Stocks on Bursa Malaysia ended firmer last Friday boosted by strong gains in most index-linked counters coupled with encouraging Gross Domestic Product (GDP) growth figures reported for 2010, overnight gains on Wall Street as well as stronger regional bourses. The benchmark FBM KLCI ended 9 points or 0.60% higher at 1,517.56 after opening 0.43 of a point better in the morning. On a weekly basis, the FBM KLCI gained 23.04 points, or 1.5%, from the previous week’s close of 1,494.52. Volume for the week decreased to 7.09 billion shares worth RM7.637 billion from 12.51 billion shares worth RM13.55 billion during the holiday-shortened week last week.
The FBM KLCI opened the week higher at 1,497.89 with a rebound and gradually moved higher for the week to touch the intra-week high of 1,521.15 before settling off high at 1,517.56. On the weekly chart, The FBM KLCI formed a bullish Harami candlestick, which is a bottom reversal candlestick pattern, and the key index is likely to continue with its upward momentum to move higher this week. However, the 10-week moving average (MA) at 1528 will post as a strong resistance to the up move, and the key index will need to climb above the previous week’s high of 1544.35 in order to reverse the downtrend.
On the daily chart, The FBM KLCI formed a bullish white candlestick which has successfully close above the neckline of the head-and-shoulder pattern. The key index might continue to move higher, but the overhead resistance to the up move is expected to be strong at the gap area of 1527 to 1533, and at 1541 posted by the 30-day MA.
Weekly MACD continued to slide lower, indicating the weekly momentum is still weak. Daily MACD, however, has curved upward, albeit still below the zero-line, coupled with shorter histogram, indicates that the daily momentum had started to pick up.
Weekly RSI (14) has hooked up, reflecting the technical rebound last week. Its weekly reading of 57.7 showed that the weekly strength of the key index is in the mildly bullish zone. Daily RSI (14) at 45.6 has continued to move upward from the low of 32.6 registered on February 11. It has moved out from the very bearish zone to the mildly bearish zone.
Weekly Stochastic is at 39.4, has continued to slide lower but is tapering off, indicating a slow down in the downward strength. Daily Stochastic, however, has crossed above its slow stochastic line and climb higher to 36.2 from the reading of 8.6 registered on February 14, indicating the FBM KLCI has move out from the oversold zone, and a short term up cycle has just started.
Technically, the FBM KLCI is just making a technical rebound at the moment, and readings from the indicators showed that the key index is still relatively weak in terms of its momentum, and the rebound could be short-lived. On the other hand, if the FBM KLCI is able to break above it recent pivot high of 1544.35, then the short term downtrend would be reversed.
Last Friday, the Dow rose +73.11 points or +0.59% to close at 12,391.25. This week, the FBM KLCI is expected to be range-bound with an upward bias, and may trade within a range of 1474 to 1550, and for today it is likely to trade within a range of 1497 to 1534.
This week's expected range: 1474 – 1550
Today’s expected range: 1497 – 1534
Resistance: 1523, 1529, 1534
Support: 1497, 1503, 1510
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