Market retains bullish bias BY K.M. LEE

by **Cals** Mon 10 Mar 2014, 01:11

Published: Saturday March 8, 2014 MYT 12:00:00 AM
Updated: Saturday March 8, 2014 MYT 2:23:55 PM
[size=40]Market retains bullish bias
BY K.M. LEE[/size]
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REVIEW: Bursa Malaysia succumbed to tremendous stress to retreat at the start of the week, with the FBM Kuala Lumpur Composite Index (FBM KLCI) losing 1.22 points to 1,834.44 in a sea of red, as heightening tension in Ukraine sent investors fleeing to the sidelines, looking for cover.
Core index-linked counters topped the losers board amid selling by the big boys. Elsewhere, second and lower liners also declined on lack of support from the retail players, exacerbated by another set of disappointing manufacturing figures out from China, which added concerns about growth in the world’s second-largest economy. A sharp drop in US stock index futures added to the downbeat mood.
Consequently, the key index violated the 100-day simple moving average of 1,814.60 to an intra-day low of 1,813.60 in early deals before paring losses slightly to trade sideways for the rest of the day.
At the close, the FBM KLCI shed 10.97 points to 1,824.69 in lacklustre trade on Monday.
The Ukraine-Russia conflict slashed the overnight European stock market by as much as 3% and 1% off Wall Street, while crude oil prices spiked amid worries about disruptions in energy supplies.
As expected, Asian equities were on the defensive the next day, with Russia tightening its grip on Crimea while the West sought measures to talk Moscow out from the conflict. But equities later reversed trend and traded firmer on hopes of a peaceful solution being reached on news that Russia’s president had ordered his troops to return to base.
Like its regional peers, the local bourse, which was fluctuating in a band since morning, bumped up at the very last minute on renewed buying interest and gains in the blue chips lifted the key index up 1.77 points to 1,826.46 on Tuesday.
Then, overnight Wall Street reacted positively to the news, recovering more than all of the previous day’s losses, on strong buying interest.
Although most markets in the region mirrored the US trend, Bursa Malaysia was generally muted, with investors adopting a cautious stance.
In cautious session, the FBM KLCI flirted between an intra-day high and low of 1,831.62 and 1,828.01 before ending at 1,829.11, up 2.65 points in mid-week.
In line with the global market rebound, the local bourse recovered 9.58 points to 1,838.69 on active volumes on Thursday before the uptrend was cut short by profit-taking activity, with the FBM KLCI shedding 6.43 points to 1,832.26 yesterday.
Statistics: Week-on-week, the major index eased 3.40 points, or 0.2% to 1,832.26, against 1,835.66 at the close on Feb 28.
Total turnover for the week amounted to 10.552 billion units worth RM10.571bil, compared with 13.205 billion shares valued at RM11.285bil changing hands the prior week.
Technical indicators: The oscillator per cent K reversed up from the 67% level and climbed over the oscillator per cent D of the daily slow-stochastic momentum index to trigger a short-term buy on Thursday.
After showing a mild negative divergence earlier this week, the daily moving average convergence/divergence (MACD) histogram resumed its upward expansion against the daily trigger line to keep the bullish note.
In stark contrast, the 14-day relative strength index hit a high of 64 on Thursday before curving down slightly to end at the 57-point level yesterday.
Weekly indicators were very much the same, with the weekly slow-stochastic momentum index surging deeper into the bullish territory and the weekly MACD keeping the sell signal.
Outlook: The FBM KLCI recovered from an unexpected fall earlier to close the week little changed.
In spite of that, Bursa was clearly underperforming, as we reckon the bulls could have done much better by borrowing the strength of overseas peers to bring the market up to the next level.
But unfortunately, the local bourse opted to stay in consolidation mode, which was into the third week.
While awaiting new developments on the Ukraine crisis, the prevailing uncertainty should in the meantime keep global equities volatile, if not nervy, but Bursa Malaysia will most probably be range-bound until a clear breakout or a breakdown is detected.
For now, the technical landscape remains bullish bias, implying the local bourse is likely to trade slightly steadier this week.
A decisive penetration of the 1,840 barrier would see buying momentum picking up steam, thus sending the key index up to the upper 1,850-1,852 points band and a possible re-test of the historical peak of 1,882.20 later.
Current support is envisaged at the 1,813.60 points, followed by the 200-day simple moving average of 1,793 points. Crucial floor is pegged at 1,762 points, also the five-year ascending trend line.