FBM KLCI - might consolidate

Stocks on Bursa Malaysia were on a rotational play last week with key heavyweights stocks in consolidation mode. The FBM KLCI started last week on continued uptrend with the buying of finance stock, the benchmark index continued to rise for twelve consecutive days and touched the intra-week high of 1347.61 on Wednesday, April 7 (its highest level since March 2008). However, profit-taking emerged on Thursday which sent the index to its intra-week low of 1331.46 before rebounding to close off-low on Friday at 1333.98. Week-on-week, the key index lost 1.95 point or 0.15%. A total of 5.842 billion shares worth RM7.821 billion changed hands during the week, up from 4.782 billion shares worth RM6.899 billion the previous week.

On the weekly chart, the FBM KLCI formed a bearish black shooting-star like candlestick which is a top reversal candlestick pattern. It indicated that the market took profit when the index came into the resistance zone of 1344 to 1354, and the key index might continued to correct or consolidate in the coming week. Immediate support for the index lies at 1330, 1324 and 1315.

Weekly MACD continued to move higher and has just touched its weekly slow MACD, indicating a continued pickup in upward momentum. An upward cross of the MACD would indicate the index turning bullish and would move higher. Weekly RSI(14) at 69.7 has hooked down but still in the bullish zone. Weekly Stochastic at 90.15 is very strong and continued to move up into the overbought zone. Signals from the indicators indicated that the key index is still in a very bullish state, albeit the candlestick has indicated possible weakness ahead.

The underlying short, medium and long term trend of the FBM KLCI as indicated by the moving averages remained up.

For this week, the FBM KLCI might correct or consolidate with a downward bias on the lack of strong positive leads, and performance of regional markets especially the Dow will influence the direction of our key index. Rotational play on the second and third liners may continue to prevail while the key index consolidates itself.

The FBM KLCI may trade within a range of 1312 to 1363 this week, and for today it is likely to trade within a range of 1326 to 1344.

This week's expected range: 1312 – 1363
Today’s expected range: 1326 – 1344

Resistance: 1337, 1340, 1344
Support: 1326, 1330, 1332

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