It was not a remarkable trading day as far as the FBM KLCI is concerned. The market opened higher and continued to trade higher thereafter but its gains slowly evaporated as buyers started to give way to sellers after last week’s 22.7 pt-gain. The market basically continued to take a breather after it snapped its six-day winning streak last Friday.
We pretty much summed up our expectation on the FBM KLCI yesterday. The index has only closed lower in three of the last 17 trading days and the market has put on some 85 pts during the process. While it is logical to expect the index to start consolidating, we also said that the market still has the potential to rally further without a consolidation despite weakness in the FBM KLCI over the last two sessions. This is because the index still shows no signs of reversing the current strong upward momentum. Moreover, the daily RSI still closed below the overbought territory.
The near-term technical outlook of the FBM KLCI will remain bullish as long as it stays at above the new uptrend line.
Immediate resistance is still seen at last Friday’s high of 1,441.8 pts, followed by the 1,445 pt-level, which is the historic close for the index recorded in 2007. The psychological 1,500 pt-level would be the next resistance. To the downside, there is immediate support at the 1,431 pt-level, followed by the 1,422 pt-level.