REVIEW: Bursa Malaysia avoided a breakdown from the 1,800-point psychological level on extended correction, with the benchmark FBM Kuala Lumpur Composite Index (FBM KLCI) advancing 2.32 points to 1,811.45 at the start of the week, rebounding from a two-day slump, as investors took the cue from the strong overseas performance to come out from the sideline and indulge in bargain-hunting activity.
The underlying tone was overwhelmingly positive. Blue chips topped the winners board amid support from institutional funds and the cheaper issues hogged the turnover list on greater retail participations.
The key index rose steadily from an intra-day low of 1,809.63 in early session to end at the day’s peak of 1,833.77, jumping a hefty 24.64 points on Monday.
Overnight Dow continued to set a new record the next day, but gains were pretty small as most investors exercised caution ahead of the Thanksgiving holiday later in the week.
Meanwhile, markets in the region turned mixed to lower, with the Australian Stock Exchange almost wiping out all of its China-inspired gains in the previous session, spooked by a resumption of a downtrend in commodity prices.
In the absence of clear direction from abroad, the local bourse traded cautiously higher amid mild “windows dressing” activity and gains in the heavyweights helped push the key index up 4.79 points to 1,838.56.
Despite the positive close, overall market breadth was negative, with decliners outnumbering advancers by 476 to 308 respectively on Tuesday.
In another almost similar trading fashion, the FBM KLCI flirted with an intra-day low of 1,836.79 in the morning to finish up 3.61 points to 1,842.17 in mid-week.
Thereafter, profit-taking selling ruled the floor due to lack of compelling leads on the horizon, with US equities closing little changed on the upside ahead of the public holidays.
In lacklustre session, the local bourse drifted from an intra-day high of 1,845.76 in mid-morning to end down 12.26 points to 1,829.91 on Thursday.
And yesterday, Bursa sustained declines, dropping an extra 9.02 points to 1,820.89, but off an intra-day lows of 1,815.31, thanks to sporadic “window dressing” action that helped cushion the downside.
Statistics: On a weekly basis, the major index perked up 11.76 points, or 0.7% to 1,820.89 yesterday, against 1,809.13 on Nov 21.
Weekly turnover amounted to 9.486 billion units valued RM9.2bil, versus 8.683 billion shares worth at RM8.305bil changed hands a week ago.
Technical indicators: The daily slow-stochastic momentum index was on the slide after the oscillator per cent K peaked out at the 93% level and tripped below the oscillator per cent D to trigger a short-term sell on Thursday.
Similarly, the past week witnessed the 14-day relative strength index touching a high of 65 before curving down to close at the 47-point level yesterday.
The daily moving average convergence/divergence (MACD) histogram had issued a buy on Nov 24, but the upward trend appeared to have paused.
Weekly indicators were very much the same, with the weekly slow-stochastic momentum index and the weekly MACD keeping their sell signal.
Outlook: Bursa trimmed early strong gains to finish the week slightly steadier, as the resumption of a downward spiral in crude oil prices after Opec cartel decided against production cuts to check the slide in the black commodity, dampened sentiment.
In line with our expectation, the 100-day simple moving average (SMA) had gone under the 200-day SMA apparently.
With this, the “death cross” of all the moving averages on our screen is now fully formed and under normal circumstances, Bursa would have suffered a severe beating, but the evidence of sporadic year-end “window dressing” activity somewhat helped mitigate the negative impact.
Thanks to the big boys and with them around this time, the market would either tread water or trade marginally higher from now until the year runs out, barring any rude shock from abroad.
Technically, indicators remain frail, implying that Bursa may be range-bound, but with a downward bias in the short term.
A crack of the 1,800-point floor may lead to a re-test of the recent lows of 1,766.22, of which a clear breakdown will prompt us to declare the market outlook bearish.
The immediate upside still is capped at the 1,850 points or the 1,860-point level, at least for now.