Prepare the Ramrods!

The Chartists have spoken.

All the indicators are favourable. After a lacklustre 3 days, Bursa broke through and move up many shades toward the resistance 1391 mark; after which it will likely attempt to crack the major psychological support of 1,400. If it does and maintains at that level, we would have a brand new Bursa record.

Rallies on New York and regional stock markets lifted the KLCI the last two trading days of the week to close at 1,384.72 points for a gain of 10.88 points or 0.79 per cent.

I cannot really understand the mumbo-jumbo of technical analysis but I will post the following:

Moving Averages: The KLCI 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.

On Balance Volume: Its short-term OBV trend continued to stay above the support of its 10-day exponential moving averages.

Relative Strength Index: Its 14-day RSI stood at the 58.68 per cent level yesterday.

Judging from its near-term technical movement, the KLCI will continue to hold firm between the 1,350 and 1,391 levels. This is important to take note of.

A decisive breach of its resistance high of 1,391 is likely to to enable the KLCI to stage a serious crack at the 1,400 level.

Let us apply one of Steven Covey’s Seven Secrets-Begin with the end in mind.

So what can happen to move KLCI to crack the 1400 level? Blue chips, that’s what. Next week begins on 16 and ends on 20 July. I think the period is just right for the local funds particularly EPF, Khazanah and PNB to move in to prop up the index. Just move into all the top thiry counters of the CI particularly that which have announced good news such as UEM, Proton, DRB-Hicom,TNB, Sime Darby, Petronas, MRCB, Genting, Resorts World, ride on them and ramp up the index. International fund managers will follow suit. This play up is crucial as a curtain raiser before Prime Minister Abdullah unveils the North Corridor Economic Region Masterplan designed by Sime Darby on 30^th July 2007.

We await for next week’s performance with baited breath.

Heartsong