Stocks on Bursa Malaysia fell on last Friday, Jan 22, in tandem with regional bourses after the Dow plummeted overnight on concerns over the proposed new regulations for the US banking sector. The FBM KLCI opened low at 1303.43 and fell almost twelve points to an intra-day low of 1296.44 before last minute buying which lifted the benchmark index off low to end 7.91 points or 0.6% down at 1300.45. Decliners outpaced gainers by 531 to 245 while 230 counters were unchanged. Volume was lower at 1.008 billion shares worth RM1.381 billion.
Week-on-week, the FBM KLCI made a 1.87 points gain and close above the 1300 psychological level since the rally started in April 2009. The index hit an intra-week high of 1308.52 before profit-taking activities sent it lower to close at 1300.45. From the weekly chart perspective, the FBM KLCI is still on the uptrend, as it still closed above the 10-week moving average (MA) which has been supporting the uptrend so far since April 2009. Immediate support render by the 10-week MA is at 1277.
Weekly MACD continued to stay below its slow MACD; nonetheless, their gap is narrowing as indicated by the shorter histogram, which signaled a gradual pickup in momentum. Weekly RSI at 74.7 is still in the very bullish zone. Weekly Stochastic at 92.9 continued to stay above it slow Stochastic and is within its bullish zone.
From the weekly chart perspective, the FBM KLCI is still in its uptrend until it close below the 10-week MA which is now at 1277.
On the Daily chart, the FBM KLCI formed a hammer-like black candlestick. It opened with a gap down from last Thursday’s closed and hit an intra-day low of 1296.44 before rebounding to close off low at 1300.45. The 10-day MA has provided immediate support at 1298, if the index close below the immediate support level, then there is this strong likelihood that it may correct further downward to the 1280 level. Even, if the index comes down to 1280 level, it is still considered a normal correction with reference to the underlying longer term uptrend.
On the indicators, daily MACD has hooked down, and so are RSI and Stochastic, reflecting the pulled back of the index. RSI hooked down more rapidly to close below the 70 mark, and indicate a weakening in the market strength for the short term. There is, however, no danger signals as yet from the indicators.
On the backdrop of the US DJIA’s sharp fall last week, the FBM KLCI is expected to go into a consolidation mode this week, and will follow the performance of the regional bourses in the absence of fresh new leads locally.
For this week, the FBM KLCI is likely to trade within a range of 1270 to 1320. As for today, it is likely to trade within a range of 1289 to 1307.
This week's expected range: 1270 – 1320
Today’s expected range: 1289 – 1307
Resistance: 1303, 1305, 1307
Support: 1289, 1293, 1296
Stock to watch: KURASIA
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