Thursday, March 1, 2012

KLCI: Higher Volume Is Needed For A More Sustainable Rally

Bursa Recap: KLCI up 3.8 points, bucking mixed regional bourses
Following a broad market rally on 29 February ahead of the fresh cash injection by the ECB, Asian markets closed mixed yesterday on profit taking amid diminishing expectations for further monetary easing by Bernanke coupled with still fragile
global PMI in Europe and China (despite improving m-o-m).

KLCI gained 3.8 points to 1573.5, lifted by selective purchase on bluechips i.e. SIME (+24 sen to RM9.93), PETCHEM (+5 sen to RM6.75), BAT (+90 sen to RM53.10), DIGI (+2 sen to RM4.04) and AMMB (+4 sen to RM6.17). However, overall volume was low at 1.62 biilion shares worth RM2.02 billion against Wednesday’s 1.94 billion shares worth RM2.69 billion. Market breadth was negative with 309 gainers as compared to 506 losers.

FBM KLCI Outlook: Higher volume is needed for a more sustainable rally
Amid the fresh injection of cheap money by the ECB, additional liquidity inflows are expected to stay firm in the near term, benefitting equities and currencies in the emerging markets.

We are cautiously optimistic that the recent breakout of 1567 (16 February’s high) will eventually spur KLCI to our new envisaged resistance 1590-1600 levels, albeit intermittent profit taking activities. However, higher volume (preferably over 2 billion shares/day) is essential for a sustainable rally.

Major supports are 1561 (10-d SMA), 1556 (mid Bollinger band) and 1544 (30-d SMA).

Daily KLCI - Technicals Are On The Mend
FBM KLCI 02-03-2012

Hourly KLCI - Overbought Technicals May Cap Further Strong Upside
FBM KLCI 02-03-2012a

Source: HLIB Research

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