The index picked up another 3.78 pts yesterday. Although strong upside momentum did not emerge yesterday – which is a signal we need to further confirm the violation of the short-term downtrend line - the index was at least moving in the right direction after creating the “non-classical Hammer”.
Anyhow, the market’s movements over the last three trading days have significantly reduced the risk of a further downside retracement. The index’s retracement from its historic high could have ended after it constructed the “non-classical Hammer”. Signs of the market bottoming could be analyzed from different angles. Firstly, on 26 Jan 2010, the index fell by slightly more than 20 pts at one point during trading but eventually recouped more than 50% of the day’s losses and ended with only a 6.43-pt loss. As a result, the “non classical Hammer” was created. Secondly, on the second last trading day before the Chinese New Year holidays began, the FBM KLCI gapped down by 14.22 pts at the opening but successfully recouped nearly all its earlier losses on the day itself. This rebound emerged near the bottom of the “non-classical Hammer”. Thirdly, in a subsequent trading session last Monday, the index experienced follow-through buying and ended higher by almost 12 pts. Last but not least, the index is now in the midst of violating the short-term downtrend line.
We, therefore, maintain our bullish view. To the downside, continue there is immediate support at the 1,505 pt-level, followed by the 1,500-pt psychological mark. To the upside, we are still eyeing the 1,532 pt-level as the initial resistance, followed by the 1,558 to 1,567-pt downside gap.
Anyhow, the market’s movements over the last three trading days have significantly reduced the risk of a further downside retracement. The index’s retracement from its historic high could have ended after it constructed the “non-classical Hammer”. Signs of the market bottoming could be analyzed from different angles. Firstly, on 26 Jan 2010, the index fell by slightly more than 20 pts at one point during trading but eventually recouped more than 50% of the day’s losses and ended with only a 6.43-pt loss. As a result, the “non classical Hammer” was created. Secondly, on the second last trading day before the Chinese New Year holidays began, the FBM KLCI gapped down by 14.22 pts at the opening but successfully recouped nearly all its earlier losses on the day itself. This rebound emerged near the bottom of the “non-classical Hammer”. Thirdly, in a subsequent trading session last Monday, the index experienced follow-through buying and ended higher by almost 12 pts. Last but not least, the index is now in the midst of violating the short-term downtrend line.
We, therefore, maintain our bullish view. To the downside, continue there is immediate support at the 1,505 pt-level, followed by the 1,500-pt psychological mark. To the upside, we are still eyeing the 1,532 pt-level as the initial resistance, followed by the 1,558 to 1,567-pt downside gap.
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