Rock solid BY K.M.LEE

by **Cals** Mon 14 Apr 2014, 00:12

Published: Saturday April 12, 2014 MYT 12:00:00 AM
Updated: Saturday April 12, 2014 MYT 11:22:24 AM
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REVIEW: In the wake of a sell-off in the technology and bio-technology sectors in the United States the previous Friday, Asian equities were set to retreat at the start of the week.
But in a surprising move, they were broken into two groups, some heading lower but others going the opposite direction amid optimism about the strength of the world’s largest economy following the release of the latest data, showing strong jobs growth for March.
While awaiting for a clearer direction from the overseas peers, shares on Bursa Malaysia opened in mixed note, with the FTSE Bursa Malaysia KL Composite Index (FBM KLCI) easing a small 0.09 of a point at 1,856.52.

Blue chips were little changed in subdued trading while Chinese markets were shut for a public holiday.
Elsewhere, second and lower liners were generally range-bound on continuous bargain-hunting interest alternated with light profit-taking activity.
Apparently that was the trend of the day until the late hour, where a last-minute push in certain heavyweights counters, such as the British American Tobacco (M) Bhdand Tenaga Nasional Bhd, helped the local bourse to settle at the day’s peak of 1.862.90, up 6.29 points on Monday.
Technically, the local market is expected to extend the upward thrust on follow-through buying momentum the next day, with the index’s closing at the day’s high, as it was viewed as a bullish development theoretically.
But sadly, Bursa Malaysia reversed course, as the dearth of fresh market-stimulating leads on the horizon prompted investors to quickly lock in profits.
Another round of beatings in the momentum stocks in the United States and with most Asian markets trading lower kept the local boys on the sidelines.
Consequently, the FBM KLCI shed 10.59 points to 1,852.31 in lacklustre session on Tuesday, in line with overseas trend.
Thereafter, the local bourse was typically in consolidation mode, with the key index rising 3.44 points to 1,855.75 in mid-week, and tacked on an extra 3.77 points to 1,859.52 on Thursday on bargain-hunting interest offsetting profit-taking activity before reversing down 6.86 points to 1.852.66 yesterday, very much mirroring the offshore pattern.
Statistics: For the week, the principal index declined 3.95 points, or 0.2% to 1,852.66, compared with 1,856.61 on April 4.
Total turnover for the week amounted to 10.534 billion shares worth RM11.026bil, against 10.445 billion units valued at RM12.706bil done the prior week.
Technical indicators: The oscillator per cent K and the oscillator per cent D of the daily slow-stochastic momentum index sustained declines after moving out of the bullish territory earlier of the week. It had issued a short-term sell signal at the top late last month.
Also on the slide, the 14-day relative strength index (RSI) fell from a reading of 82 points on Monday to close at the mid-range yesterday.
Elsewhere, the daily moving average convergence/divergence (MACD) histogram retained the buy call, but it appears in danger of slipping below the signal line following recent weakness.
Weekly indicators were very much the same, with the weekly slow-stochastic momentum index and the weekly MACD keeping the buy signal.
Outlook: Bursa Malaysia tripped into correction mode the past week owing to an apparent profit-taking activity.
But unlike the rout in US technology shares spreading to other sectors on Wall Street and greater volatility in major markets in the region, losses on the homefront were somewhat marginal, with local investors staying calm.
To some extent, we could say the local bourse is solid like a rock, with the FBM KLCI still keeping the posture above the middle Bollinger band and staying inside the existing upward channel that was carved out recently.
Going forward, the trend this week will very much depend on the breaking news flow.
If the unusual liquidation pressure in the United States persists and regional markets continue to suffer great volatility, investors can expect the local bourse to retreat further, but on a gradual pace amid follow-through profit-taking activity.
In stark contrast, if overseas markets are calm or stage a convincing rebound, then, equities on the domestic front would firm. In this case, the possibility of the key index re-testing the historical peak of 1,882.20, set on Dec 31, last year, may come sooner than expected.
Technically, the falling daily slow-stochastic momentum index and the 14-day relative strength index (RSI) suggest that Bursa Malaysia may slide further over the next couple of days before improving in the later part of the the week.
Initial support is envisaged at the 21-day simple moving average (SMA) of 1,840 points, followed by the 1,825 points. The next lower support is pegged at the 200-day SMA of 1,800 points.
The five-year-old ascending trend line, resting at the 1,780 points, remains an important floor.