Saturday June 23, 2012
By K.M. LEE
REVIEW: Bursa Malaysia started out the week on a steadier note, with the FBM Kuala Lumpur Composite Index (FBM KLCI) rising 4.12 points to 1,583.35 in initial trade, extending the previous session's gains amid follow-through nibbling.
Business was robust, boosted by a firmer US performance overnight, on hopes that central banks of major economies would take a collective action to stabilise markets and prevent a credit squeeze, if necessary.
A good showing in the Asia-Pacific region added to the upbeat momentum.
Riding on the bullish tone, the key index quickly scaled to a high of 1,588.54, but unlike the regional peers, there was a sense of caution and sporadic profit-taking activity on the broad front.
Consequently, the local bourse turned sideways for the rest of the day. At Monday's closing bell, the major index only chalked up a small 3.50 points to 1,582.83.
A day after the steep climb, the Dow retraced some 25.35 points to 12,741.82 and crude oil prices fell 76 cents to US$83.27, as rising bond yields in Spain and Italy reinforced views that Europe's debt crisis was in danger of worsening.
With most regional stock exchanges reversing down, many people had expected the local bourse to mirror the trend but in an unprecedented move, our market was positive on strong buying by foreign and institutional funds.
As usual, blue chips topped the winners list, propelling the FBM KLCI to settle at the day's top of 1,594.98, up 12.25 points on Tuesday.
In line with the rebound in world markets the following day, led by the Dow's 95.51 points gain to 12,837.33 in overnight session amid growing hopes that the Federal Reserve would launch a new round of stimulus to counter slower growth and the impact of the eurozone sovereign debt crisis, another round of bargain hunting activities dominated the floor on the home front.
On the back of better risks appetite and improving underlying tone, the bulls charged forward to tear down the 1,600 points barrier to end at 1,604.39, up 9.41 points in mid-week.
The successful penetration of the psychological hurdle set the stage for more climbing but as the bulls inched nearer to the historical peak of 1,609.33, investors opted to lock in gains instead of buying, with frail external sentiment weighing on the local bourse.
In the wake of profit-taking activity, the FBM KLCI shed 2.96 points to 1,601.43 on Thursday before rebounding 1.64 points to 1,603.07 on fresh bargain hunting yesterday.
Statistics: On a weekly basis, the principal index perked up 23.84 points, or 1.5% to 1,603.07 yesterday, against 1,579.23 on June 15.
Total turnover for the week amounted to 6.326 billion shares valued at RM8.141bil, compared with 3.768 billion units worth RM7.207bil changed hands the prior week.
Technical indicators: The oscillator per cent K had fallen below the oscillator per cent D of the daily slow-stochastoc momentum index at the overbought area yesterday, but the short-term sell signal could not be confirmed for now, as the two oscillators still were keeping the posture above the 80% bullish line.
Similarly, the 14-day relative strength index scaled to a high of 77 points in mid-week before pulling back slightly to finished at the 69 points level.
In stark contrast, the daily moving average convergence/divergence (MACD) histogram extended the upward expansion against the daily signal line to stay bullish. It had issued a buy on May 29.
Weekly indicators were seen improving, with the weekly slow-stochastic momentum index retaining the buy and the weekly MACD showing a strong convergence pictogram.
Outlook: The bulls resumed their rally on renewed bargain hunting interest after a short breather, navigating the key index to a high of 1,608.65 during intra-day session yesterday, a whisker away from the historical peak of 1,609.33.
Though the overall market breadth was not impressive, Bursa still was an outperformer and pretty resilient the past week, largely due to mid-year “window dressing” activity, inflows of foreign funds and institutional players bidding up heavyweights on expectations that positive sentiment would prevail ahead of the listing of Felda Global Ventures Holdings Bhd, scheduled for June 28.
The question of how long the local bourse can withstand external shocks and greater volatility in overseas markets, is anybody's guess. One thing we are certain about is the uptrend from the recent lows of 1,526.60 on May 18 is constructive and Bursa will remain bullish as long as the FBM KLCI retains the position above the ascending line of 1,585 points and supported by the rising 14-day SMA of 1,581.
Going forward, should offshore equities improve, we will not be surprised to see the bulls re-testing the all-time high or moving into the uncharted territory this week. Technically, indicators are improving which signify that the local bourse may strengthen on follow-through interest.