Index likely to test immediate downside support

SHARE prices on Bursa Malaysia consolidated in step with the technical pullbacks on the regional stock markets, reversing last week's technical rebound to close at 1,489.95 points on December 2.

The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) consolidated three out of five trading days under review.


Overall market sentiment weakened in step with the regional stock markets.

The FBM KLCI trended between 1,456 and 1,492 levels. It closed near the week's low and it posted a week-on-week loss of 28.89 points, or 1.94 per cent, for the week ended on December 9.


Key heavyweight index-linked components of the benchmark index pulled back to consolidate its recent gains. The FBM KLCI opened at 1,489.73 points on Monday before hitting its intra-day low of 1,456.71 yesterday.


Share prices on Bursa Malaysia staged two mild rebounds on Monday and Wednesday in sync with the market rebounds on the regional stock markets.

Thereafter, prices moved broadly lower over the last two trading days.


The Dow Jones Industrial Average rebounded over the first three trading days before giving all back on Thursday, staying below its psychological resistance of 12,000.

It ended at 11,997.70 points on December 8, giving a week-to-date loss of 21.72 points, or 0.18 per cent.


Meanwhile, the tech stock-heavy Nasdaq Composite Index moved in tandem with the general market sentiment last week.

The Nasdaq Composite Index closed at 2,596.38 points on Thursday, giving a week-to-date loss of 30.55 points, or 1.16 per cent.


In Asia, the Tokyo stock market fell back in tandem with the weak performance on the Hong Kong stock market.

The Nikkei 225 Index closed at 8,536.46 points on Friday, giving a week-on-week loss of 107.29 points, or 1.24 per cent.


The Hong Kong stock market paused to consolidate its recent gains.

The Hang Seng Industrial Index closed lower at 18,586.23 points, posting a week-on-week loss of 454.16 points, or 2.39 per cent.


The FBM KLCI paused to consolidate its recent gains for the week ended onFriday.

It closed lower at 1,460.13 points on Friday, a week-on-week loss of 28.89 points.


The FTSE Bursa Malaysia Small Cap Index lost 120.10 points to close at 11,450.15 points while the FBM ACE Index added 15.47 points, or 0.37 per cent, to 4,174.45.


These are some of the readings of some of the FTSE Bursa Malaysia Kuala Lumpur Composite Index's technical indicators:-


Moving Averages: The benchmark index had since stayed below its 10-, 20-, 30-, 100- and 200-day moving averages.


Momentum Index: Its short-term momentum index continued to stay above its neutral reference line at the market close on Friday.


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


Relative Strength Index (RSI): Its 14-day RSI stood at the 48.55 per cent level on Friday.





Outlook


The FBM KLCI hit its intra-week high of 1,492.71 on December 5, failing in its bid to re-test this column's envisaged resistance zone (at the 1,493 to 1,527 levels).


Subsequently, the FBM KLCI trended lower to its intra-week low of 1,456.71 yesterday, staging a successful re-test of this column's envisaged support zone.


A quick review of the FBM KLCI's 30 components saw its losers overwhelm gainers by 26 to 4.

RHBCap, MISC, YTLPower and MHB's week-on-week losses of 8.48 per cent , 5.38 per cent, 4.74 per cent and 4.55 per cent respectively accounted for the bulk of the key index's week-on-week loss of 28.89 points, or 1.94 per cent.

DiGi.Com Bhd remained as the week's top performing component to-date with a total year-to-date gain of RM1.23, or 50.00 per cent.


The FBM KLCI's weekly chart continued to stay between the confines of its immediate downside support and its immediate overhead resistance (See FBM KLCI's weekly chart A5:A6 and A1:A2) during the week. It continued to trend below its intermediate-term uptrend support (A3:A4).


Chartwise, the FBM KLCI's daily price chart had since staged a breakdown below its immediate downside support (See FBM KLCI's daily chart B3:B4) on Friday.

With that, the benchamark has an even chance of moving towards its immediate downside support (B5:B6).

The FBM KLCI's weekly fast MACD (moving average convergence divergence) stayed above its weekly slow MACD yesterday.

Its daily and monthly fast MACDs stayed below their respective slow MACDs.

The index's 14-day RSI was at 48.55 per cent yesterday while its 14-week and 14-month RSI stayed at 47.70 and 54.79 respectively.


The key index had since slipped below the support of its 10-, 20-, 30-, 100- and 200-day moving averages, signalling the weakening of its short-term market momentum.

With that, the benchmark will come under the overhead resistance of its longer-term 100- and 200-day moving averages.


Next week, the index's envisaged resistance zone is at the 1,464 to 1,498 levels while its immediate downside support is at the 1,422 to 1,456 levels.