REVIEW: Despite the firmer US markets, stocks on Bursa Malaysia kicked off the week on a soft note, with the FBM Kuala Lumpur Composite Index (FBM KLCI) losing a significant 4.74 points, or 0.28% to 1,712.08, as foreign funds opted to book profits following the recent rally and ahead of the release of Budget 2016.
Meanwhile, the mixed performance of regional equities and the depreciation of the ringgit against the greenback also were not helping.
But, as soon as the latest economic figures from China filtered out, showing the world’s second largest economy did not cool as much as expected in the third quarter, the local bourse reversed early weakness and moved into the positive territory on renewed bargain hunting interest.
Though there was a fresh bout of buying momentum pushing the key index up 1.38 points to 1,718.20 at the end of the day, trading on the whole was pretty cautious and it was clearly reflected in the scoreboard, with winners and decliners nearly matched on Monday.
The Dow posted a much smaller gains the next day, up 14.57 points to 17,230.54, as caution at the start of the earnings season kept a lid on the market.
Elsewhere, crude oil prices reversed down US$1.37 a barrel to US$45.89 amid worries that Iran would flood the market soon following the implementation of its nuclear deal while the US dollar rose against the ringgit ahead of the European Central Bank meeting.
With major regional markets drifting within a narrow range in sluggish trading, there were simply no incentives on the horizon for the local players to nibble.
In the absence of support from investors, the FBM KLCI opened 2.32 points lower at 1,715.88 and thereafter dipped gradually to an intra-day low of 1,702.84 in late hour before trimming losses slightly to settle at 1,705.03, slumping 13.17 points on Tuesday.
Thereafter, the local bourse was generally range-bound on bargain hunting interest alternated with profit-taking activity, undergoing consolidation while awaiting a new lead to emerge.
In lacklustre session, the key index recovered 2.08 points to 1,707.11 in mid-week but eased 2.02 points to 1,705.09 on Thursday before bouncing back 5.84 points to 1,710.93 yesterday, boosted by a triple-digit jump in the Dow overnight, firmer crude oil prices and a stronger ringgit.
Statistics: For the week, the key index lost 5.89 points, or 0.3% to 1,710.93 yesterday, versus 1,716.82 at the close on Oct 16.
Total turnover for the regular week stood at 11.94 billion shares worth RM10.133bil, compared with 9.544 billion units valued at RM9.421 done during the four-day holiday-shortened previous week.
Technical indicators: The oscillator per cent K climbed over the oscillator per cent D of the daily slow-stochastic momentum index to trigger a short-term buy at the neutral area yesterday.
In stark contrast, the 14-day relative strength index appeared stuck within a narrow range of 65 points and 68 points the past several days.
Meanwhile, the daily moving average convergence/divergence (MACD) histogram continued to weaken despite keeping the buy signal.
Weekly indicators remained bullish, with the slow-stochastic momentum index surging deeper into the overbought territory and the MACD sustaining the upward expansion against the signal line.
Outlook: Bursa was generally range-bound but with a mild downward bias on correction the past week, as investors book gains following the recent rally.
For the week ahead, there is a high posibility the local bourse may sustain the sideways pattern in subdued trading over the next several days on extended consolidation process, awaiting for the outcome of the Federal Reserve policy meeting, scheduled to be held on Tuesday and Wednesday.
And should the Fed officials decide to hold interest rates steady, then investors can expect the local market to rise amid fresh buying momentum.
But if they announce a rate hike in December, the key index will probably retreat in the wake of fresh selling pressure. So, look out for that.
Based on the daily chart, the short-term uptrend is constructive and will stay that way as long as the ascending line, now at 1,670 points and still rising, continues to support the benchmark index.
Should this line be broken, the lower 50-day simple moving average (SMA) of 1,633 points will be vulnerable.
To the upside, a decisive penetration of the uppermost 200-day SMA of 1,740 points will see the overall sentiment market sentiment turning more bullish, en route to the 1,760 points, 1,780 points, or the 1,800-point psychological barrier.
Technically, most of the indicators still are positive, suggesting that Bursa may drift sideways but with an upward bias until a breakout is detected.
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