The market was down by nearly 10 pts during the session but managed to recoup about 50% of the losses towards the last 10 minutes of trading on Tuesday. Nevertheless, the index surprisingly ended 1.98 pts higher after calculating the component stocks’ theoretical closing prices. We shall see if these gains are sustainable for the rest of the week.
Meanwhile, the FMB KLCI is still maintaining a safe posture at above last Friday’s low of 1,488 pts. Being able to sustain itself at above this level would prevent the index from retracing towards uptrend line 2. Having said that, remember the index has violated the uptrend line 1 and as long as it continues to trade at below the breakdown level, there is still a possibility of the market eventually retracing towards uptrend line 1. In the meantime, the breakdown from uptrend line 2 still needs to be confirmed as it was a breakdown from a short-term uptrend line. We have seen many times in the last few months how the index experienced a very short retracement period after violating a shortterm uptrend line.
No matter which of the scenarios mentioned above turns out to be, our view towards the near-term market has been the same, that is the index will continue to rise until the uptrend line 1 is taken out.
From the current level, there is immediate support at the 1,500-psychological mark, followed by the 1,488 pt-level and the 1,479 pt-level. To the upside, an overhead hurdle lies at the 1,512-1,514 pts area, followed by the record high of 1,532 pts.