Monday, May 23, 2011

KLCI Sideways Consolidation Due To Lack Of Clarity

Bursa Recap: KLCI ends flat week-on-week
In line with the mixed regional markets amid weak economic data from Japan and U.S. and escalating debt crisis in Europe, FBM KLCI lost 3 points to end at 1541 last Friday. Market breadth was negative with 361 gainers against 378 losers, whilst trading volume dropped 2.5% to 869 million shares worth RM1.37 billion.

Following the 3-point decline last Friday, the FBM KLCi ended flat with a 0.3-point weekly gain whilst average daily traded volume shrank 5% to 891 million shares.

FBM KLCI outlook: Sideways consolidation due to lack of clarity
From a weekly low of 1536 on 16 May, the FBM KLCI rose to as high as 1550 on 19 May before ending lower at 1541 last Friday.

Latest batch of economic and earnings reports and nagging European debt crisis do seem to indicate weakening economic recovery in the short to medium term, particularly on the developed markets. Unless we see a great deal of positive surprises on economic indicators and encouraging domestic 1Q11 corporate earnings reports, the external uncertainties will continue to weigh on our market.

Given the 93 points decline on Dow last Friday, slightly weakening tone on FBM KLCI and dull trading volume, the local bourse is likely to extend its sideways consolidation until further positive catalysts emerge.

Weekly upside resistance levels are 1552 (23.6% FR) and 1566 (April’s high).

Weekly support levels are 1537 (38.2% FR), 1532 (30-d SMA) and 1525 (50% FR).

Daily KLCI Closed With A Shooting Star Formation, Indicating KLCI Could Signal Lower Sideways Consolidation Ahead
FBM KLCI 23-05-2011

Weekly KLCI: Uncertainty Ahead With The Doji Formation
FBM KLCI 23-05-2011a

Source: HLeBroking

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