Market remains in consolidation BY K.M LEE

by **Cals** Mon 25 Nov 2013, 01:50

Published: Saturday November 23, 2013 MYT 12:00:00 AM
Updated: Saturday November 23, 2013 MYT 7:19:21 AM
Market remains in consolidation
BY K.M LEE

REVIEW: Shares on Bursa Malaysia kicked off the week on a steadier platform, with the FBM Kuala Lumpur Composite Index (FBM KLCI) advancing 1.52 points to 1,791.39, extending the previous session’s gains, as institutional players continued to look for value buys after the recent correction.
Blue chips topped the winners’ board, aided by a solid showing on Wall Street, which saw the Dow and the S & P 500-share indices scaling new highs on positive comments from Federal Reserve chair nominee Janet Yellen, who told a senate committee it was too early to end the central bank’s stimulus.
Tracking the firmer offshore tone, the local bourse crept higher amid gains in the quality issues. Elsewhere, most second and lower liners tripped into correction mode after the recent rally.
In a two-tier market, the key index hit an intra-day high of 1,795.14 at lunch break before paring gains slightly to settle at 1,792.39, up 2.52 points in mixed note, with losers beating advancers by 439 to 351 on Monday.
US stocks set another record the next day on prospects of continued Fed’s stimulus, driving the two major indices, the Dow and the S & P 500-share above the 16,000 and 1,800 milestones for the first time during intra-day session.
Taking the cue from a bullish Wall Street, blue chips, led by big names in the plantation sector sustained the uptrend on follow-through support from institutional funds.
Some second and lower liners also rebounded in the wake of fresh speculation plays despite regional markets were generally in adjustment mode after the previous session’s hefty gains on China’s economic reform plans.
On the back of the bullish sentiment, the key index powered ahead to a high of 1,813.51 in the afternoon before retreating slightly to close at 1,807.16, jumping a steep 14.77 points in active business on Tuesday.
Sadly, the momentum was quick to fizzle out, as investors took the excuse of the dearth of fresh market-stimulating leads on the horizon to book gains.
Overnight Wall Street snapped the four-day winning streak and most regional markets drifted lower owing to an apparent profit-taking activity.
Amid renewed selling, the local bourse succumbed to pressure to retrace, dropping 8.47 points to 1,798.69 in mid-week.
Thereafter, the FBM KLCI eased 4.04 points to 1,794.65 amid extended liquidation on Thursday due to worries over a possible cut in Washington’s stimulus programme, exacerbated by downbeat China manufacturing data. And yesterday, the local bourse declined an extra 0.13 point to 1,794.52, ignoring Wall Street’s rally to a record close overnight.
Statistics: Week-on-week, the major index chalked up 4.65 points, or 0.3% to 1,794.52, compared with 1,789.87 at the close on Nov 15.
Weekly turnover amounted to 8.942 billion units worth RM10.585bil, versus 9.872 billion shares valued at RM9.516bil done previously.
Technical indicators: The daily slow-stochastic momentum index was on the slide after triggering a short-term sell at the 60% level on Thursday. The week saw the 14-day relative strength index hitting a high of 61 on Tuesday before reversing down to end at the 42 points level yesterday.
In addition, the daily moving average convergence/divergence (MACD) histogram resumed the downward expansion against the daily trigger line to stay bearish. It had issued a sell on Nov 4. Weekly indicators continued to deteriorate, with the weekly slow-stochastic momentum index falling and the weekly MACD keeping the sell signal.
Outlook: Bursa was in consolidation mode the past week, as an early attempt to move out of the doldrums was somewhat derailed by fresh worries about the Fed tapering sooner than expected.
Going forward, the market is likely to stay volatile, with the big boys continuing to speculate over the timing of the Fed rolling back of its bond buying programme.
Meanwhile, a negative crossing of the 14-day simple moving average (SMA) against the 21-day SMA was sighted on the chart earlier this week and with the two lines persistently pressuring the index, it looks like the core blue chips are compelled to stay in consolidation process, probably within a moderate range, rather than sustaining declines on extended correction.
Technically, most of the indicators on our radar screen are frail, implying Bursa may be under pressure this week and in great danger of extending the short-term downtrend channel. The immediate support is pegged at the 100-day SMA of 1,779 points. The lower floor is seen at the 200-day SMA of 1,741 points, of which a crack will have a negative impact on the market.
To the upside, heavy resistance is maintained at the historical peak of 1,826.22 points.