-lines) closed bullish for the near-term trend. The 3- and 7-week ESA-lines finished higher at 975 and 966 points respectively.
The daily ESA-lines expanded on their bullish divergence and remained positive at Friday’s close. The 3- and 7-day ESA-lines settled the week higher with the 3-day ESA-line above the 7-day ESA-line at 977 and 973 points respectively.
Relative Strength Index (RSI): The 9-week RSI (not shown in the charts) closed higher in the overbought territory 77.82 points. Analysis of the weekly RSI shows the immediate underlying strength of the index is still bullish despite being in technically overbought position.
Weekly moving-average convergence/divergence (MACD): The weekly MACD (not shown in the chart) continues to indicate the near-term trend is constructive. The weekly MACD ended above the trigger-line and closed higher at 12.08 and 10.88 points respectively.
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