Stocks on Bursa Malaysia closed broadly higher last Friday on mild bargain-hunting activities as investors responded to the government's subsidy cut program announced on last Thursday night. The FBM KLCI rose 2.57 point or 0.19% to close the week at 1336.65. Week-on-week, it posted a gain of 12.34 points or 0.93% compared with 1324.31 the previous Friday. Total volume for the week rose to 3.40 billion shares worth RM5.94 billion from 2.81 billion shares worth RM5.02 billion the previous week.
The FBM KLCI staged a follow through rebound last week. It opened last week at 1323.91 and briefly touched the intra-week low of 1323.55 on last Monday. It rebounded quickly and moved up to hit the intra-week high of 1341.96 on Wednesday, however, profit-taking activities set-in quickly to curb gain. The key index corrected 7 points downward on Thursday but rebounded to re-coup some lost ground on Friday.
On the weekly chart, the FBM KLCI formed a bullish white candlestick and managed to close above the immediate resistance level at 1335. It formed a triangle on the weekly chart which is a continuation pattern that indicates correction and consolidation. A breakout from this pattern supported by good volume will bring the key index to the target of 1450, technically, in the medium to longer term perspective.
On the daily chart, the key index experienced a pull-back after touching the intra-week high of 1341.96, it was supported immediately by the short term 5-day moving average (MA), and is staying above the 10 and 30-day MA, which indicates the current short term trend is up. The key index is now staying in the resistance zone of 1330 to 1350, it will need to breakout from this zone before it can move higher. The underlying medium term trend is sideways as indicated by 60-day MA while the long term trend remained up, however, they are tapering off, indicting the slow down in long term upward momentum.
Weekly MACD continued to move higher marginally as indicated by its shorter histogram, nonetheless, it is still below its signal line, indicating the weekly upward momentum has not really pick up yet. Daily MACD, however, is in the bullish state. Weekly RSI(14) at 59.98 is moving into the bullish zone. Daily RSI(14) at 62 has hooked up and remained in the bullish zone. Weekly Stochastic at 74 continued to move higher, indicating the medium term cycle remained up. The daily Stochastic at 90 is in the overbought zone, and has hooked downward reflecting the current pull-back of the key index.
The government's subsidy cuts for petrol, diesel, liquefied petroleum gas, diesel and sugar effective last Friday is expected to have minimal impact on consumption patterns in the short term, and the less-than-aggressive cuts in subsidies will not translate into any impact on business sectors most exposed to consumer demand. In fact, the move will help improve the economy in the long run. As there is still no major catalyst that can move the market, it is expected that the FBM KLCI will continue to be range-bound between 1300 and 1350.
The Dow loss -261.41 points or -2.52% lower to close at 10,097.90 on last Friday. This week, the FBM KLCI may trade within a range of 1300 to 1360, and for today it is likely to trade within a range of 1327 to 1341.
This week's expected range: 1300 – 1360
Today’s expected range: 1327 – 1341
Resistance: 1337, 1339, 1341
Support: 1327, 1331, 1334
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