Mild upward bias By: K.M.LEE

by **Cals** Sun 13 Sep 2015, 19:34

Mild upward bias

Saturday, 12 September 2015
By: K.M.LEE

REVIEW: Against the negative US backdrop, Bursa Malaysia started out the week on a soft platform, with the FBM Kuala Lumpur Composite Index (FBM KLCI) losing a significant 10.66 points to 1,589.50 amid follow-through liquidation pressure.
Adding to the downbeat note, most Asian stock markets tanked in a sea of red, execerbated by the depreciation of the ringgit against the greenback.
Consequently, the key index slumped to a low of 1,567.91 in early session, but unlike the regional peers, the local bourse managed to bounce off the day’s ebb later to close down 6.31 points to 1,582.85 in subdued trading on Monday.
There were no leads coming from the United States the next day, as markets there were shut for a public holiday.
Though European shares steadied on gains in the resource-related issues, stocks in Asia Pacific were mostly lower, as investors turned cautious, awaiting for more clues on the health of China’s economy pending the release of an economic data.

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Mirroring the offshore pattern, the local bourse fluctuated within a narrow range in the negative territory throughout the morning session, but a late bout of fresh buying emerged unexpectedly in the afternoon to help erased early losses and finished up 4.27 points to 1,587.12 on Tuesday.
After the long week-end, Wall Street bounced back to life, jumping a hefty 390.30 points to 16,492.68 on growing hopes for more stimulus measures from the Chinese government after the latest economic data filtered out showed that its imports had shrunk more than expected last month.
As expected, stock markets in the region rallied, with Japan’s Nikkei 225-share average posting the biggest one-day gain since the global financial crisis in 2008, while China equities showed signs of stabilising.
Riding on the bullish overseas momentum, Bursa gapped up a steep 10.78 points to 1,597.90 and traded gradually higher during the day to reclaim its posture above the 1,600-point psycholigical level.
In active session, the FBM KLCI chalked up 16.24 points to 1,603.36 in mid-week.
Thereafter, the local bourse was generally range-bound on continuous bargain hunting interest alternated with profit-taking sellling, ending up 10.66 points to 1,614.02 on Thursday but skidded 10.42 points to 1,603.60 yesterday, as investors focused on the upcoming US Federal Reserve’s monetary policy meeting.
Statistics: Week-on-week, the principal index advanced 14.44 points, or 0.9% to 1,603.60 yesterday, versus 1,589.16 on Sept 4.
Total turnover for the regular week stood at 10.306 billion units worth RM9.544bil, against 7.506 billion shares valued at RM7.841bil done during the four-day holiday-shortened previous week.
Technical indicators: The oscillator per cent K and the oscillator per cent D of the daily slow-stochastic momentum index rose deeper into the bullish territory after flashing a short-term buy at the neutral area on Tuesday.
The past week saw the 14-day relative strength index hitting a high of 59 on Thursday before weakening slightly to settle at the 54-point level yesterday.
Meanwhile, the daily moving average convergence/divergence (MACD) histogram continued to improve, in tandem with the daily signal line to keep the buy call.
Elsewhere, weekly indicators improved slightly, with the weekly slow-stochastic momentum index rising and the downward momentum of the weekly MACD easing notably.
Outlook: Bursa was generally sideways on consolidation, but with a slight upward bias on bargain-hunting interest offsetting profit-taking selling the past week.
Unlike last week, which was pretty stable, trading ahead may turn volatile again ahead of the Fed’s meeting and whether the key index will swing to the upside or downside would very much depend on how the big boys play the interest rate hikes theme song in the coming week.
Other factors that could set the direction of the local bourse would be the release of the Chinese industrial output, retail sales figures and investment data.
While awaiting for a clearer picture to emerge, investors are advice to stay alert and always on the lookout for clues.
Based on the daily chart, the 14-day simple moving average (SMA) had staged a “golden crossing” against the 21-day SMA and with the FBM KLCI flirting above these two moving averages, we reckon the local bourse has the potential to strengthen further this week, baring any negative news flow.
Elsewhere, technical indicators were seen getting better, suggesting that Bursa is likely to trade within a band, but with a slight positive bias, very much similar to we have seen last week.
Initial resistance is maintained at the 1,620 points, followed by the 50-day SMA of 1,660 points. The next upper strong hurdle is pegged at the 1,700-point psychological level.
As for the downside, the immediate support is resting at the 1,590 points. A crack of the 1,568-point line will see the lower 1,530-1,532-point-range and the 1,500-point mark becoming vulnerable.