Three weeks ago, we mentioned that the FBM KLCI may have violated the uptrend line extending from May 2012’s low but pending for further confirmations. Since then, we have not seen any follow-up selling, probably because the DJIA has been on a rally mode at the same time. Instead, the index staged a rebound and it seems like the market could end the week with gains for the second straight week.
If the FBM KLCI continues to rebound from the current level, it will very soon be able to completely write off any worries on the potential breakdown from the uptrend line. As the uptrend line on the weekly chart has not been proven violated, we maintain our bullish bias view in the near term. The selling that occurred three weeks ago may just be a breather for the market while the index continues the upside momentum started since three months ago.
From the current level, look for an immediate resistance at the 1,643 pt-level followed by the 1,648 historic pt-level. To the downside, we are eyeing the 1,620 pt-level as the initial support for the index followed by the 1,600 psychological mark.
Source: OSK
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