Stocks on Bursa Malaysia went through a week of roller-coaster ride last week with the benchmark FBM KLCI falling from 1360 level to the intra-week low of 1342.07 and recovered to close the week at 1360.15 on Friday. The FBM KLCI lost 0.3 of a point or 0.02%, week-on-week, to 1,360.15 compared with previous Friday's closing of 1,360.45. Weekly volume dropped to 3.939 billion shares worth RM5.813 billion from 4.741 billion shares valued at RM6.766 billion the previous week.
The FBM KLCI opened last week on a weak note with the key index in a correction mode and traded in a narrow range on Monday and Tuesday, where it still hang around the 1360 level. It lost 6.8 points to close at 1352.91 on Wednesday, and plunged almost 10 points to the intra-week low of 1342.07 on Thursday before recovering strongly to close last Friday at 1360.15.
The price action of the key index led to the formation of a dragon-fly Doji candlestick with long lower shadow on the weekly chart, which indicates strong buying support of index-linked counters at levels below 1360. On the daily chart, the key index formed a bullish Marubozu candlestick which confirmed the reversal signal issued by the Hammer candlestick formed on last Thursday. The FBM KLCI is, thus, expected to continue moving higher in the coming week, however, strong resistance is expected at 1370 level.
Weekly MACD continued to climb higher, indicating the medium term momentum of the key index remained positive. Daily MACD, however, continued to move lower, but is tapering off as indicated by the shorter histogram, indicating the short term downward momentum is waning. Weekly RSI(14) at 64.4 is flat, but remained in the bullish zone. Daily RSI(14) at 62.2 has hooked up, indicating the turn in market strength to the positive direction. Weekly Stochastic at 94.5 has hooked down, but remained above its slow stochastic, indicating the medium term market strength is still strong; while daily Stochastic at 43.2 continued to move lower, indicating the short term down cycle is not over yet. Mixed signals from the indicators is indicating that the medium to longer term market remained bullish, while the short term could be choppy.
The FBM KLCI is currently staying above all its short, medium and long term moving averages which indicates a bullish state of the key index. However, the appearance of a shooting-star candlestick the week before followed by a long lower shadow Doji last week indicates a possible top, unless the key index could break through the 1370 level in weeks to come. The overhead resistance zone remained at 1370 to 1383, while the immediate downside support zone is at 1340 to 1350.
The market may extend its rally this week on continued buoyant sentiment from last Friday's up move but it could fast fizzle out, as key data released in the US showed hints of possible economic softness, which could trigger another round of cautious sentiment among investors. In view of a lack of fresh market leads locally, the FBM KLCI will continue to track the performance of regional key indexes, while rotational play on second and third liners will continue to prevail.
The Dow fell -16.80 points or -0.16% lower to close at 10,303.15 on last Friday. This week, the FBM KLCI may trade within a range of 1327 to 1395, and for today it is likely to trade within a range of 1346 to 1369.
This week's expected range: 1327 – 1395
Today’s expected range: 1346 – 1369
Resistance: 1363, 1366, 1369
Support: 1346, 1349, 1355
Stock to watch: ZELAN, BJASSET, BHIC
An update of stock to watch:
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