REVIEW: Bursa Malaysia kicked off the week little changed, with the benchmark FBM Kuala Lumpur Composite Index (FBM KLCI) easing 0.19 point to 1,206.06 in initial deals amid dearth of fresh catalyst from abroad.
Overnight Dow shed 21.61 points to 9,487.67 on worries about the pace of economic recovery after US non-farm payrolls dropped more than expected in September, thus pushing the unemployment rate to a 26-year high of 9.8% while world crude oil prices sagged 87 cents to US$69.95 a barrel.
Elsewhere, trading in most regional bourses were directionless, with the major indices moving in and out of the positive territory before ending moderately lower on lack of support, as a long break in China, which was closed from Oct 1 to Oct 8 for National Day holidays, discouraged aggressive buying momentum.
Mirroring the sluggish offshore performance, the local bourse drifted sideways in dull business throughout, but the key index managed to chalk up some 10.20 points rise to settle at the day’s peak of 1,216.45, lifted mainly by mild bargain-hunting interest in select blue-chips in the afternoon, and a big jump in Kuala Lumpur Kepong Bhd (KLK) shares in the last minute due to an error in the bid order by a foreign brokerage house at RM17 a piece against RM13.74 previously.
Apparently, the uninspiring market breadth was clearly reflected in the scoreboard, with the losers beating winners by 354 to 238 at the end of Monday’s session.
After suffering a series of declines, overnight US equities finally ended their losing streak the next day, helped in part by positive data that showed the US services sector grew for the first time since August 2008 and upbeat comments about the large banks.
With most regional exchanges responding positively to a rebound in the US, many people had expected Bursa Malaysia to react accordingly, but a downward adjustment on an index-linked KLK stock following an unusual activity the day before, kept the market in the negative territory.
However, losses were minimal, with the FBM KLCI shedding 3.72 points to 1,212.73 on Tuesday, as gains elsewhere provided the cushion.
Subsequently, the local bourse turned mixed but with an upward bias, buoyed by positive economic data and confidence in the upcoming corporate earnings seasons, as well as a steadier performance in regional peers.
In range-bound trade, Bursa Malaysia climbed 5.88 points to 1,218.61 in mid-week.
Thereafter, the market powered ahead in the wake of fresh buying momentum, scaling an extra 11.48 points to 1,230.09 amid better sentiment on Thursday and an additional 3.73 points to 1,233.82 on light follow-through interest yesterday.
Statistics: For the week, the FBM KLCI gained 27.57 points, or 2.3% to 1,233.82 on Friday, versus 1,206.25 on Oct 2.
Total turnover for the week stood at 3.609 billion shares valued at RM5.912bil, against 2.991 billion units worth RM3.122bil traded in the pervious week.
Technical indicators: The oscillator per cent K and the oscillator per cent D of the daily slow-stochastic momentum index were fast reaching the overbought area after flashing a buy on Oct 1.
Another short-term pointer, namely the 14-day relative strength index continued to improve, firming from the mid-range to the 70 points level yesterday.
Meanwhile, the daily moving average convergence/divergence (MACD) histogram climbed over the daily signal line to trigger a buy yesterday.
However, weekly measurements were very much the unchanged, with the weekly slow-stochastic momentum index curving down from the top and the weekly MACD in danger of falling below the weekly signal line.
Outlook: Bursa Malaysia traded firmer, with the key index hitting a near 16-month high of 1,236.89 during intra-day week session on renewed bargain hunting nibbling, largely encouraged by a solid showing in overseas markets.
According to the chart, the FBM KLCI had penetrated the recent peak of 1,231.49. Theoretically, a breakthrough of such would clear the path for an uptrend continuation and I am optimistic about the development ahead, given the improvement in global market sentiment and macro economy.
However, for the bulls to charge ahead in style, we need to see more concrete signs of economic revival and most importantly, bigger volumes.
Otherwise, the bulls will not run far from here, given the prevailing limited investors’ confidence and liquidity in the market.
Technically, indicators are on the mend, especially the daily MACD, suggesting a steadier trend this week, with initial resistance envisaged at 1,240-1,250 points band.
The next upper hurdle is resting at 1,260 points, followed by 1,280 points.
Support is expected at 1,231.49 points, 1,220 points, 1,196.46-1,200 points range. If the important lower floor of 1,191, also the 50-day simple moving average line is violated, investors should be prepared for more downward journey on increase liquidation pressure.