KLCI in Sideways Consolidation

(Source: New Straits Times)By S.N. Lock

SHARE prices on Bursa Malaysia moved sideways on new political developments on the local front. The Kuala Lumpur Composite Index (KLCI) continued to stay below its major psychological support of 1,100 when it closed at 1,020.53 points yesterday.

The benchmark index staged a mild technical rebound on lack of fresh market leads on Monday. It closed at 1,028.62, giving a day- on-day gain of 2.92 points, or 0.28 per cent.

Share prices continued to ease on Tuesday, almost cancelling all of Monday's gains. The KLCI closed at 1,026.18, giving a day-on-day loss of 2.44 points, or 0.24 per cent. The market continued to move sideways on Wednesday. The KLCI closed at 1,028.40, giving a day-on- day gain of 2.22 points, or 0.22 per cent.

The KLCI staged a mild technical pullback on Thursday, closing lower at 1,024.74, a day-on-day loss of 3.66 points, or 0.36 per cent.

The index continued to consolidate yesterday. It closed lower at 1,020.53, giving a day-on-day loss of 4.21 points and a week-on- week loss of 5.17 points, or 0.50 per cent.

Following are the readings of some of the KLCI's technical indicators:

* Moving Averages: The KLCI continued to stay below its 20-, 30- , 50-, 100- and 200-day moving averages. It stayed precariously above its 10-day moving averages.

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

* 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 36.65 per cent level yesterday.

Outlook

The KLCI's mild technical rebound hit its intra-week high of 1,040.85 on Monday, moving into the confines of this column's envisaged resistance zone (1,049 to 1,073 levels).

Subsequent sideways consolidation brought it to its intra-week low of 1,018.18 yesterday, staging a re-test of this column's envisaged support zone (988 to 1,022 levels).

Chartwise, the KLCI continued to stay below its immediate downside support (See KLCI's weekly chart - A3:A4) for the seventh consecutive week. It continued to stay below its intermediate-term downtrend (A5:A6).

The KLCI's daily trend continued to stay below its intermediate- term downtrend (See daily chart - B3:B4). Also, it continued to stay below its intermediate-term downside support (B1:B2).

The KLCI's weekly and monthly fast MACDs (moving average convergence/divergence) continued to stay below their respective slow MACDs. Its daily fast MACD staged a "golden cross" of its daily slow MACD.

The KLCI's 14-day RSI stayed at 36.65 per cent yesterday. Its 14- week and 14-month RSI stayed at 27.84 and 36.17 per cent respectively.

The KLCI's technical rebound on Monday fizzled out into a sideways consolidation over the next trading days. A decisive breach of its immediate downside support of 1,020 is likely to signal a re- test of its psychological support of 1,000.

Next week, the KLCI's immediate overhead resistance zone hovers at 1,025 to 1,059 while its immediate downside support zone is at 981 to 1,015.

The subject expressed above is based on technical analysis and opinions of the writer. It is not a solicitation to buy or sell.

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