FBMKLCI - Technical Commentary 26/07/10

Due to positive stress test on majority of the Europe banks, DJI jump 102 points on Friday. FBMKLCI open with +4.86 points gap up to jump across the 1350 resistance level and close at 1351.82 (+6.14, +0.46%). Although the big caps CI were supported, however most of 2nd and 3rd liners that rose last week, were under profit taking for T+3 and T+4. The buy rate was keep dropping until 37% at the closing. We hope that the correction for the lower liners is healthy and prepare for the next run. The CI now stays above 1350 level marginally, can it sustains above this level is questionable. Anyhow we still depend on Dow Jones and global market.

The overall market’s trend is considered as mixed today as there were 336 up counters and 355 down counters with the market total traded volume decreased –14.4% at 850 MIL shares. The trading volume is above 40 days VMA and it is sufficient to keep the market “HOT”.

Today’s FBMKLCI top 5 gaining components (CI gainers) are CIMB, KLK, PETDAG, DIGI and RHBCAP. The top 5 lagging components (CI losers) are BAT, TANJONG, UMW, MAXIS and IOICORP.

The primary and secondary indicators
FBMKLCI candlestick stays above the BB10’s mid-band with the BB10 opened 9% due the index up >6 points. It also well supported by the EMA 14/21/31, this is a bullish sign for the CI.
RSI rose to 81.57 and MACD hooked up again, another bullish signal for the CI. The STC maintains above 70, it is very bullish but reflected from 100%. This indicates CI components near over bought and due for correction soon.

Summary

Most the indicators indicate FBMKLCI is bullish biased. The index continues to form a higher low and this is an up-trend pattern. FBMKLCI continues to stay above L1 trend line today and there is a good chance for it to run some more. If it successfully breaks above 1357 resistance level, it will go up higher.

The nearest possible resistance levels for FBMKLCI is 1357 and 1425 whereas the nearest possible supports levels is L1 trend line and 1327 (FR 23.6%). Please refer to the picture below.