Consolidation likely before resumption of technical rally

FOLLOWING Barisan Nasional's win in the 13th General Election, share prices on Bursa Malaysia have hit dizzling highs.

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The FTSE Bursa Malaysia KLCI (FBM KLCI) recorded its all-time historical
high of 1,826.22 on May 6. It stayed above its psychological support of
1,700 when it closed at of 1,772.38 points yesterday.

The FBM
KLCI hit a low of 1,743.14 on Monday before closing at an all-time
historical high of 1,826.22, giving it an intra-week trading range of
83.08 points.

The benchmark recorded a week-on-week gain of 77.61 points last week. Its gainers had overwhelmed losers by 29 to 0.

The index opened broadly higher at 1,771.62 points on Monday before hitting a high of 1,826.22.





Continuing market rallies on the local bourse sent share prices to
close above its major psychological support of 1,700. The FBM KLCI
recorded a week-on-week gain of 77.61 points, or 4.58 per cent, to close
at 1,772.38 yesterday.

The FBM Small Cap Index's recorded a
week-on-week gain of 12.76 per cent while the FBM ACE Market Index also
garnered a week-on-week gain of 11.54 per cent during the week.

Back at home, share prices on Bursa Malaysia rallied in earnest over the last five trading days.

The
benchmark FBM KLCI closed broadly higher at 1,772.38 points on Friday,
posting a week-on-week gain of 77.61 points, or 4.58 per cent.

The FTSE Bursa Malaysia Small Cap Index rallied 1,518.17 points, or 12.76 per cent, to close at 13,419.55 points.

The
ACE Market closed broadly higher at 4,352.27 points, recording a
week-on-week gain of 450.15 points, or 11.54 per cent, for the week
ended yesterday.

The following are the readings of some of the FBM KLCI's technical indicators:-

Moving Averages: The FBM KLCI continued to stay above its 10-, 20-, 30-, 50-, 100- and 200-day moving averages at the market close yesterday.

Momentum Index: Its short-term momentum index had since stayed above the support of its neutral reference line at the market close yesterday.

On Balance Volume (OBV): Its short-term OBV trend dipped above the support of its 10-day exponential moving averages.

Relative Strength Index (RSI): Its 14-day RSI stood at 71.98 per cent at the close yesterday

Outlook

The FBM KLCI hit a low of 1,743.14 points on Monday, staying way above
the confines of this column's envisaged support zone (1,656 to 1,690
levels).

Subsequent technical rebounds sent the FBM KLCI to its
intra-week high of 1,826.22 on Monday, moving above the confines of
this column's envisaged resistance zone (1,698 to 1,732 levels).

On the index, UEM Land Holdings Bhd, YTL Corporation Bhd, Genting Bhd
and CIMB Group Holdings Bhd posted week-on-week gains of 19.70 per
cent, 10.49 per cent, 9.51 per cent and 8.94 per cent, respectively.

Of these, UEM Land Holdings Bhd was the week's top performer with a year-to-date gain of RM1.06, or 50.48 per cent.

The local bourse continued to stay within the confines of its long-
and intermediate-term trendlines (See FBM KLCI's weekly chart - A1:A2
and A3:A4) yesterday.

Chartwise, the benchmark FBM KLCI
rallied above the upper channel (See FBM KLCI's daily chart - B5:B6) of
its intermediate-term uptrend channel (B1:B2 and B5:B6) yesterday. It
continued to stay above its long-term uptrend support (B1:B2) last
week.

Meanwhile, the weekly fast MACD (moving average
convergence/divergence)continued to stay above the weekly slow MACD at
the market close yesterday, with the daily and monthly fast MACDs
continuing to stay below their respective slow MACDs.

The FBM
KLCI's 14-day RSI stayed at 71.98 per cent yesterday, with its 14-week
and 14-month RSI staying at 71.91 per cent and 68.55 per cent
respectively.

The FBM KLCI hit a high of 1,826.22 on Monday
before consolidating lower to close at 1,772.38 yesterday, staying above
the upper resistance (B5:B6).

The shares had since rallied above the support level of 1,750 yesterday.

Following the sharp technical rally over thelast five trading days, the
FBM KLCI may need to consolidate within narrow range-bound trading
before resuming its technical rally.

Construction and properties counters are likely to find critical support on fresh round of foreign buying.

Next week, the FBM KLCI's envisaged resistance zone is likely to be
between 1,776 and 1,830 while its immediate downside support is
envisaged to be between 1,713 and 1,768.

The subject expressed above is based purely on technical analysis and opinions of the writer. It is not a solicitation to buy or sell.