Stocks on Bursa Malaysia traded mixed last week with active profit-taking on heavyweight counters after the benchmark index hit fresh high for the year, while rotational play continued to prevail on lower liners. The FBM KLCI registered a fresh 29-month high at 1370.52 but closed the week off high at 1360.45, losing 0.47 point or 0.12% week-on-week. Weekly volume rose to 4.741 billion shares worth RM6.766 billion from 4.347 billion shares valued at RM6.610 billion the previous week.
The FBM KLCI opened 3.31 points higher at 1364.23 on last Monday and surged to the intra-day high of 1368.43 but succumb to heavy profit-taking activities to close off high at 1363.60. On Tuesday, the key index continued to scale new high of 1370.52 but failed to sustain the gain and closed just marginally higher. The key index continued to face heavy profit-taking activities for the rest of the week from Wednesday to Friday and closed the week 0.47 point lower at 1360.45. However, good buying support was seen at level below 1360 while strong overhead resistance was encountered at 1366 level.
On the weekly chart, the FBM KLCI formed a bearish black shooting-star candlestick which indicates top distribution, as the weekly volume increased to above the 30-week average of 4.089 billion shares. On the daily chart, the key index was practically forming bearish black candlestick everyday the whole of last week, signifying heavy distribution at level above 1360. In view of the bearish signal, the benchmark FBM KLCI is likely to continue its correction and consolidation in the coming week.
Currently, the FBM KLCI has closed below its immediate short term 5-day moving average (MA) indicating the index might continued to face short term selling pressure, but remained above its 10-day MA. The medium term 30-day MA and the longer term 120-day MA is still pointing northeast, indicating a bullish undertone from the longer term perspective. If the key index continues to correct, it might get immediate support by the 10 and 30-day MA at 1336 to 1359 level, with 1350 being the critical support level. Immediate overhead resistance zone for the FBM KLCI is now at 1366 to 1383, while immediate downside support zone lies at 1350 to 1359.
Weekly MACD continued to climb higher after making a golden-cross last week, indicating the medium term upward momentum is still intact. Daily MACD has, however, continued to slide lower, reflecting the short term correction mode of the key index. Weekly RSI(14) at 64.5 has hooked downward, but still in the bullish zone. Daily RSI(14) at 67.9 has crossed below the 70 level, indicating a short term correction in action. Weekly Stochastic at 95.9 continued to climb higher, indicating the medium term market strength is still strong, while daily Stochastic at 78.6 has crossed below the 80 level, indicating a short term down cycle has probably begun. Signals from the indicators are indicating two different scenarios where for the immediate short term, the key index might go into a correction mode, but remained bullish for the medium to longer term time frame.
The market may extend its consolidation this week, as investors stay cautious following slower economic growth in the US while they also await the bulk of the corporate results due to be released in August. On Wall Street, stocks fell on Friday after government data showed a larger-than-expected drop in July non-farm payrolls, giving investors a stark reminder that the economic recovery remains slow. However, rotational play on lower liner stocks may continue to dominate the local market.
The Dow was down -21.42 points or -0.20% lower to close at 10,653.56 on last Friday. This week, the FBM KLCI may trade within a range of 1339 to 1383, and for today it is likely to trade within a range of 1353 to 1369.
This week's expected range: 1339 – 1383
Today’s expected range: 1353 – 1369
Resistance: 1363, 1366, 1369
Support: 1353, 1356, 1358
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