Bulls find shelter Saturday, 13 June 2015 By: K.M. LEE

by **Cals** Mon 15 Jun 2015, 01:25

Bulls find shelter

Saturday, 13 June 2015
By: K.M. LEE

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REVIEW: Bursa Malaysia kicked off the week on a soft platform, with the FBM Kuala Lumpur Composite Index tumbling a hefty 9.26 points to 1,736.07 in the wake of renewed liquidation pressure.
Though crude oil prices spiked a hefty US$1.13 a barrel to US$59.13, it was not helping.
Meanwhile, stocks in the Asia-Pacific region turned mixed in cautious traded on concerns over a slowdown in the world’s second largest economy after the latest economic figures filterred out from China showed imports fell at a greater pace.
In the absence of support, the key index slumped to a near five-month low of 1,727.01 in the morning before trimming losses in the afternoon to settle at 1,739.45, down 5.88 points on Monday.
Global equities did not get any better the next day, but deteriorated, as investors played the theme song about Federal Reserve raising interest rates as early as September.
A deadlocked in Greece’s bailout negotiations and prevailing worries about poor earnings from the local corporations further sent investors running to the sidelines.
Tracking overseas declines, the FBM KLCI lost 10.40 points to close at the day’s ebb of 1,729.05 on Tuesday.
Technically, the index’s closing at the day’s bottom was interpreted as a bearish sign and theoretically, it would open the doors for more downside swing the following day.
A marginally easier Wall Street overnight combined with a subdued regional equities sapped confidence, pointing to more losses ahead.
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However, that was not the case this time round, as Bursa was saved by the local funds indulging in light bargain hunting interest in select blue chips, taking comfort from the weaker greenback and a steadier commodity prices.
Nevertheless, most cheaper issues fell on lack of support and it was reflected on the scorecard.
Despite the key index chalking up a gain of 6.58 points to 1,735.63, the overall breadth was uninspiring, with decliners beating advancers by 417 to 357 in mid-week.
Thereafter, the local bourse returned to consolidation mode, ignoring overseas rebound, as persistent foreign liquidation weighed on the market.
In sluggish business, the FBM KLCI reversed early strong gains to close down 0.87 of a point to 1,734.76 on Thursday and an additional 0.39 of a point to 1,734.37 on follow-through selling yesterday.
Statistics: The major index shed 10.96 points week-on-week, or 0.6% to 1,734.37 yesterday, compared with 1,745.44 on June 5.
Weekly turnover stood at 6.355 billion shares valued at RM7.291bil, versus 7.367 billion units worth RM8.943bil done previously.
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Technical indicators: The oscillator per cent K reversed up from the 35% level and climbed over the oscillator per cent D of the daily slow-stochastic momentum index to trigger a short-term buy yesterday.
In addition, the daily moving average convergence/divergence (MACD) histogram attempted to cross above the daily signal line. If successful, it will flash a buy signal.
Also, the 14-day relative strength index continued to improve, up from a reading of 13 on June 2 to settle at the 33-point level yesterday.
In stark contrast, weekly indicators were frail, with the slow-stochastic momentum index keeping the sell despite reaching the very oversold area and the MACD sustaining the downward expansion against the weekly trigger line.
Outlook: Bursa extended the correction mode, with the FBM KLCI suffering losses for the fourth straight week amid foreign liquidation pressure.
However, the downward move had eased somewhat, thanks to the local boys indulging in light bargain hunting interest in select blue chips, thus providing the cushion.
Based on the daily chart, it looks like the bulls have found a shelter at the 1,727.01-point level and they are now making an attempt to recover after the recent rout.
Whether they will succeed or not is unclear for now, as there were simply too many prevailing issues clouding equities.
But what we are certain is that a decisive breach of the “returning line” of the existing downtrend channel of 1,760 points, followed by a clear penetration of the 21-day simple moving average of 1,763 points would signal the end of the correction period.
Thereafter, Bursa is expected to firm on renewed buying momentum.
Otherwise, the local market may trade range-bound with a mild upward bias on extended consolidation this week.
Technically, the daily indicators are improving, suggesting the local bourse are likely to firm on relief recovery, but the upside potential may be capped, as weekly indicators still are weak.
Initial support is kept at the 76.4% Fibonacci retracement (FR) of 1,718 points.
A crack of the lower 1,700-point psychological level may see the key index making a full retracement back to the 1,671.92 points, which is the base of the last leg of the previous rally.