Stocks on Bursa Malaysia went through quite a volatile move last week. The FBM KLCI started last week on a consolidation mode on Monday and Tuesday. It had a knee-jerk reaction on Wednesday when the Dow plunged 213 points overnight and hit the intra-week low of 1324.34 on fear that the Euro-zone debt problems might worsen when Greece and Portugal’s debt rating was downgraded. The key index recovered quickly on Thursday to 1335.86 when the Dow rebounded amid positive US economic data and corporate earnings, and on hopes that Greece was close to a bailout deal.
On Friday, the FBM KLCI rose in tandem with regional markets to close the month of April on a positive note at 1346.38, a two-year new high since March 3, 2008, making a gain of 25.81 points on a month-on-month basis. Week-on-week, the FBM KLCI advanced 9.6 points to 1,346.38 from 1,336.78 the previous Friday, and weekly turnover increased to 4.39 billion shares, worth RM5.71 billion, from previous week's 4.14 billion shares worth RM5.85 billion.
On the weekly chart, the FBM KLCI formed a bullish continuation candlestick that closed the week near its weekly high, breaking out from its three weeks long consolidation. With the strong up move on last Friday, the key index in expected to continue its upward momentum to move higher to test the psychological resistance level of 1350. If it can successfully move through the immediate resistance zone of 1347 to 1354, it might move higher to test the 1382 level.
The FBM KLCI is currently staying above its short term 5-week and medium term 10-week moving averages (MA), which indicate the current trend is up. The longer term trend as indicated by the 30-week MA remained strongly up.
Weekly MACD continued to move higher as shown by the longer histogram in the positive zone after making a golden-cross last week, indicating the continued buildup of upward momentum. Weekly RSI(14) at 71.69 too has move higher into the very bullish zone. Weekly Stochastic at 92.58 has also hooked up, signaling the continuation of the up cycle. A confluence of positive signals from the technical indicators is pointing to more upside potential of the benchmark index.
For the coming week, in view of the lack of market impetus, the benchmark FBM KLCI will continue to take cue from the performance of major regional markets, and the corporate quarterly results that are continuously being release in May will also influence the performance of the key index.
As the Dow fell 158.71 points or 1.42% to close at 11,008.61 on last Friday, the local market is expected to face some volatility today. This week, the FBM KLCI may trade within a range of 1307 to 1372, and for today it is likely to trade within a range of 1331 to 1358.
This week's expected range: 1307 – 1372
Today’s expected range: 1331 – 1358
Resistance: 1350, 1354, 1358
Support: 1331, 1335, 1341
An update of the stock picks:
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