Stocks on Bursa Malaysia were in consolidation last week after a rebound the previous week. The main highlight last week was the announcement of the 10th Malaysia Plan (10MP) on last Thursday which couldn’t excite the market, as its impact has already been discounted. The market, which opened the week lower, started to rebound ahead of the announcement of the 10MP, and stocks closed the week steadier across-the-board. The FBM KLCI gained 0.28 point or 0.02% week-on-week to close at 1294.67 on last Friday. Weekly turnover declined to 2.878 billion shares valued at RM3.989 billion from 3.328 billion shares valued at RM5.259 billion the previous week.
The FBM KLCI opened last week on a weak note at 1284.51 and touched the intra-week low of 1278.89 on last Monday, it gradually recovered its lost ground as the week progressed and hit the intra-week high of 1302.07 on last Friday before profit-taking activities pressed it lower to close the week off-high at 1294.67.
On the weekly chart, the benchmark index formed a bullish white candlestick which closed right above the 30-week moving average (MA) which is currently at 1292.80. This has significant importance as the 30-week MA has previously given support to the key index when it corrected in early February and help maintained the longer term uptrend. If the key index is able to stay above this long term MA in the near term, there is a good likelihood that it may re-challenge the 1300 psychological resistance level, and if successfully break-through, then it will move towards the next higher target level at 1320. The 1300 and the 1320 levels coincided with the 38.2% and the 23.6% Fibonacci levels as shown in the daily chart. On the other hand, if the benchmark index could not hold at this level and break below the immediate support at 1290, then it might move southward towards the 1270 level, which is where the 61.8% Fibonacci level and the 200-day MA meet.
Weekly MACD continued to move lower, but at a reduced pace, as shown by the histogram which has turned flat; daily MACD, however, continued to move higher, reflecting the current technical rebound state of the FBM KLCI. Weekly RSI(14) at 52 turned flat and is back into the neutral zone with a mildly bullish bias; whereas the daily RSI(14) at 47.5 continued to climb higher, is still in the mildly bearish zone. Weekly Stochastic has just hooked up but is still below the 50 level; whereas daily Stochastic at 81.5 continued to move higher, indicating the short term up-cycle remained intact, but it has just entered the short term overbought zone. Mixed signals from the weekly and daily indicators point towards short term consolidation with an upward bias for the benchmark FBM KLCI.
Short term, the FBM KLCI might continue to stay sideways with an upward bias, it is currently bound by the overhead resistance at 1300 to 1320, whilst its immediate downside support is at 1270 to 1290. The longer term trend, however, remained up.
In view of a lack of fresh leads locally after the announcement of the 10MP, the mid-year school holiday, and the FIFA world cup which has drawn much attention away from the stock market, the local bourse is likely to remain quiet and trade sideways, and will track the performance of the US and regional bourses.
The Dow closed 38.54 points or 0.38% higher on last Friday at 10,211.07. This week, the FBM KLCI may trade within a range of 1250 to 1324, and for today it is likely to trade within a range of 1285 to 1305.
This week's expected range: 1250 – 1324
Today’s expected range: 1285 – 1305
Resistance: 1297, 1300, 1305
Support: 1285, 1289, 1292
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