THE REAL BULL ARE COMING?

KUALA LUMPUR: OSK Investment Research said on April 24 the stock market was starting to show the symptoms of a typical bull market, according to its technical charts.
In a research note, it said firstly, investors were not afraid at all as the KL Composite Index approached the 76.6 points RSI on April 23, which helped the KLCI stretch its gains within the overbought territory.

“Another very positive development is that this time, it was the broader market which fueled buying sentiment on the KLCI component stocks instead, eventually sending the key index higher by 10.06 points,” it said.

The research house said that it was not impossible for the key index to stretch the current uptrend. Although the market has entered overbought territory, the KLCI could still rally further and carry the daily RSI over the 80 point-mark.

“We have seen this happen many times before in a typical bull market in the past, especially when the weekly and monthly RSIs are far from being overbought,” it said.

OSK Research said of course, the key technical indicator to watch out today is the daily RSI, which is now trading at the 79 point-level.

It said while the market is becoming more and more overbought, but the conviction and confidence of buyers were also improving by the day since the breakout from the 100-day MAV line. This type of market sentiment was essential at this stage to carry the KLCI further away from the 200-day MAV line.

“Yesterday’s rally is the initial confirmation of a decisive violation of the 200-day MAV line. Meanwhile, the near-term technical outlook of the KLCI remains firmly bullish. We are still eyeing a strong support at the 200-day MAV line, which is now situated at the 959-level,” it said.

OSK Research said an additional support was seen at the 936-level, followed by the 925-level. To the upside, continue to look for the 1,000-level as the next formidable resistance.