Stocks on Bursa Malaysia closed lower last Friday, weighed down by profit-taking activities. The FBM KLCI was 1.67 points or 0.11% lower at 1,569.89 after opening 0.73 points higher at 1,572.29. Week-on-week, the key index fell 3.32 points to 1,569.89 from previous Friday’s 1,572.21. Total weekly volume rose to 12.254 billion shares worth RM13.678 billion from 10.7 billion shares worth RM15.255 billion the previous week.
The local bourse was very much in profit-taking consolidation last week. The FBM KLCI opened the week 2.43 points higher at 1574.64 and hit the intra-week high of 1576.37 but succumb to heavy profit-taking on Monday. The key index hit the intra-week low of 1,558.64 on Tuesday and rebounded from there to eventually close the week at 1,569.89.
On the weekly chart, the FBM KLCI formed a hanging-man candlestick, which is a top reversal signal. With the appearance of this candlestick, the FBM KLCI is likely to continue with its consolidation this week, unless there are strong enough factors that can propel the key index to higher ground.
On the daily chart, the FBM KLCI also formed a hanging-man like candlestick last Friday, where the key index was basically in profit-taking mode throughout the day until a last minute buying of selected key heavyweight which lifted the index to close marginally lower.
Weekly MACD continued to move higher after making a golden-cross the previous week, indicating the weekly momentum had turned positive. Daily MACD, however, is turning flat, coupled with the declining histogram indicates a continued loss in the daily upward momentum.
Weekly RSI (14) is lower at 79.2 after hitting the overbought reading of 80.2 the previous week, reflecting the correction last week. Nonetheless, the weekly RSI reading shows that the key index is still in the very bullish zone. Daily RSI (14) at 71.3 has hooked downward, reflecting the correction last Friday, it is however, still in the very bullish zone.
Weekly Stochastic had continued to move higher to 91.5, and so is the daily Stochastic which has cross above its slow stochastic line, indicating a continuation of the up cycle.
The underlying uptrend of the FBM KLCI is still very much intact, except that for the very short term it might continues with its range-bound move until it is able to break above the immediate strong overhead resistance at 1577. If that happens, we may see the FBM KLCI climb higher to test the next psychological resistance at 1600.
For this week, share prices on Bursa Malaysia are expected to be steadier, as the market fundamentals remained firm following positive corporate and economic news on the local front as well as on overseas markets. The FBM KLCI may continue with its range-bound mode with an upward bias, while rotational play on second and third liners is expected to remain dominant. Last Friday, the Dow rose +55.48 or +0.47% higher to close at 11,787.38. This week, the FBM KLCI may trade within a range of 1542 to 1594, and for today it is likely to trade within a range of 1559 to 1580.
This week's expected range: 1542 – 1594
Today’s expected range: 1559 – 1580
Resistance: 1573, 1577, 1580
Support: 1559, 1562, 1566
Stocks to watch: GUOCO, YTLLAND, JAVA, COASTAL, WASEONG
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