MRCB's follow-through rebound expected

THE standoff in the US over the country's debt dictated market sentiment on global financial markets last week. Bursa Malaysia was not spared the impact as it continued to drift lower in tandem with the consolidations on the New York and Asian stock markets last week. The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) ended lower for the third week in a row.

The FBM KLCI trended between an intra-week high of 1,565.46 on Monday and an intra-week low of 1,544.88 on Friday, giving a trading range of 20.58 points.

Heavyweight index-linked counters continued to come under selling pressure and losers thumped gainers by 19 to 7 in the 30-stock FBM KLCI.

The benchmark index closed at 1,548.81 on Friday, giving a week-on-week loss of 16.25 points, or 1.04 per cent.

Among other indices, the FTSE Bursa Malaysia Small Cap Index lost 77.41 points, or 0.61 per cent, to 12,511.27 while the FTSE Bursa Malaysia Ace Market Index fell 48.31 points, or 1.16 per cent, to 4,121.80 on the week.

On the foreign front, sentiment on the New York stock market remained weak. The Dow Jones Industrial Average tumbled to close at 12,143.24 points on Friday, posting a week-on-week loss of 537.92 points, or 4.241 per cent. The broader S&P 500 dropped 3.9 per cent for the week to 1,292.28, while the tech-heavy Nasdaq Composite fell 3.6 per cent to close at 2,756.38.

Meanwhile the Hong Kong stock market moved sideways. The Hang Seng Index closed at 22,440.25 on Friday, a drop of 4.55 points, or 0.02 per cent.

In Tokyo, the stock market's main barometer dipped below its major psychological resistance level of 10,000 points. The Nikkei 225 Index closed at 9,833.03 on Friday, losing 299.08 points, or 2.95 per cent, on the week.

On Bursa Malaysia, Malaysian Resources Corp Bhd (MRCB) staged a technical rebound. Its daily price trend closed at RM2.55 on Friday, giving a week-on-week gain of 20 sen, or 8.51 per cent.

The following are the readings of some of its technical indicators:

Moving Averages: MRCB's daily price trend stayed above all its 10-, 20-, 30-, 50-, 100- and 200-day moving averages.

Momentum Index: Its short-term momentum index continued to stay above the support of its neutral reference line last week.

On Balance Volume (OBV): Its short-term OBV stayed above the support of its 10-day moving averages.

Relative Strength Index (RSI): Its 14-day RSI had since stayed above the 50 level. Its technical reading stood at the 74.17 per cent level at the market close on Friday.

Outlook

Heavyweight index-linked counters remained the trading focus on Bursa Malaysia last week but selected second and third liners emerged with some interesting market play. MRCB was one of these counters with a week-on-week gain of 20 sen, or 8.51 per cent.

Chartwise, MRCB's monthly price trend staged a technical breakout of its intermediate-term downtrend. It continued to trend above the support of its intermediate-term uptrend. This bodes well for its short- to intermediate-term perspectives.

Its weekly price trend staged an overhead breakout of its short-term overhead resistance (seeMRCB's weekly price chart B3:B4) last week. It continued to trend above the support of its intermediate-term uptrend (B1:B2).

MRCB's daily price trend staged an overhead breakout of its short-term overhead resistance (seeMRCB's daily price trend C3:C4) last Thursday. It continued to stay above its intermediate-term uptrend (C1:C2) at the market close last Friday,

Its daily, weekly and monthly fast MACDs (Moving Average Convergence Divergence indicators) continued to stay above their respective slow MACDs. This augurs well for its short- to intermediate-term perspectives.

Its 14-day Relative Strength Index (RSI) stood at the 74.17 per cent level. Its 14-week and 14-month RSI were at the 69.412 and 71.37 per cent levels respectively.

With the technical breakouts on its daily (C3:C4) and weekly (B3:B4) charts , MRCB's daily price trend is now poised to stage a follow-through technical rebound towards its near-term overhead resistance zone (RM2.70 to RM2.95 levels).