Stocks on Bursa Malaysia extended gains for the fourth week with the benchmark index, FBM KLCI closing at the year high to a fresh 29-month high since the rally started in April 2009, as the rise on overseas markets after most European banks passed the stress tests and better-than-estimated second quarter earnings from blue-chip companies ranging from the US to Japan enhance the global economic recovery outlook. The FBM KLCI finished 15.24 points or 1.13% higher week-on-week to 1,360.92 from 1,345.68 the previous Friday. Weekly volume rose to 4.347 billion shares, valued at RM6.610 billion, from 4.175 billion shares, worth RM6.527 billion, traded the previous week.
The FBM KLCI opened last Monday with an up gap of 4.86 points at 1350.54, and continued to trade above the psychological resistance level of 1350. Profit-taking activities on Tuesday only managed to bring the key index down to 1348.29, the intra-week low, but the bull continued to push the index higher for the rest of the week with intra-day profit-taking activities continued to take place as the key index traded higher to close at the week high of 1360.92.
On the weekly chart, the FBM KLCI formed a white candlestick which is a bullish continuation signal to the current uptrend. On the daily chart, the key index was up for the sixth days consecutively and is in a bullish state, and the key index is expected to continue its up move to test the next higher level targets at 1370 and 1383.
Weekly MACD has made a bullish cross-over on its signal line, a golden-cross, which indicates the longer term momentum of the key index has turned upward. Daily MACD continued to move higher and is in a bullish state. Weekly RSI(14) at 64.6 continued to move higher and is in the bullish zone. Daily RSI(14) at 71 is very bullish, has nevertheless, entered the short term overbought zone. Weekly Stochastic at 94.7 continued to gain further, indicating the mid term strength is very strong, but is overbought. Daily Stochastic at 97.4 is very strong and continued to stay in the short term overbought zone. Signals from the indicators are pointing towards a strong short to medium term uptrend; with short term overbought situation flashing, hence, profit-taking activities is expected to continue to cap gains as the index move higher.
The FBM KLCI is currently above all its short, medium and long term moving averages. The immediate short term trend is up, medium term trend has started to turn upward while the longer term trend remained up, indicating a bullish state of the benchmark index. Immediate overhead resistance zone for the key index now lies at 1370 to 1383, while the immediate support zone is at 1345 to 1350.
In view of the improving economic climate, and the continued released the corporate results locally which are expected to be positive will continued to support the local market.
The Dow was down a marginal -1.22 points or -0.01% lower to close at 10,465.94 on last Friday. This week, the FBM KLCI may trade within a range of 1340 to 1383, and for today it is likely to trade within a range of 1350 to 1371.
This week's expected range: 1340 – 1383
Today’s expected range: 1350 – 1371
Resistance: 1363, 1365, 1371
Support: 1350, 1353, 1357
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