More consolidation BY K.M. LEE

by **Cals** Mon 21 Jul 2014, 02:20

Published: Saturday July 19, 2014 MYT 12:00:00 AM
Updated: Saturday July 19, 2014 MYT 10:10:20 AM
[size=40]More consolidation
BY K.M. LEE[/size]
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REVIEW: Overnight Wall Street gained 28.74 points to 16,943.81 the previous Friday, as easing worries about the health of Portugal’s largest bank offset cautious mood about US earnings reports.
Taking the cue from a slightly steadier US market, Bursa Malaysia started the week on a positive note, with the FBM Kuala Lumpur Composite Index (FBM KLCI) rising 0.62 of a point to 1,883.77 amid fresh bargain-hunting buying. A better showing in Asian equities also supported local sentiment in early session.
However, the momentum could not be maintained, as frail reading from technical indicators enticed the local boys to book profits following the recent rally and ahead of the holiday, thus keeping the market trapped within a narrow range on consolidation.
In subdued trade, the key index flirted between an intra-day high and low of 1,886.87 and 1,882.22, a very tight 4.65 points throughout before ending up 1.72 points to 1,884.87, largely due to gains in select blue chips.

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Elsewhere, second and lower liners were very much on the downside and it was clearly reflected on the scoreboard.
Though the market finished higher, the overall market breadth was negative, with decliners beating advancers by 453 to 372 on Monday.
The local market was shut on Tuesday due to Nuzul Al-Quran.
While we enjoyed the day’s break, global equities turned around for the better, with the Dow setting a new intra-day record, boosted by Citigroup’s better-than-expected earnings and corporate deals in the healthcare sector.
As expected, Bursa Malaysia jumped 6.72 points to 1,891.59 on resumption of business and quickly raced to a high of 1,895.02, playing catching up.
But the momentum fizzled out again due to several reasons, such as a futile attempt to penetrate the historical peak of 1,896.23, a subdued overseas performance after a strong rally and a speech from Fed chairman Janet Yellen and her fellow policymakers, raising concerns about “overvaluation stocks” in certain sectors, prompted the bulls on the domestic front to abandon the mission.
In sluggish trade, the FBM KLCI eked out a small gain of 1.84 points to 1,886.71 in mid-week.
Thereafter, Bursa Malaysia tripped into correction mode, finishing down 3.57 points to 1,883.14 and losing an extra 10.17 points to 1,872.97 on extended liquidation pressure yesterday, exacerbated by heightening geopolitical tensions after a MAS passenger plane came down in the war-torn Russian-Ukraine border, believed to have been shot by a missile and all 298 people on board were feared dead.
Statistics: Week-on-week, the major index shed 10.18 points, or 0.5% to 1,872.97 yesterday, versus 1,883.15 on July 11.
Total turnover for the four-day holiday-shortened week stood at 9.144 billion shares valued at RM9.005bil, against 9.037 billion units worth RM10.879bil done during the regular previous week.
Technical indicators: The oscillator per cent K reversed up from the neutral area and climbed over the oscillator per cent D of the daily slow-stochastic momentum index to trigger a short-term buy on Thursday.
In stark contrast, the 14-day relative strength index weakened considerably to 35 points level yesterday, down from a reading of 63 a week ago.
Meanwhile, the daily moving average convergence/divergence (MACD) histogram expanded negatively against the daily signal line to stay bearish. It had issued a sell the previous week. Weekly indicators continued to deteriorate, with the weekly slow-stochastic momentum index falling and the weekly MACD triggering a sell signal.
Outlook: Since peaking temporarily at an all-time high of 1,896.23 on July 8, Bursa Malaysia was generally range-bound with a mild downward bias on consolidation until yesterday, where the overall market condition worsened on renewed liquidation pressure amid worries about growing geopolitical risks.
Based on the daily chart, the FBM KLCI has now fallen below the 50-day simple moving average (SMA) line.
As we can see, overall sentiment was pretty cautious and with the negative crossing of the 14-day SMA against the 21-day SMA pressuring the key index, the local bourse is expected to remain in consolidation mode at least for another week.
Technically, most of the indicators are negative, suggesting shares on Bursa Malaysia, especially the blue chips are likely to stay under pressure in the short-term, unless fresh market-stimulating lead emerges.
To the upside, heavy resistance is kept at the 1,900 points, followed by the 1,950 points and the next, at the magic 2,000 points psychological barrier.
Initial support has been adjusted down slightly to the 100-day SMA of 1,861 points. The next lower support is pegged at the 200-day SMA of 1,837 and a clear breakdown from the bullish trend line of 1,830 will have a negative impact going forward.