The FBM KLCI stretched its gains to the sixth consecutive trading day last Friday, having added about 50 pts in the process. Although last Friday’s 2.46 pt-gain appears marginal and the index’s gains have been narrowing since last Tuesday, these were indeed precious points gained considering the index’s recent winning stretch. Also note that the index gapped down by about 2 pts at the opening last Friday but still managed to end the session with a 2.64-pt gains. Hence, in terms of the height of last Friday’s white candlestick, it was not very short compared to the previous two or three trading days. This means the recent winning stretch remains strong and there is still a possibility that the index could continue to close higher for the seventh day in a row.
The market RSI closed at the 78.4 pt-level last Friday, which is not far from the 80-pt overbought zone. Another one or two days of massive gains would see the market entering the overbought zone. So far, since the bull market began in March 2009, the index has never been able to stretch its gains within overbought territory.
Meanwhile, the near-term technical outlook of the market remains bullish. We continue to eye a tough resistance at the 1,395 pt-level while the 1,400 pt-level would be the psychological hurdle for the market. Initial support is now seen at the 1,360 pt-level, followed by the 1,351 pt-level.
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