KNM Daily Price Trend May Rebound

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

SHARE prices on Bursa Malaysia moved sideways last week, consolidating their recent losses triggered by the financial woes on Wall Street. The benchmark Kuala Lumpur Composite Index (KLCI) continued to stay below its major psychological support of 1,100 when it closed at 1,020.53 points last Friday.

The Bush administration's push for a US$700 billion (US$1 = RM3.43) bailout of the US financial industry continued to be the main focus of investors and markets worldwide.

The KLCI fell from its intra-week high of 1,040.85 last Monday to its intra-week low of 1,018.18 last Friday, giving an intra-week trading range of 22.67 points. The index closed at 1,020.53 points last Friday, giving a week-on-week loss of 5.17 points, or 0.50 per cent.

Among the other indices, the FTSE Second Board Index added 36.22 points, or 0.73 per cent, to close at 5,025.09 while the FTSE Mesdaq Index eased 41.35 points, or 1.03 per cent, to 3,958.75.

On the foreign front, trading on Wall Street remained volatile ahead of the outcome of the US$700 billion bailout proposal. The Dow Jones Industrial Average closed at 11,143.13 last Friday, giving a week-on-week loss of 245.31 points, or 2.15 per cent.

The tech stock-heavy Nasdaq Index continued to extend its technical pullback in tandem with the weak performance of the Dow. It closed at 2,183.34 points last Friday, posting a week-on-week loss of 90.56 points, or 3.98 per cent.

The Tokyo stock market moved sideways last week. The Nikkei 225 Index closed at 11,893.16 points last Friday, giving a week-on-week loss of 27.70 points, or 2.41 per cent.

In Hong Kong, the stock market continued to encounter persistent selling pressure last week. The Hang Seng Index closed at 18,682.09 on Friday, giving a week-on-week loss of 645.64 points, or 3.34 per cent.

On Bursa Malaysia, KNM Group Bhd was the most active counter last week. Its share price moved sideways to close relatively unchanged at RM1.24 last Friday.

Following are the readings of some of its technical indicators:

Moving Averages: KNM's daily price trend stayed below its 20-, 30- , 50-, 100- and 200-day moving averages. It closed above the support of its 10-day moving averages last Friday.

Momentum Index: Its short-term momentum index continued to stay above its neutral reference line.

On Balance Volume (OBV): Its short-term OBV continued to stay above its 10-day moving averages.

Relative Strength Index (RSI): Its 14-day RSI continued to stay below the 50 level. Its technical reading stood at 40.03 per cent at the market close last Friday.

Outlook

KNM was the stock market darling last year. Its fairy tale run was interrupted by its ambitious acquisition of a German outfit. Investors were concerned about funding and other issues.

Chartwise, KNM's monthly price trend came to a halt when it breached the support of its long-term uptrend.

Its weekly price trend staged a decisive breach of the neckline (See KNM's weekly chart A1:A2) of its double-top pattern formation.

Its daily price trend breached the support of the neckline (See KNM's daily chart B1:B2) of its intermediate-term double-top pattern formation on September 5 and has since stayed below it. It continued to stay below its intermediate-term downtrend (B3:B4).

KNM's weekly and monthly fast MACDs (moving average convergence divergence) continued to stay below their respective slow MACDs while its daily fast MACD stayed above its daily slow MACD.

Its 14-day Relative Strength Index (RSI) stood at the 40.03 per cent level last Friday. Its 14-week and 14-month RSIs were at the 31.84 and 47.25 levels respectively.

From the perspectives of its technical indicators, KNM's daily price trend may attempt to stage a technical rebound while its weekly and monthly price trends are suggesting a continuation of its consolidation phase.

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

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