Bursa resilient BY K.M. LEE

REVIEW: Bursa Malaysia’s key barometer, the FBM Kuala Lumpur Composite Index (FBM KLCI), slipped into the red zone shortly after opening 0.7 point higher to 1,831.44 at the start of the week, due to lack of fresh compelling leads at home and overseas.

Overnight Wall Street eased 29.93 points to 16,103.30 the previous Friday on profit-taking as it lingered within striking distance off record highs.

Over on the New York Mercantile Exchange, light sweet crude for April delivery shed 55 cents to US$102.20 per barrel amid worries over declining demand.

Meanwhile, a lacklustre performance of stocks in the Asia-Pacific region on jitters over the health of China’s economy and the impact of the US Federal Reserve’s stimulus withdrawal, continued to weigh on local sentiment.

Losses on the bourse were marginal despite a negative offshore tone as accumulation on dips by the big boys, helped cushion the downside.

While blue chips consolidated within a narrow range, second and lower liners enjoyed brisk business on speculative plays, thus keeping the market busy.

In mixed note, the key index eased 2.06 points to 1,828.68, with the scoreboard showing winners and losers almost evenly matched on Monday.

After a short breather, bulls on Wall Street bounced back keenly, sending the S&P 500-share to a new record high, boosted by optimism over merger activity.

Surprisingly, Asian markets turned mixed as investors fret over credit curbs on China’s property sector.

Mirroring the regional trend, the local bourse flirted between an intra-day high and low of 1,833.79 and 1,827.26, a tight 6.53 points throughout before finishing 5.07 points higher to 1,833.75.

Despite the firmer close, the broad market was clearly in extended sideways consolidation mode, with decliners beating advancers by 547 to 294 on Tuesday.

Though Bursa slumped some 11.20 points to 1,822.55 in the absence of fresh catalysts in mid-week, followed by a rebound of 9.11 points to 1,831.66 on bargain hunting interest, it was mostly trapped inside the existing “rectangular box” on extended consolidation, awaiting for a clearer picture to emerge.

In another band trading, the FBM KLCI fluctuated between an intra-day high and low of 1,836.14 and 1,825.82 respectively before ending at 1,835.66, up four points yesterday.

Statistics: Friday-on-Friday, the principal index added 4.92 points, or 0.3% to 1,835.66, versus 1,830.74 on Feb 21.

Weekly turnover stood at 13.205 billion shares worth RM11.285bil, against 15.750 billion units valued at RM12.181bil previously.

Technical indicators: The oscillator per cent K and the oscillator per cent D of the daily slow-stochastic momentum index were on the slide. It had triggered a short-term sell near the overbought territory in mid-week. Unlike the above, the daily moving average convergence/divergence (MACD) histogram sustained the upward thrust, in tandem with the daily signal line to keep the bullish note. It had issued a buy call on Feb 10.

Meanwhile, the 14-day relative strength index touched the mid-range on Wednesday before curving up to settle at the 60 points level yesterday. Weekly indicators were little changed, with the weekly slow-stochastic momentum index scaling higher and the weekly MACD retaining the sell signal, although the downward pressure appeared to have eased.

Outlook: Bursa was mostly range-bound once again, undergoing consolidation during the past week. Though the bulls did try to resume their rally on several occasions, they could not get the support as prevailing emerging markets woes and rising geopolitical risks weighed on local sentiment.

The present sideways pattern of the FBM KLCI, however, is similar to a market movement in 2010, where Bursa was “locked-up” for five weeks before it was set free. After that, came the breakdown, which witnessed the market fall steeply before staging a powerful rebound, pushing the key index to a new high.

Based on the daily chart, the local bourse appears resilient for now. Obviously, all is well if the bulls are set to charge out of the existing rectangular box. But should there be a breakdown similar to that in 2010, investors can consider accumulating more, but buy at the pivotal support floors.

Technically, indicators were little changed, but remain bullish bias, suggesting that Bursa is likely to notch higher, barring any external shock this week. A breach of the 1,850-1,852-point band would lead to a re-test of the all-time peak of 1,882.20 or sending the bulls to the unknown territory.

Initial support is expected at the 1,814-1,816-point range, followed by the 200-day simple moving average of 1,792 points.

The five-year ascending trend line is resting at the 1,760 points, of which a crack will have a negative impact on the market going forward.