Stocks on Bursa Malaysia closed higher last Friday in line with the gains on Asian markets and Wall Street overnight. Wall Street and regional markets staged a rebound after the Group of Seven rich nations agreed on a joint intervention to curb advances in the Japanese currency. The FBM KLCI crossed the 1,500-level to close 11.80 points higher at 1,503.89, and week-on-week, it gained 8.27 points from 1,495.62. Advancers outnumbered decliners by 501 to 250 while 271 counters were unchanged. Turnover was higher at 988.923 million shares worth RM1.504 billion from 922.172 million shares worth RM1.467 billion on Thursday. However, weekly volume fell to 5.097 billion shares valued at RM7.738 billion from 5.50 billion shares valued at RM8.50 billion the previous week.
The FBM KLCI saw a volatile week last week where it opened on last Monday with a big down gap of 9.52 points at 1,486.10 and slipped to the intra-day low of 1,480.63, losing as much as 15.09 points at its worst, before rebounding to close almost unchanged at 1,495.37. On Tuesday, the key index opened 0.93 point lower at 1,494.42 and plunged to the intra-week low of 1,476.24 on heavy selling pressure in the morning session, losing as much as 19.11 points at its worst, and it rebounded on bargain hunting to close off low at 1,484.14. On Wednesday, the FBM KLCI was more stable, it opened 5.77 points higher at 1,489.91 and close at the day’s high of 1,492.44 after touching an intra-day low of 1,484.71. On Thursday, the FBM KLCI opened with a big down gap of 9.15 points at 1,483.29 following the hefty fall on Wall Street overnight, but managed to rebound from there to close almost unchanged at the day’s high of 1.492.09. And on Friday, the FBM KLCI staged a breakout from its consolidation range of the week to close at the week’s high of 1,503.89, backed above the psychological 1,500-level.
On the weekly chart, the FBM KLCI formed a piercing-line candlestick, which indicates the counter-attack of the bulls after a week of battled by the bears. The key index found support from the 30-week moving average and closed above it after piercing through it in the earlier part of the week. With the formation of a piercing line candlestick on the weekly chart, the key index is likely to continue its rebound this week.
On the daily chart, the FBM KLCI formed a bullish white candlestick and made a breakout from its consolidation range of the week. With the key index closing above the 1,500-level again, it will give investors on the sideline confidence to come back to the market, and hence will help to push the index higher in the week ahead. Nevertheless, the key index is currently still in the downtrend, it will have to move above the 1,530 level in order to reverse the trend.
Weekly MACD continued to slide lower, but on a slower pace, as shown by the shorter histogram. Daily MACD has turned upward, but is still below its signal-line in the negative territory, and hence the key index is still bearish, and the rebound could be just part of a technical correction to the downtrend.
Weekly RSI (14) is at 53.1 and has hooked up, and it is currently in the neutral zone. Daily RSI (14) has however climbed higher to 47.9 from 41.6, moving towards the neutral zone from the bearish zone.
Weekly Stochastic is at 32.2, and has hooked up to cross its slow stochastic line after forming a bullish divergence, indicating a possible up cycle in the brewing. Daily Stochastic is at 38.8, and has crossed over its daily slow stochastic line, and together with the bullish divergence formed it indicates a possible up cycle in the week ahead.
Readings from the weekly and daily indicators showed that the FBM KLCI is still bearish and weak, but there are signs that it may gradually turn bullish again. However, this will need more data to confirm.
Current trend of the FBM KLCI is still down, as it is still closing below most of the moving averages. Nevertheless, it has just crossed above its very short term 5-day MA, and hence may continue to move higher in the immediate term. Strong overhead resistance zone is expected at the 1,510 to 1,530 levels, while the immediate downside support zone is at 1,490 to 1,474 levels.
Last Friday, the Dow rose another +83.93 points or +0.71% to close at 11,858.52. This week, the FBM KLCI is likely to be range-bound with an upward bias, and may trade within a range of 1,457 to 1,531, and for today it is likely to trade within a range of 1,479 to 1,519.
This week's expected range: 1457 – 1531
Today’s expected range: 1479 – 1519
Resistance: 1509, 1514, 1519
Support: 1479, 1484, 1494
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