Stocks on Bursa Malaysia ended generally firmer last week in tandem with a firmer regional market performance following optimism that the impact of Europe debt crisis on the regional economy may be limited, and a new wave of optimism about the global economy's health.
The FBM KLCI ended last Friday at its intra-day high of 1,317.69, giving a single day gain of 13.22 points, or 1.01%. On a week-on-week basis, it gained 23.02 points or 1.78% from 1294.67 of the previous week’s close. Weekly turnover decreased to 2.731 billion shares worth RM4.486 billion from 2.878 billion shares valued at RM3.989 billion the previous week.
The FBM KLCI opened last week marginally lower, but registered gains for five consecutive days or throughout the week. The break through came on last Wednesday when it opened with an up gap of 4.77 points at 1303.14, crossing over the psychological resistance of 1300 without any struggle and finally closed the week at the intra-week high of 1317.69, with that, it has closed above the 10-week moving average (MA). This is an important breakthrough as the benchmark index normally turned bullish when it stays above the 10-week MA. On the chart, the key index formed a bullish white Marubozu candlestick on both its weekly and daily chart, which indicates a bullish outlook ahead.
Weekly MACD has turned flat, but its histogram has turned shorter, indicating a reduction in the downward momentum. The daily MACD, however, continued to surge higher, indicating the continued pick up in daily upward momentum. Weekly RSI(14) at 57.3 continued to move higher towards the bullish zone, whereas, daily RSI(14) at 60.4 has move into the short term bullish zone, hence, more upside is expected for the FBM KLCI. Weekly Stochastic at 55 has just crossed above the 50 level and its slow Stochastic, issuing a medium term bullish signal. The daily Stochastic at 89.1 is very strong for the short term and has again hooked up. Signals from the indicators are pointing towards a bullish outlook for the FBM KLCI, hence, it may continue to move higher.
With the strong closing of the FBM KLCI last Friday, all the technical indicators has turned positive, and the benchmark index is expected to continue charging higher. The short term trend has turned up, and the longer term underlying trend remained up.
The immediate overhead resistance zone now lies at 1320 to 1330, while the immediate underlying support is at 1290 to 1300.
With the mid-year school holiday over, the fund managers are back to work, and a positive outlook of the global economy, the FBM KLCI is expected to move higher this week.
The Dow closed +16.47 points or +0.16% higher on last Friday at 10,450.64. This week, the FBM KLCI may trade within a range of 1279 to 1349, and for today it is likely to trade within a range of 1298 to 1329.
This week's expected range: 1279 – 1349
Today’s expected range: 1298 – 1329
Resistance: 1321, 1325, 1329
Support: 1298, 1302, 1310
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