Previously, we noted that Tuesday's rebound, which recouped over 50% of the day's huge intra-day losses, could have two implications. First, it could be seen as a sign of weakness as the index failed to close back above July's 1,620-pt low and ended the day 6.8 pts lower. On the other hand, the resulting action which created a non-classical 'Hammer' could signal the possibility of a price stabilisation at above the last Thursday's low of 1,613 pts. We had a gut feeling that the former scenario was more likely. Nevertheless, the yesterday's gain of nearly 15 pts suggested otherwise.

The yesterday's 'Long White Day' more or less confirmed the non-classical 'Hammer', though further observation is still needed. That means that there is a possibility that the recent market action may have already come to an end. Yesterday's market activity played a significant part in reversing market sentiment, at least temporarily. Still, our view towards the near-term technical outlook remains bullish. Note that the FBM KLCI gained as much as 128 pts during the May-Aug 2012 period, and therefore the selling pressure experienced by the market since last week is fairly insignificant.

At the current level, look for an immediate resistance within the 1,633pt-1,641pt range, followed by the 1,655-pt historic high. To the downside, look for an immediate support at the midpoint of yesterday's 'Long White Day' at 1,620 pts, followed by the opening point of the candlestick pattern of at 1,612 pts.

Source: OSK