Sunday, December 02, 2007

Is KLCI going to regain next week?

By Biz Times

STRONG gains on Wall Street and the trading of the world's largest plantation group, Sime Darby Bhd, drove the Kuala Lumpur Composite Index (KLCI) sharply higher yesterday, briefly breaching its major psychological resistance of 1,400.

The KLCI gapped up in the opening trade on Monday before closing at 1,364.37, giving a day-on-day gain of 10.82 points, or 0.80 per cent.

The KLCI staged a late rebound on Tuesday to close at 1,364.99, giving a day-on-day gain of 0.62 point, or 0.05 per cent.

Sentiment was firm on Wednesday as the KLCI closed at 1,366.58 points, giving a day-on-day gain of 1.59 points, or 0.12 per cent.

The next day, share continued to rise pushing the KLCI to close at 1,374.32, giving a day-on-day gain of 7.74 points, or 0.57 per cent.

Trading of Sime Darby led the KLCI yesterday to briefly breached its major psychological resistance of 1,400. The KLCI finished the week at 1,396.98, recording a day-on-day gain of 22.66 points, or 1.65 per cent.

The KLCI rebounded to close at 1,396.98 yesterday, posting a week-on-week gain of 43.43 points, or 3.21 per cent.

The FTSE Bursa Malaysia Second Board Index fell 131.68 points, or 1.93 per cent, to 6,699.01, while the FTSE Bursa Malaysia Mesdaq Index lost 269.09 points, or 4.35 per cent, to 5,912.80 level.

Following are the readings of some of its technical indicators.

Moving Averages: The KLCI stayed above its 10-, 20-, 30-, 50-, 100- and 2000-day moving averages after the sharp technical rebound yesterday.

Momentum Index: Its short-term momentum index staged a successful re-penetration of its neutral reference line.

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

Relative Strength Index: Its 14-day RSI stood at the 59.57 per cent level yesterday.


The KLCI touched its intra-week high of 1,408.32 yesterday, breaching this column's envisaged resistance zone (1,357 to 1,387 levels). Chartwise, the KLCI rose after the successful re-test of its immediate downside support (See KLCI's monthly chart - A3:A4).

The KLCI's rise bounced off the support of its immediate parallel trendline support (See KLCI's daily chart - B3:B4) towards its immediate overhead resistance (B5:B6).

The KLCI's daily fast Mmoving Average Convergence/Divergence (MACD) indicator staged a "golden cross" of its daily slow MACD yesterday.

Its monthly fast MACD continued to stay above its monthly slow MACD.

The KLCI's 14-day RSI stayed at 59.57 per cent level yesterday. Its 14-week and 14-month RSI stayed at 59.67 and 75.05 per cent levels respectively.

Following the gains on Wall Street and regional markets, the KLCI has managed to regain its momentum to stage another technical re-challenge of its major psychological resistance of 1,400.

The KLCI will gyrate around its major psychological resistance/support of 1,400.

Next week, the KLCI's overhead resistance hovers between 1,400 and 1,434 points, while its downside support lies between 1,359 ans 1,393 points.

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