Market poised to firm on better sentiment

by **Cals** Sun 30 Jun 2013, 01:45

Saturday June 29, 2013
Market poised to firm on better sentiment
MARKET TREND
By K.M. LEE

REVIEW: Instead of taking some comfort from a steadier Wall Street the previous Friday, stocks in the Asia-Pacific region were mostly frail at the start of the week as investors continued to fret about the impact of the Federal Reserve's plans to withdraw monetary stimulus and an economic slowdown in China.
Tracking the losses in the region, Bursa Malaysia quickly sustained the downward pressure shortly after opening bell, 0.09 down at 1,755.76 amid a dearth of fresh market-stimulating leads on the horizon.
Blue chips were the biggest drag on foreign selling. Elsewhere, second and lower liners also suffered, with retail investors fleeing to the sidelines.
In lacklustre session, the local bourse swooned to an intra-day low of 1,737.99 in late trade before ending broadly lower at 1,738.19, shedding a hefty 17.66 points on Monday.
After a short respite, the overnight Dow resumed its downward spiral, slumping 139.84 points to 14,659.56 the next day, as market makers turned nervous amid worries that the Fed would soon cut back its bond purchase programme.
Against the negative backdrop, many people had expected equities in the region to sink on extended selling, but surprisingly, they finished slightly easier in choppy style as some bargain-hunting nibbling on weakness, especially in the afternoon, helped cushion the downside.
Mirroring regional trend, the local bourse fluctuated between an intra-day high and low of 1,743.16 and 1,723.74 respectively, before settling at 1,728.64, dropping 9.55 points on Tuesday, also the fifth straight decline in a row.
Then, the China market showed signs of stabilising, after recent turbulence, which soothed investors and led global equities higher in a technical rebound on Wednesday.
On Wall Street, the Dow rose 100.75 points to 14,760.31 in overnight session while in Asia, the Hang Seng Index jumped 2.4% to 20,338.55.
Likewise, stocks on the domestic front recovered on fresh buying, with the FBM KLCI rising steadily to a high of 1,744.64 in the afternoon before trimming advances slightly to finish up 12.12 points to 1,740.76 in mid-week.
Thereafter, bargain-hunting activity dominated the floor in line with overseas performance. The key index added 10.81 points to 1,751.57 on Thursday and an additional 21.97 points to 1,773.54 amid follow-through interest yesterday.
Statistics: For the week, the principal index chalked up a total of 17.69 points, or 1% to 1,773.54 yesterday, versus 1,755.85 at the close on June 21.
Weekly turnover stood at 7.521 billion shares valued at RM12.386bil, against 8.724 billion units worth RM11.063bil a week ago.
Technical indicators: The daily slow-stochastic momentum index was rising. Its oscillator per cent K and oscillator per cent D had reversed up from the oversold area after triggering a short-term buy on Thursday.
Likewise, the 14-day relative strength index improved moderately, up from a reading of 26 in mid-week to the 56-point level yesterday.
Also, the daily moving average convergence/divergence (MACD) histogram had traced out a strong convergence pictogram despite keeping the sell signal.
Weekly indicators improved slightly, with the weekly slow-stochastic momentum index issuing a tentative buy call near neutral territory and the weekly MACD retaining the buy signal.
Outlook: Bursa Malaysia suffered a series of losses, lasting five days on correction, which witnessed the bulls filling the runaway gap partially before bouncing back to life in mid-week to close the week firmer, largely saved by a positive turnaround in Wall Street amid easing fears of an early end to US monetary stimulus and the Chinese market showing signs of stabilising.
A bout of mid-year “window dressing” activity by big funds was another factor aiding the local bourse the past week.
Based on the daily chart, the wake of fresh buying over the past several days has helped the FBM KLCI navigate back to the position above all the moving averages on our radar screen and with sentiment expecting to continue improving, there is a great possibility the local bourse may sustain its recovery in the short term.
The immediate upside objective would be to challenge the 1,800-point psychological barrier and a successful penetration would lead to a re-test of the historic peak of 1,826.22, established on May 6.
Should the bulls fail to cross over this tough line in the absence of solid catalysts, a pullback on correction or a mild retracement on consolidation could be expected.
Support is envisaged at 1,750 points, followed by 1,712 points. The lower floor is resting at 1,700 points and the 200-day simple moving average of 1,675 points.
Technically, indicators are getting better, implying the FBM KLCI is likely to strengthen this week.