Stocks on Bursa Malaysia ended last Friday higher as institutions snapped up plantation and financial heavyweights. Gains in key regional markets, following the overnight advance on Wall Street, as well as the easing crude oil prices further lifted the market sentiment. Promising economic outlook in the US prompted institutions to buy selected heavyweights as they had been sidelined for a while due to the unrest in Middle East. The FBM KLCI rose by 15.73 points, or 1.04%, to close at 1,522.61. Week-on-week, it rose 33.34 points from 1,489.27 recorded the previous Friday. Turnover rose to 1.13 billion shares worth RM1.9 billion from 1.07 billion shares worth RM1.52 billion recorded on Thursday. However, weekly volume fell to 5.84 billion shares, valued at RM8.7 billion, from 8.58 billion shares, worth RM10.4 billion, recorded the previous week.
The FBM KLCI opened 4.13 points higher at 1,493.40 last Monday but plunged to the intra-week low of 1,474.38 and rebounded from there to close 1.98 points higher at 1,491.25. The key index continued its rebound on Tuesday to close at the day’s high of 1,502.24. Taking cue from the hefty fall on Wall Street overnight, the FBM KLCI closed at 1,499.28 on Wednesday, down 2.96 points after opening 8.64 points easier at 1,493.60. On Thursday, The FBM KLCI was up 7.60 points to close at 1,506.88 after opening 0.47 of a point lower at 1,498.81. And on Friday, the key index opened with an up gap of 12.4 points and rallied to the intra-week high of 1529.41 before retreating to close off high at 1,522.61 on profit-taking activities.
On the weekly chart, the FBM KLCI formed a bullish engulfing-like candlestick which indicates a strong fight back by the bulls after being pressed down by the bears for more than a month. It rebounded strongly after penetrating the 30-week moving average (MA) but halted at the 10-week MA. If the key index is able to clear the resistance posted by the 10-week MA convincingly, it may rallied to re-challenge the psychological resistance level at 1,550 and then the all time high level of 1,576.95.
On the daily chart, the FBM KLCI formed a shooting-star candlestick pattern last Friday after opening with a big up gap of 12.4 points. The long upper shadow of the shooting-star candlestick indicated heavy profit–taking activities by short term investors. The strong up move last Friday was met with the strong resistance posted by a 30, 50 and 60-day MA which all met at the same region of 1522 to 1528. The FBM KLCI will have to clear this immediate resistance zone in order for it to climb higher to reverse its current downtrend. The other point to note is that the key index has just closed above the neckline of the head-and-shoulder (H&S) pattern, and it will have to move higher in order to remove the threat of the H&S pattern.
Weekly MACD had continued to slide lower, but its histogram is turning shorter for the first time after a continuous slide for six weeks, indicating a slow down in the weekly downward momentum. On the contrary, daily MACD had made a golden cross over its daily signal line, issuing a short term buy signal. However, as the golden-cross occurred below the zero-line, one need to be cautious when taking position, as it might turn out to be just part of a technical rebound before continuing with its downward slide.
Weekly RSI (14) has reversed up to 57.3 from 51.1 the previous week and is still in the mildly bullish zone. Daily RSI (14) had crossed above the 50 level to 53.6 from 46.1 on Thursday, indicating the FBM KLCI is back to the mildly bullish zone from the mildly bearish zone. With this move, a continuation of the upward momentum is expected.
Weekly Stochastic has hooked up strongly for the first time after six weeks of continuous decline; nonetheless, it is still below its weekly slow stochastic line at the moment, a crossed above the weekly slow stochastic line would trigger an up cycle on the weekly chart. Daily Stochastic is at 65.7, and has continued to move higher, indicating a pick up in the upward momentum. Readings from the indicators showed that the FBM KLCI in gradually turning bullish, however, more data is required for confirmation.
With the strong up move last Friday, the FBM KLCI had break above the short term downtrend line, indicating a change of short term trend from down to up. As mentioned in previous analysis, the FBM KLCI is now coming to challenge the resistance zone at 1,528 to 1,530, if it can close above the 1,530 convincingly, it will trigger a rally towards the 1,550 level and then to re-challenge the all time high level of 1,576.95..
Last Friday, the Dow fell -88.32 points or -0.72% to close at 12,169.88. This week, the FBM KLCI is likely to be range-bound with an upward bias, and may trade within a range of 1,453 to 1,584, and for today it is likely to trade within a range of 1,507 to 1,539.
This week's expected range: 1453 – 1584
Today’s expected range: 1507 – 1539
Resistance: 1529, 1533, 1539
Support: 1507, 1513, 1518
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