Late-week rebound helps FBM KLCI cut loss

SHARE prices on Bursa Malaysia closed lower for the fifth consecutive week yesterday. The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) posted yet a week-on-week loss of 40.76 points, or 2.67 per cent. It stayed below its critical support of 1,500 points when it closed at 1,483.67 yesterday.

The FBM KLCI fell in tandem with the technical pullbacks on Asian stock markets on Monday. It opened at 1,529.94 before hitting its intra-day low of 1,509.37. The index closed at 1,524.43, with a day-on-day loss of 27.44 points, or 1.80 per cent.

Share prices on Bursa Malaysia tumbled across the board on Tuesday, moving in step with the sharp pullbacks on Wall Street and Asian stock markets. The FBM KLCI trended between a low of 1,423.47 and a high of 1,490.14. It closed at 1,472.14, recording a day-on-day loss of 24.85 points, or 1.66 per cent.

The benchmark index staged a technical rebound on Wednesday after three days of freefall when it moved in step with the technical pullbacks on the New York, Hong Kong and Tokyo stock markets. It trended from its intra-day low of 1,472.14 to its intra-day high of 1,495.65, closing at 1,480.52 points, with a gain of 8.38 points or 0.57 per cent, for the day.

Sharp falls on Wall Street and regional stock markets sent share prices on Bursa Malaysia into wild swings on Thursday. The local blue-chip index trended from its intra-day low of 1,454.52 to its intra-day high of 1,479.41. It ended the day at 1,476.46 points, a loss of 4.06 points, or 0.27 per cent.

The FBM KLCI staged a technical rebound yesterday, responding to the sharp overnight rally on Wall Street. It trended between its intra-day low of 1,483.42 and intra-day high of 1,488.29 before closing at 1,483.67 points, giving a day-on-day gain of 7.21 points, or 0.49 per cent.

On the foreign front, New York's Dow Jones Industrial Averages (DJIA) tumbled over the last four trading days, closing at 11,143.31 on Thursday, with a four-day loss of 301.30 points, or 2.63 per cent.

The Tokyo stock market continued to consolidate with its Nikkei 225 Index closing at 8,963.72 points yesterday, losing 3.61 per cent week-on-week.

On Bursa Malaysia, the FBM KLCI registered a week-on-week loss of 40.76 points, or 2.67 per cent.

Among other indices, the FBM Small Cap Index lost 618.48 points, or 5.08 per cent, to close at 11,552.65, while the FBM ACE Index fell 255.93 points, or 6.32 per cent, to the 3,794.09 level yesterday.

The following are the readings of some of the FBM KLCI's technical indicators:

Moving Averages: The FBM KLCI stayed firmly below the support of its 10-, 20-, 30-, 50-, 100- and 200-day moving averages.

Momentum Index: Its short-term momentum index continued to trend below its neutral reference line at the market close yesterday.

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

Relative Strength Index (RSI): Its 14-day RSI stood at the 26.65 per cent level yesterday.

Outlook

The FBM KLCI hit its intra-week low of 1,423.47 on Tuesday, breaching the confines of this column's envisaged support zone (1,487-1,521 levels).

A quick review of the performances of the the index's 30 components shows losers continued to overwhelm gainers by 26 to 3. British American Tobacco, MHB, HLFG and Hong Leong Bank's combined losses of RM1.80, RM1.01, 86 sen and 66 sen respectively accounted for the bulk of the FBM KLCI's week-on-week loss of 40.76 points, or 2.67 per cent.

Petronas Dagangan Bhd remained as the week's top performing component, with a total year-to-date gain of RM5.08, or 43.42 per cent.

The FBM KLCI's weekly charts breached the support of its intermediate-term uptrend support (See FBM KLCI's weekly chart - A3:A4) during the week. Also, it breached the support of its immediate downside support (A1:A2) on Monday.

Chartwise, the index had since stayed below the support of its intermediate-term uptrend (See FBM KLCI's daily chart - B1:B2) over the week. It breached its immediate support (B3:B4) on August 5 before staging a re-test of its next support (B5:B6). It closed at 1,483.67 points yesterday.

The benchmark index's daily, weekly and monthly fast MACDs (moving average convergence divergence) had since stayed below its respective slow MACDs yesterday. With that, the FBM KLCI will continue to remain in its intermediate-term consolidation mode.

The index's 14-day RSI stayed at the 26.65 per cent level yesterday, with its 14-week and 14-month RSI staying at the 38.17 and 59.45 levels respectively.

The FBM KLCI consolidated over three of its five trading days during the week. Last week, this column commented that the index had trended below the support of its 200-day moving averages. Also, it suggested that the overall market sentiment was set in its mid-term consolidations. It did just that. The index closed 40.76 points, or 2.67 per cent, lower to 1,483.67 points yesterday.

Following the the technical breakdown of the support of its 200-day moving averages, the FBM KLCI is now set in its intermediate-term consolidation over the next few weeks or even months. Selective heavyweight index-linked counters will shift into their rotational consolidations.

Next week, the FBM KLCI's envisaged resistance zone is at the 1,487-,521 levels, while its immediate downside support is at the 1,445-1,479 levels.