KLCI’s gradual downward trend likely to continue this week

MAIN BOARD

THE Kuala Lumpur Composite Index (KLCI) corrected sharply after a long awaited technical correction and finally closed the week near the tail end of its week’s trading range.

Profit taking on most of the blue-chip stocks prevented the index establishing fresh rally highs.

The KLCI traded above 1,300 points briefly in early trading and then reversed direction from its week’s high of 1,301.94 points to 1,273.44 points. It ended the week moderately lower at 1,274.78 points, down 25.89 points or 1.99% from the previous week.

Most of the main index-linked stocks returned all their earlier gains and settled Friday in the minus zone.

Sime Darby, IOI Corp, Maybank, MISC, Bumiputra-Commerce, Tenaga Nasional, Genting, Plus Expressways and PPB Group all closed with minor losses and caused the index to lose a combined 13.60 points.

Public Bank, KL Kepong and Digi.Com settled in the plus territory and added a combined 3.98 points to the KLCI.

Total volume for the four-day trading week dipped to 809.03 million shares from 865.06 million shares the week before.

Daily average volume for the week rose to 202.25 million shares from 173.0 million shares previously.

The daily candlestick chart finished the week neutral to slightly negative and suggested that the market would remain in gradual downward trend this week.

A negative long upper shadow candle occurred on Friday. This is typically a bearish signal, particularly when it is formed near a rally high or resistance level.

The KLCI established a technical double top early last week, and the failure to generate fresh upward momentum suggests that the underlying strength of the index is not solid.

Vital neckline support of the double-top formation now stands at 1,275.00-1,270.00 points. A breach of this important technical chart support this week would signal the start of a downward cycle.

Minor chart support for the coming sessions is pegged at the 1,250.00-1,245.00 points, and this level is likely to be re-visited in the event of a strong downward correction.

Chart resistance for the immediate term is adjusted lower to 1,280.00-1,290.00 points.

All the daily technical indicators finished Friday negative and suggested that the index would head south in a gradual fashion.

The daily stochastic triggered the sell signal on May 20 and stayed bearish for the immediate term. The oscillators per cent K and D settled the week sharply lower at 9.22% and 18.83% respectively.

The daily Money Flow Index (MFI) ended sharply lower at 36.04 points and showed that light distribution occurred last week.

The main trend tracker, the 3- and 7-week exponentially smoothed moving average price lines (ESA lines), ended in bearish convergence and signalled that the main trend was turning negative.

The short-term trend tracker, the 3- and 7-day ESA lines, finished in bearish divergence and indicated that the immediate-term trend was currently in a bearish phase.

The 5-day Relative Strength Index (RSI) turned south last week and closed lower at 31.07 points. Analysis of the daily RSI indicated that the index’s immediate underlying strength was weak.

URL: http://biz.thestar.com.my/news/story.asp?f...42&sec=business

US stock exchange closed for Memorial's Day.

Bursa-listed stocks finish May on high note

PETALING JAYA: Malaysian stocks ended May on a high note as the first-quarter earnings season drew to a close. Most companies did reasonably well during the January-March period and plantation firms again led the overall charge with another bumper quarter as they continued to profit from surging crude palm oil (CPO) price.

Analysts said there were no major surprises from the big companies, which was a good thing considering the weak overall market sentiment. A slip-up would have invited a quick sell down.

The benchmark KL Composite Index (KLCI) finished 14.28 points higher yesterday at 1,276.10. At the close, it was down 0.2% from a month ago.

The KLCI’s performance yesterday was held back by the sharp fall in Gamuda Bhd and SP Setia Bhd’s share prices on concerns over their exposure to Vietnam.

Recent reports suggested that Vietnam’s economy is in a crisis, and this prompted investors to unload shares in local companies with significant operations in that country, including Berjaya Land Bhd.

Meanwhile, Proton Holdings Bhd plunged 7.2% to RM3.34 yesterday - the lowest in almost 10 years. Like Gamuda, SP Setia and Berjaya Land, the sell down on Proton was due to “external factors.”

Shares in Proton have declined 16% since May 6, when MSCI announced the stock’s removal from its local index at the end of yesterday’s trading.

Proton on Monday said it made a net profit of RM233mil for the year ended March 31, reversing a loss of RM590mil a year earlier.

Proton’s return to profit was partlydriven by higher sales of its new best sellers, the Persona and the new Saga.

Successful introduction of new models also helped Tan Chong Motor Holdings Bhd to post better-than-expected earnings in the first three months this year.

The stock was up one sen yesterday at RM1.99, rising 8.7% over the past one month.

Shares in Sime Darby Bhd, the world’s largest listed palm oil planter and the most valuable stock on Bursa Malaysia, gained five sen yesterday to RM9.50. Sime Darby is also involved in the motor vehicle business.

The conglomerate posted its third-quarter results ended March 31 earlier this week. Its nine-month net profit was up 42% to RM2.49bil versus a year earlier, well within market expectations.

Pure plantations firm Asiatic Development Bhd also had a sterling quarter. CIMB Investment Bank said both Sime Darby and Asiatic were traded at below its targets based on Friday’s closing prices.

URL: http://biz.thestar.com.my/news/story.asp?f...75&sec=business

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