Stocks on Bursa Malaysia staged a technical rebound last week after two consecutive weeks or nine straight days of fall, as investors bargain-hunt stocks that have fallen heftily over the last two weeks. The FBM KLCI rose 25.23 points to 1,294.39 from 1,269.16 week-on-week. Weekly turnover fell slightly to 3.328 billion shares valued at RM5.259 billion compared with the 3.397 billion shares valued at RM6.423 billion the previous week.
The FBM KLCI opened last week with a strong follow-through rebound which gave 15.85 points gains on last Monday. This was followed by two days of mild correction on Tuesday and Wednesday, and Thursday saw another 18 points up swing of the key index which hit the intra-week high of 1297.75, before profit-taking activities sent the key index off its intra-week high to close the week at 1294.39.
On the weekly chart, the FBM KLCI formed a bullish white candlestick which closed near its high. On the daily chart, however, a Doji candlestick with a long lower shadow was formed last Friday, which indicates a pause in the up move of the key index.
The rebound of the FBM KLCI last week has led the key index into the resistance zone of 1290 to 1300. On the weekly chart, it is closing above the 30-week moving average (MA), but is faced with the psychological resistance at 1300 and the resistance post by the 5-week MA at 1304. On the daily chart, the 120-day MA has post as a hurdle to the up move as the key index retraces after hitting it. The key index is now faced with multi-level of resistances from 1297 to 1320 as it tries to recover its recent losses. The key support for the key index lies at 1270, which is where the 200-day MA is now, and the psychological 1250 level to the 1244 level, the recent low.
Weekly MACD continued to slide lower, indicating the continuation of the downward momentum on the weekly time frame. However, daily MACD continued to move higher, albeit below the zero-line, reflecting the technical rebound of the key index last week. Weekly RSI(14) at 52 has hooked up, and has returned to the neutral zone, whereas, daily RSI(14) at 46 has turned flat, is still in the mildly bearish zone. Weekly Stochastic at 35 continued to move lower, indicating the down cycle is still in action; whereas the daily Stochastic continued to move higher, reflecting the up move due to the technical rebound. As the indicators signals from the longer term weekly chart is still negative, the current rebound may be short-lived, and may faced a pull-back before it move to challenge the higher resistance levels.
The short term trend of the FBM KLCI has now reversed up, the medium term trend is sideways with a downward bias, whereas the long term trend is still up.
On a lack of fresh leads, with the two weeks mid-year school holiday starting today and the FIFA world cup starting this Friday, the market is expected to go into a consolidation mode.
The Dow closed 323.31 points or 3.15% lower on last Friday at 9,931.97, this may affect the sentiments today towards the negative side, and will lead to a correction to the gain last week. This week, the FBM KLCI may trade within a range of 1245 to 1320, and for today it is likely to trade within a range of 1281 to 1302.
This week's expected range: 1245 – 1320
Today’s expected range: 1281 – 1302
Resistance: 1297, 1299, 1302
Support: 1281, 1285, 1290
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