REVIEW: Overnight Wall Street stocks rose to above the 11,000 mark for the first time in five months on speculation the latest data would push the Federal Reserve to launch another round of economic stimulus, lifting the blue-chip average up 57.90 points to 11,006.48 the previous Friday.
Over on the New York Mercantile Exchange, Light sweet crude for November delivery spiked 99 cents to US$82.66 a barrel on supply worries after a strike at France’s top oil port into the 12th day threatened to cut European oil products output.
Tracking the steadier Dow and commodity prices in the United States, Bursa Malaysia kicked off the week on a concrete platform, with the FBM Kuala Lumpur Composite Index (FBM KLCI) jumping 4.73 points to 1,486.14.
The strong performance in Asian equities also added to the upbeat tone, but surprisingly, the upside potential was checked, as some investors appeared taking advantage of the strength to book profit after the recent strong rally.
Hence, in range-bound to higher pattern, the key index fluctuated within an intra-day peak and bottom of 1,490.10 and 1,484.57 respectively, a pretty tight 5.53 points band throughout before closing at 1,487.41, gaining six points on Monday.
Overall, the local sentiment was very much unchanged, albeit on a wider range in the absence of compelling news the next day.
Overnight Wall Street drifted in lightest volumes of the year, with the Dow edging up a small 3.86 points to 11,010.34, as few dared to place bets ahead of key companies’ results.
Elsewhere, a retreat in the black commodity from a five-month peak also prompted the local investors to exercise extra care in their trading approach.
In mixed session, the local bourse shed 0.84 point to 1,486.57 amid profit-taking activity on Tuesday.
Nevertheless, Bursa Malaysia took a change for the better on fresh buying after a two-day sideways trading, spurred by a higher overnight Dow and the regional performance, as details from the Federal Reserve’s latest meeting indicated the US central bank may once again flood markets with cheap cash to further boost growth.
In robust trade, advances in the core heavyweights helped propel the FBM KLCI up 10.40 points to 1,496.97 in mid-week.
Thereafter, the key index extended the upward momentum, hitting a new 33-month high of 1,503.82 in early business, encouraged by more gains in overseas stock exchanges before reversing owing to an apparent profit-taking activity in the quality issues.
In choppy style, the local bourse shed 0.59 point to 1,396.38 on Thursday.
Thereafter, sellers dominated the floor, pulling the key index down 6.52 points to 1,489.86 yesterday, with sentiment dampened by the generally frail offshore tone.
Statistics: For the week, the FBM KLCI perked up 8.45 points, or 0.6% to 1,489.86 yesterday, compared with 1,481.41 at the close on Oct 8.
Weekly turnover amounted to 5.758 billion shares valued at RM9.331bil, against 5.227 billion units worth RM8.05bil done previously.
Technical indicators: The daily slow-stochastic momentum index moved out of the bullish territory after triggering a short-term sell at the overbought territory on Nov 11.
The past week witnessed the 14-day relative strength index hitting a high of 81 points before curving down to 62 points yesterday.
After “kissing” the daily signal line on Thursday, the daily moving average convergence/divergence histogram resumed the downtrend to stay bearish. It flashed a sell on Sept 23.
In stark contrast, weekly indicators were bullish, with the weekly oscillator per cent K crossing above the weekly oscillator per cent D of the weekly slow-stochastic momentum index to issue a buy at the top and the weekly MACD continuing to expand positively against the weekly signal line to retain the buy.
Outlook: In line with our expectation, the key index had successfully patched up the 1.490-1,497 points gap and based on the daily bar chart, the bulls are poised to mount a charge on the historical peak of 1,524.69, established on Jan 14, 2008, in their next move.
With the bulls already pausing for air after a strong rally, it is very unlikely to happen this week but it will certainly come by eventually.
Technically, the falling daily slow-stochastic momentum index and the curving down of the 14-day RSI, together with the weakening sign of the daily MACD suggest the local bourse will probably slip into consolidation mode in the immediate term but companies that benefit from the good budget would shine.
Support is anticipated at the 14-day simple moving average (SMA) of 1,477, 21-day SMA of 1,473, followed by the 1,455-1,456 points range and the next, at 1,445.33 points.
A push above the all-time high would propel the key index to the uncharted territory, targeting the 1,550-1,560 points band. - BY K.M.LEE
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