KUALA LUMPUR: HLG Research said despite ongoing consolidation, the medium to long term outlook of Bursa Malaysia remains bright, supported by local and institutional funds that were attracted by the promising outlook for the ringgit given the widening interest rate gap with developed nations.

In its market outlook on Monday, Oct 4, it said expectations of more measures to boost the economy from the upcoming Budget 2011 proposals and New Economic Model 2 announcements could provide some boost but may be short-lived.

Technically, the positive crossover in the daily slow stochastic indicators and the impeding positive crossover of the 5-d SMA above the 10-d SMA could signal more upside for the market and cushion more severe correction ahead.

Immediate FBM KLCI resistance levels are the recent high of 1,479.6 (Sept 21), followed by 1,490 (Jan 8, 2008's intraday high), the 1,500 hurdle and all-time high of 1,524.

Key supports are situated at 1,457 (20-day SMA), 1,440 (30-day SMA) and 1,420 (40-day SMA).

For the Dow Jones Industrial Average, the strength of September's momentum will be tested this week by several economic data as well as the start of third-quarter earnings season. We expect Dow to consolidate within a range bound 10500-11000 levels in the short term.