Stocks on Bursa Malaysia went on a rotational play last week, while the index-link heavyweights were mostly in correction or consolidation mode in the absence of market moving news after the announcement of the NEM at the end of March.
The FBM KLCI was very much in a consolidation mode last week, it opened the week slightly positive and touched the intra-week high of 1344.12, and it hit the low of 1330.27 before rebounding to close off-low at 1332.77, posting a week-on-week lost of 1.21 point or 0.09%. A total of 4.812 billion shares worth RM7.279 billion changed hands last week, slightly down from the 5.842 billion shares worth RM7.821 billion the previous week.
On the weekly chart, the FBM KLCI formed another bearish black candlestick with longer upper shadow. The key index tried to re-test the high of 1347 a few times during the week, but the attempts failed with the index closing back below the 1340 level. This shows that the bear was very much in control above the 1340 level. The index registered a low high and lower low last week compared with the previous week, which is a sign of weakness in development, and the key index is expected to test the lower support levels at 1327, 1322 and 1308.
Weekly MACD continued to move higher, albeit in a slow rate, and is above its slow MACD. Weekly RSI(14) at 69.2 is lower compared with last week’s 69.71, indicating a gradual weakening of the market strength. Weekly Stochastic is higher at 91.72 compared with previous week’s 90.14, is in the very bullish or overbought zone and might head for a correction. The mixed signals of the indicators reflected the current consolidation mode of the key index.
The underlying trend of the FBM KLCI as indicated by the short, medium and long term moving averages still remained in an uptrend.
For this week, the benchmark index is expected to continue with its consolidation mode in the absence of any major market moving factors, its direction will track that of the regional markets. Rotational play on selective second and third liners may continue to prevail while the key index corrects itself. 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: 1318 – 1345
Resistance: 1337, 1340, 1345
Support: 1318, 1324, 1328
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