The Malaysian stock market needs to re-test the 1,300 level in the coming weeks if it is going to avoid a more serious pull-back when technical correction kicks in.
It posted the first high of the year at 1,308.36 on January 21.
Jupiter Securities head of research Pong Teng Siew said the current period was the usual time the market rally paused before running into profit taking.
"The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) should within the next few weeks touch the 1,330 level. If it fails to do that, then the pullback may be more serious," he said.
At the beginning of the week, the market rallied after profit-taking in the previous week. However, this was shortlived as the market dipped on Tuesday on another round of profit-taking.
On Wednesday, however, the announcement of a better than expected fourth quarter economic growth of 4.5 per cent for 2009 provided a good background for investors to pursue the performing blue chips.
The key-composite index closed the week flat at 1,270.78 on Thursday, although it was up 13.11 points compared with the previous Friday.
The stock exchange was closed on Friday for Prophet Muhammad's birthday celebration.
The flat ending of FBM KLCI was due to its limited upside as it hit a high of 1,277.66.
A local analyst expects the correction to come in around the second week of March.
"The government is expected to announce some market boosting measures in the first week of March. The correction will come in after that," he said.
He expects the Composite Index's upside to remain limited next week with resistance level at 1,280 and support level at 1,266.
On a weekly basis, the Finance Index rose 130.01 points to 11,131.95, the Plantation Index surged 40.53 points to 6,317.64 and the Industrial Index decreased 23.74 points to 2,577.27.
The FBM Emas Index went up 106.33 points to 8,560.2, the FBM Top 100 rose 98.55 points to 8,327.57 and the FBM ACE Index gained 17.81 points to 4,345.09.
The week's turnover increased to 2.78 billion shares valued at RM4.98 billion from 1.767 billion shares valued at RM3.175 billion end of the previous week.
Volume on the Main Market also rose to 2.44 billion shares worth RM4.92 billion versus 1.475 billion shares worth RM3.103 billion before.
Call warrants jumped to 130.59 million units valued at RM18.83 million from 94.302 million units valued at RM13.626 million previously.
The ACE Market volume however, slipped to 175.7 million shares worth RM39.16 million from 178.72 million shares worth RM46.585 million before. --Bernama