More downside pressure for KLCI

MAIN BOARD

THE KL Composite Index (KLCI) plunged in a broad sell-off in reaction to Barisan Nasional losing its two-thirds majority, closing the week with heavy losses and at a seven-month low.

The KLCI plunged from a week's high of 1,251.35 points to a seven-week low of 1,157.47 and ended the week with huge losses at 1,194.84, down a hefty 101.49 points or 7.83% from the week before.

All the top 10 index-linked stocks ended the week with huge losses despite recovering some of their earlier sell-off losses.

Volume for the week soared to a one-year high of 1.912 billion shares compared with 1.169 billion shares the previous week. The weekly volume was at its highest since the March 2007 Shanghai-inspired meltdown.

The daily average volume jumped to 382.49 million from 233.9 million shares the week before.

The weekly candlestick chart finished bearish and called for further negative pressure this week. A black bearish falling-window candle was formed last week, and this usually implies a continuation a bearish trend.

At the moment, the technical setting of the market is bearish. A continuation of the negative momentum this week would likely take the index lower and trade around its immediate chart support at 1,180–1,160 points.

A successful downward breakout from these levels would see the index trending lower to test its minor chart base around 1,100–1,050 points. A successful break below these levels would turn the near-term chart picture very bearish.

The immediate-term chart hurdle is now seen at the 1,215–1,225 levels. A minor chart resistance stands at 1,240–1,250.

The daily technical indicators settled the week mostly bearish and suggested the underlying strength of the index was still negative.

The daily stochastic ended the week slightly positive and indicated the index was in a correctional phase after the excessive declines last week. The oscillators per cent K and D ended higher at 41.51% and 36.31% respectively.

The daily Money Flow Index (MFI) fell from a week's high of 57.82 points and settled lower at 42.89. Analysis of the MFI shows distribution occurred late last week.

The main trend-tracker, the 3- and 7-week exponentially smoothed moving-average price lines (ESA-lines), remained in bearish divergence on Friday and showed the main trend was still in a bearish phase.

The 3- and 7-day ESA-lines, closed in bearish divergence and indicated the short-term bearish cycle would expand.

The 5-day Relative Strength Index ended the week lower at 28.40 points and indicated the index’s immediate underlying strength was still bearish.