Stocks on Bursa Malaysia continued its consolidation last week on the absence of major market moving news. The FBM KLCI opened last Monday with a gap down of 3 points and touched the intra-week low of 1321.25 after DJIA closed 125 points lower the previous week. The benchmark index recovered quickly to close above the 1330 level on Tuesday and stayed in a sideways range from there on to close last Friday at 1336.78, posted a week-on-week gain of 4.01 points or 0.3%. Turnover for the week fell to 4.137 billion shares worth RM5.854 billion from 4.812 billion shares worth RM7.279 billion the previous week.
On the weekly chart, the FBM KLCI formed a white piercing-line candlestick which indicates counter-attack of the bull after the bear sold down stocks on fear; hence, the key index might continue to move higher to challenge the overhead resistance zone at 1344 to 1354. If the key index is able to breakthrough the psychological resistance at 1350, it might continue to move higher to challenge the higher target level at 1380. On the other hand, if the index could not breakthrough the resistance zone, it might just continue to drift in its current sideways consolidation range of 1330 to 1347.
Weekly MACD continued to move higher, albeit on a slow pace, and has just made a golden-cross over its weekly slow MACD, indicating a potential uptrend in the brewing. Weekly RSI(14) at 69.96 has hooked up and is about to move into the very bullish zone. Weekly Stochastic has, however, hooked down reflecting the current correction mode. Signals from the indicators reflected the correction mode of the key index with an upward bias.
The benchmark FBM KLCI is currently above both its short term 5 and 10-week moving average, hence, the short term trend is still up. The underlying medium to longer term uptrend is still remained intact.
This week, the benchmark index is expected to continue its consolidation in the absence of fresh market moving impetus with an upward bias, its direction will likely to track that of the regional markets. Rotational play on selective second and third liners may continue to prevail. As the underlying longer term trend is up, any correction should be viewed as an opportunity to accumulate quality stocks at lower level.
This week, the FBM KLCI may trade within a range of 1308 to 1358, and for today it is likely to trade within a range of 1318 to 1345.
This week's expected range: 1308 – 1358
Today’s expected range: 1331 – 1344
Resistance: 1339, 1341, 1344
Support: 1331, 1333, 1335
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