MFM may stage follow-through technical rebound

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TECHNICAL pullbacks on the Wall Street and Hong Kong stock market dictated the market direction on the FTSE Bursa Malaysia KLCI (FBM KLCI) last week.

The FBM KLCI staged a technical breakdown of its major psycholo-gical support of 1,800 when it closed at 1,776.16 points Friday.

Heavyweights on the index set the market undertone for the first four trading days of the week before a mild rebound last Friday arrested the decline.

The FBM KLCI fell from an intra-week high of 1,800.30 on Monday before hitting an intra-week low of 1,774.16 on Thursday, giving the bourse an intra-week trading range of 26.14 points compared with 36.03 points recorded the week before.

Overall market consolidations sent the FBM KLCI lower to 1,776.16 points on Friday, posting a loss of 25.67 points, or 1.42 per cent.

The FTSE Bursa Malaysia Small Cap Index added 26.79 points, or 0.17 per cent, to end the week’s trade at 15,383.37 while, the FBM ACE Market Index gained 211.22 points, or 3.94 per cent, to close at 5,571.17 last Friday.

In New York, the overall market consolidation on Wall Street sent share prices down last week.

The Dow Jones Industrial Average closed lower at 15,258.24 points with on Friday with a decline of 192.85 points, or 1.25 per cent.

The tech stock-heavy Nasdaq Composite Index moved in counter-trend with the general market sentiment when it staged a technical rebound last week.

The Nasdaq Composite Index closed higher at 3,781.59 points, with week-on-week gains of 6.86 points, or 0.18 per cent.

Meanwhile, back on the local bourse, Malayan Flour Mills Bhd (MFM) staged a technical rebound last week. Its daily price trend closed at RM1.36 last Friday, giving it a week-on-week profit of eight sen, or 6.25 per cent.

Following are the readings of some of MFM’s technical indicators:-

Moving Averages: MFM’s daily price trend stayed above all its 10-, 20-, 30-, 50-, 100- and 200-day moving averages.

Momentum Index: Its short-term momentum index stayed above the support of its neutral reference line last week.

On Balance Volume (OBV): Its short-term OBV stayed above the support of its 10-day moving averages.

Relative Strength Index (RSI): Its 14-day RSI had since stayed above the 50 level. Its technical reading stood at 68.97 per cent last Friday.

Outlook

Second and third liners took centrestage Heavyweights consolidated while select second and third liners managed to outperform their Main Market counters last week.

MFM was one of these counters, it ended the week eight sen higher.

Chartwise, MFM’s monthly price trend staged a technical breakout of its intermediate-term downtrend that augurs well for its intermediate-to long-term perspectives.

Its weekly price trend staged a successful re-test of its intermediate-term uptrend (See MFM’s weekly price chart – B1:B2) before staging an overhead breakout of its intermediate-term downtrend (B3:B4).

MFM’s daily price trend staged a technical breakout of its intermediate-term downtrend (See MFM’s daily price trend – C1:C2) on Thursday.

Its daily and weekly fast MACDs (moving average convergence divergence) hovered above their respective slow MACDs last Friday while its monthly fast MACD stayed below its monthly slow MACD.

In the meantime, its 14-day Relative Strength Index (RSI) stood at 68.97 per cent while, its 14-week and 14-month RSI were at 57.31 and 50.81 per cent, respectively.

Viewing the bullish technical breakout on its daily chart, MFM’s daily price trend is set to stage a follow-through technical rebound and re-challenge its immediate overhead resistance of between RM1.40 to RM1.60 over its intermediate-term perspectives.

The subject expressed above is based purely on technical analysis and opinions of the writer. It is not a solicitation to buy or sell.

Business Times : marketwatch

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