Lacklustre trading ahead


LAST CLOSE (Oct 20): 979.19 points, off 4.35 points (0.44%) from the previous week. Week’s high: 983.79 points. Week’s low: 975.30 points. 

The Kuala Lumpur Composite Index (KLCI) edged lower on profit-taking pressure ahead of the extended festive holidays and settled Friday off from its rally highs.  

A few of the key index-linked stocks returned some of the recent gains and settled the week with minor losses.  

Maybank, Tenaga Nasional, Telekom, Bumiputra Commerce, Genting, Petronas Gas, Sime Darby and PLUS Expressways all settled the week lower and erased a combined 6.12 points from the index.  

Public Bank, Maxis Communications, IOI Corporation, Sime Darby, British American Tobacco, Astro and Digi.Com all closed with small gains and added a combined 2.21 points to the KLCI. 

MISC closed the week unchanged. 

Total weekly volume of the 100-stock KLCI declined to 426.01 million shares from 483.13 million previously. Average daily volume for the week dropped to 85.20 million shares from 96.62 million a week ago.  

The weekly candlestick chart settled the week positive. A big white candle occurred last week and this is generally considered bullish as prices ended significantly higher than they opened for the week. The appearance of the white candle during the breakout above THE resistance area and establishment of a fresh rally high last week adds credibility to the upward move. 

The extended holiday next week where the market will only operate for two days would likely encourage many to cash in on their profits and likely cause a mild downward correction. 

Chart support for this week remains unchanged from a week ago the 975.00-970.00 level. The immediate-term chart picture would turn slightly negative if this level is violated this week.  

Immediate chart resistance for this week is adjusted slightly lower to the 980.00-985.00 level. 

The weekly indicators ended the week mixed and indicated that the index has lost some of its bullish momentum.  

Stochastic: The weekly stochastic closed the week in the overbought zone and showed a mild negative convergence signal to indicate that a trend reversal would taker place. The oscillators per cent K and D closed the week lower at 94.16% and 92.57% respectively.  

The weekly Money Flow Index (MFI) only managed fractional gains last week and ended in the overbought territory at 88.35 points. Analysis of the weekly MFI shows that the index is in an overbought state.  

The 3- and 7-week exponentially smoothed moving average price lines (ESA lines) ended in bullish divergence and indicated that the near-term trend is still constructive. The 3- and 7-week ESA lines settled the week higher at 977.00 and 969.00 points respectively. Meanwhile, the daily ESA lines closed in bullish divergence and signalled that the short-term trend is still positive. The 3- and 7-day ESA lines finished the week lower with the 3-day line above the 7-day line at 975.00 and 977.00 points respectively.  

Relative Strength Index (RSI): The 9-week RSI (not shown in the charts) settled the week lower in the overbought territory at 72.22 points. Analysis of the weekly RSI indicates that the immediate underlying strength of the index has turned negative.  

Weekly moving average convergence/divergence (MACD): The weekly MACD (not shown in the chart) ended the week positive for the near-term trend. The weekly MACD settled the week above the trigger line and ended slightly higher at 12.79 points and 11.84 points respectively.  

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