News Column

Muhibbah poised to test intermediate-term resistance

January 19, 2014

S.N. Lock

FOLLOW-THROUGH consolidations dictated the overall market sentiment on Bursa Malaysia last week. Overall market sentiment weakened for the third consecutive week, sending the FTSE Bursa Malaysia (FBM KLCI) to close 13.60 points, or 0.74 per cent, lower at 1,813.01 points on Thursday. Last week, the FBM KLCI staged a follow-through technical pullback to its intra-week low of 1,811.18 on Thursday. It breached its immediate downside support of 1,820 before attempting to stage a re-test of its other support level of 1,810. It registered a total loss of 21.96 points over the last two trading days, compared with a gain of 8.36 points last Monday. From the performances of the FBM KLCI's 30 components, heavyweight index-linked counters registered 21 losers against nine gainers. It hit its intra-week high of 1,837.35 last Monday, giving an intra-week trading range of 26.17 points. The FBM Small Cap Index lost 160.62 points, or 0.99 per cent, to 16,073.41 points while the FBM ACE Market Index gained 70.86 points, or 1.19 per cent, to close at 6,032.04 points last Thursday. Meanwhile, share prices on Wall Street staged a mild technical rebound last week. The Dow Jones Industrial Average continued to stay above its major psychological support of 16,000. It closed marginally higher at 16,458.56 points last Friday. The tech stock-heavy Nasdaq Composite Index moved in tandem with its general market trend when it also ended higher last week. Nasdaq closed higher at 4,197.58 points last Friday. Hong Kong's Hang Seng Index staged a technical rebound last week, continuing to stay above its immediate downside support of 23,000 points when it closed at 23,105.19 points on Friday. Tokyo's Nikkei 225 Index stayed below the 16,000-point support level last week. It closed lower at 15,734.46 points, giving it a week-on-week loss of 177.60 points, or 1.12 per cent. Back to local front, Muhibbah Engineering (M) Bhd staged a technical rebound last week. Its daily price trend rebounded to close at RM2.58 on Thursday, posting a week-on-week gain of 14 sen , or 5.74 per cent. Following are the readings of some of its technical indicators: Moving Averages: Muhibbah's daily price trend had since stayed above its 10-, 20-, 30-, 50-, 100- and 200-day moving averages. Momentum Index: Its short-term momentum index continued to stay above the support of its neutral reference line last week. On Balance Volume (OBV): Its short-term OBV continued to stay 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 the 72.37 per cent level. Outlook Overall market sentiment consolidated over the last three trading days last week, moving in step with the consolidation on the Tokyo stock market. Selective second and third liners remained the trading focus last week. Muhibbah was one of these counters. Chartwise, Muhibbah's monthly price trend staged an overhead breakout of its intermediate-term neckline. Its monthly price trend stayed above this neckline last Thursday. Its weekly price trend staged a technical breakout of its intermediate-term downtrend (See Muhibbah's weekly price chart - B3:B4). It continued to stay above the support of its intermediate-term downtrend. Muhibbah's daily price trend staged a technical breakout of its intermediate-term downtrend (See Muhibbah's daily price trend - C1:C2) last Thursday. It continued to stay above this downtrend (C1:C2). Its daily, weekly and monthly fast MACDs (moving average convergence divergence) continued to stay above their respective slow MACDs. Muhibah's daily and monthly fast MACDs stayed above their respective slow MACDs. Its 14-day RSI stood at the 72.38 per cent level. Its 14-week and 14-month RSI were at the 66.43 per cent and 73.27 per cent levels respectively. Following the technical breakout of its intermediate-term downtrend (C1:C2) on its daily price chart, Muhibbah's price trend is poised to move towards its intermediate-term resistance zone ( RM2.60-RM2.85 levels). The subject expressed above is based purely on technical analysis and opinions of the writer. It is not a solicitation to buy or sell.

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Source: Business Times (Malaysia)

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