Breakout likely Saturday, 28 March 2015 BY: K.M LEE

by **Cals** Mon 30 Mar 2015, 01:08

Breakout likely

Saturday, 28 March 2015
BY: K.M LEE

REVIEW: Bursa Malaysia quickly moved to the positive side despite starting the week 2.42 points easier at 1,801.23, as investors took advantage of the sharply higher US equities and crude oil prices to indulge in bargain hunting.
As usual, blue chips led in early session, driving the benchmark FBM Kuala Lumpur Composite Index (FBM KLCI) to a high of 1,811.08 amid support from the big funds.
However, the momentum could not be sustained later, as a generally mixed showing in the Asia-Pacific region simply was not supportive of the bulls.
In the wake of selling in the afternoon, the key index succumbed to pressure and retreated, ending at the day’s low of 1,795.85, losing 7.80 points in volatile session on Monday.
Theoretically, the index’s closing at the day’s bottom usually would open the doors for more downward pressure the next day and with overnight Wall Street retracing slightly after a see-sawed session, it really does not bode well for Bursa.
But that was not the case, as stocks on the home front were resuscitated by declines in the greenback against the ringgit, underpinned further by a firmer commodity prices.
Quality issues bounced back to life on foreign buying, which witnessed the FBM KLCI rising steadily from morning to a high of 1,814.54 in late hour before ending up 18.19 points to 1,814.04.
Elsewhere, second and lower liners were mostly flat to lower and it was reflected on the scoreboard, with winners and decliners almost equal on Tuesday.
Nevertheless, the local market sentiment continued to improve amid persistent foreign buying in the blue chips, ignoring Wall Street losses overnight.
The cheaper issues also attracted significant retail participation while the US dollar came under pressure on views that the Federal Reserve would not rush to increase interest rates.
In a relatively good day like this, the FBM KLCI tested the uppermost 200-day simple moving average speed bump in mid-morning before paring gains slightly to trade sideways.
At the final bell, the local bourse chalked up 5.06 points to 1,819.10 on robust volumes in mid-week.
Then, Wall Street suffered another round of beatings on massive selloff, with semiconductor and biotech shares slumping more than 4%, and the greenback slipping.
Meanwhile, Asian equities drifted lower on renewed uncertainty and given the dearth of compelling catalysts on the horizon, the local bourse tripped into consolidation mode.
However, losses were small, with the FBM KLCI shedding 0.68 of a point to 1,818.42, thanks to a spike in crude oil prices helping to cushion the downside on Thursday.
And yesterday, the key index fluctuated within a tight range, undergoing consolidation due to lack of fresh leads, dropping 5.05 points to 1.813.37, with a lower Wall Street weighing on local sentiment.
Statistics: Week-on-week basis, the major index rose 9.72 points, or 0.5% to 1,813.37 yesterday, compared with 1,803.65 on March 20.
Weekly turnover amounted to 10.206 billion units valued at RM9.505bil, against 11.417 billion shares worth RM10.588bil done previously.
Technical indicators: The oscillator per cent K had slipped below the oscillator per cent D of the daily slow-stochastic momentum index to trigger a short-term sell at the 80% level on Thursday.
The past week witnessed the 14-day relative strength index hitting a high of 66 in mid-week before retracing marginally to end at the 60-point level yesterday.
On the contrary, the daily moving average convergence/divergence (MACD) histogram sustained the upward expansion against the daily signal line to keep the bullish note.
Meanwhile, weekly indicators were improving, with the slow-stochastic momentum issuing a buy call at the 40% level and the MACD rising in tandem with the weekly trigger line.
Outlook: The FBM KLCI tested the declining uppermost 200-day simple moving average for the third time in the past two months before retreating slightly owing to an apparent profit-taking activity.
The key index first visited this line on Feb 4, followed by significant pullback, and backing off again on March 4 on the second attempt.
Unlike the previous two rounds, the bulls are in a better position of staging a positive breakout this time, with new leads emerging.
The catalysts are increase buying momentum as we step into the second quarter, the greenback bull-run appears losing steam, upbeat US economic data to help revive risk appetite and rising crude oil prices due to conflic in the Middle East.
Technically, most of the indicators are pointing to a steadier short-term trend, suggesting a bullish breakout may be on the cards.
A decisive breach of the 1,831.41 points barrier would give investors the confirmation, enroute to challenge the historical peak of 1,896.23 or to explore the unknown territory.
Otherwise, the market would still be trapped in a range-bound pattern, with initial support resting at the 1,770-point floor.