Stocks on Bursa Malaysia ended last week on a high note backed by robust regional markets coupled with fresh domestic leads. Inflow of more investments and planned slowing of subsidy cuts to spur consumption and cap inflation also aided market sentiment. The FBM KLCI closed at 1,555.38, up 10.25 points or 0.66%, after opening 1.91 points higher at 1,547.04. Week-on-week, the index surged 39.83 points or 2.62 per cent from previous Friday’s close of 1,515.55. Gainers outnumbered losers by 517 to 319 while 271 counters were unchanged. However, turnover fell to 1.518 billion shares, worth RM2.152 billion, from 1.951 billion shares, worth RM2.566 billion, transacted on Thursday. Nonetheless, weekly volume surged to 8.841 billion shares valued at RM11.383 billion, from the previous week’s 6.125 billion shares valued at RM8.214 billion.
The FBM KLCI opened last Monday with a down gap of 1.05 points at 1,514.50 and moved lower to hit the intra-week low of 1,511.98, before rebounding to close 1.3 points down at 1,514.25 after trading in narrow range. The key index rebounded on Tuesday and continued to move higher for the rest of the week to close at the week’s high of 1,555.38.
On the weekly chart, the FBM KLCI formed a bullish white candlestick which breakout from its recent consolidation range to close above the psychological resistance level of 1,550, as well as above all its moving averages. With this very bullish breakout, the FBM KLCI is expected to continue moving higher to re-test its historical high of 1,576.95 charted on January 6, 2011.
On the daily chart, the FBM KLCI formed a bullish white Marubozu candlestick with a continuation gap which indicates strong buying demand for index-link heavyweights. The key index has now closed above two critical resistance levels at 1,530 and 1,545, which indicates the recent downtrend which started on January 18 and saw its bottom on February 28 is over, and the downtrend had been reversed. With this strong reversal in the short term trend and a firm close above the neckline, the threat of the head-and-shoulder pattern is eased off now.
Weekly MACD has hooked up, and the histograms continued to turn shorter, which indicates a picking up of the weekly momentum. Daily MACD is continuing its up move to climb higher, indicating a strong pick up in the daily momentum.
Weekly RSI (14) has returned to the bullish zone and is at 61.8. Daily RSI (14) is higher at 71.1, indicating the key index is turning very bullish, but has also moved into the short term overbought zone, forewarning a possible pullback correction soon.
Weekly Stochastic has crossed above its weekly slow stochastic line, indicating a beginning of an up cycle on the weekly chart after going through the short term down cycle recently. Daily Stochastic continued to climb higher to 99.5, indicating very strong market strength and is short term overbought. Readings from the indicators showed a very bullish state of the FBM KLCI, and the key index is likely to continue with its up move. However, as some oscillators already showed signs of overbought, a pullback correction is expected soon.
The short term trend of the FBM KLCI has turned up. However, the medium term trend is still sideways as indicated by the medium term 60-day MA which is flat and the 30-day MA is still below the 60-day MA. The FBM KLCI will turn fully bullish when the 30-day MA crosses above the 60-day MA. The long term uptrend is intact. Immediate overhead resistance zone is at 1,560 to 1,577, while the downside support zone is at 1,545 to 1,530.
Last Friday, the Dow rose another +56.99 points or +0.46% to close at 12,376.72. This week, the FBM KLCI is likely to trade within a range of 1,483 to 1,599, and for today it is likely to trade within a range of 1,541 to 1,564.
This week's expected range: 1483 – 1599
Today’s expected range: 1541 – 1564
Resistance: 1558, 1561, 1564
Support: 1541, 1544, 1549
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