One of our most distinguished blue chips, CIMB broke below its medium-term uptrend line support at RM13.30 yesterday. It failed to recover today as it lost 22 sen to close at RM13.06 on increased volume of 10 million shares traded.


Chart 1: CIMB's daily chart as at Jan 27, 2010_4.50pm (Source: Quickcharts)

One stock that tends to track our stock market very well is Bursa, the listed company that owns our stock exchange. From Chart 2, we can see that Bursa share price has been moving sideway for the past 3 months after hitting a high of RM8.59 on Oct 20 last year. When we compared this to the steady uptrend in the FBM-KLCI (denoted by 'A'), we should have noted this bearish divergence (denoted by 'B') & the danger it forewarned.

We note that Bursa has now broken below its very strong horizontal support of RM8.00 yesterday. At the close today, Bursa lost 12 sen to end at RM7.68. Its next horizontal support is at RM7.50. I have displayed Bursa's weekly chart together with FBM-KLCI's weekly chart to show how well the FBM-KLCI has performed vis-a-vis Bursa. The reverse of the coin would be the potential downside for FBM-KLCI if & when the players give up & cash in their chips.


Chart 2: FBM-KLCI & Bursa's weekly chart as at 26/1/2010 (Source: Tradesignum)