Stocks on Bursa Malaysia ended marginally lower last Friday as investors took profits ahead of the long weekend, snapping its four-day rally supported by improved sentiment following better-than-expected corporate earnings in US. However, investors are still looking for fresh leads as sentiment currently point towards a weaker economic outlook in the near term, despite corporate results beating forecast currently. The FBM KLCI ended 0.35 point lower at 1,534.95, after opening 5.25 points better at 1,540.55. On a weekly basis, the key index gained 12.2 points or 0.8% from 1,522.75 the previous Friday. Losers led gainers by 395 to 337 while 330 counters were unchanged. Turnover declined to 852.367 million shares valued at RM1.264 billion, compared with Thursday’s 924.643 million shares valued at RM1.400 billion. Weekly volume declined to 5.007 billion shares worth RM4.901 billion from 5.873 billion shares worth RM7.408 billion the previous week.
The FBM KLCI started last week on a consolidation mode where it made a marginal gain of 1.3 points to close at 1,524.05 after trading in a narrow range. On Tuesday, the market barometer defied the bearish sentiment in play after touching the intra-week low of 1,520.45 to end 3.29 points higher at 1,527.34 despite being in the minus territory in the predominant part of the day. The market continued to be mixed on Wednesday but the key index managed to gain 2.57 points higher to 1,529.91. On Thursday, the FBM KLCI was boosted by gains in selected heavyweights to ended 5.39 points higher at 1,535.30, extending its gains for the fourth consecutive day; and on Friday, the key index ended 0.35 point lower at 1,534.95.
On the weekly chart, the FBM KLCI formed a bullish white candlestick which signifies a confirmation to the possible reversal signal issued by the spinning-top candlestick formed the previous week. Hence, the key index is likely to move higher this week. However, the resistance zone at 1,541 to 1,565 would be a test, and the key index will have to break above the 1,565 level in order to breakout from the current sideways range.
On the daily chart, the FBM KLCI formed a black hanging-man candlestick after opening at the day’s high of 1,540.55, and this is a bearish one day top reversal candlestick pattern which indicates distribution by the bears. With this price action, the key index is likely to go back to its consolidation range of 1,514 to 1,541.
Weekly MACD continued to slide lower and remained below its signal line, indicating a state of consolidation on a weekly perspective. Daily MACD, however, continued to move higher, but is still below its signal line, indicating a rebound amid sideways consolidation.
Weekly RSI (14) has hooked up to 56.4, indicating a mildly bullish condition on the weekly perspective. Daily RSI (14) is slightly lower at 54, is in the bullish bias neutral zone.
Weekly Stochastic continued to slide lower, indicating a continued loss of weekly market strength. Daily Stochastic, however, climb higher, reflecting the continued climb of the key index over the last four days. Readings of the weekly and daily indicators showed mixed signals which indicate the FBM KLCI is still in a consolidation phase.
The short and medium term trend of the FBM KLCI is currently sideways range-bound, and the key index will have to breakout from its resistance at 1,565 in order to turn uptrend, and if it breaks below 1,514, the trend will go southward. The long term trend, nonetheless, is still up. Overnight, the Dow fell a marginal -3.18 points or -0.02% to close at 12,807.36, while Bursa Malaysia was closed for Labor Day Holiday. This week, the FBM KLCI is likely to be range-bound within a range of 1,503 to 1,561, and for today it is likely to trade within a range of 1,518 to 1,552.
This week's expected range: 1503 – 1561
Today’s expected range: 1518 – 1552
Resistance: 1541, 1546, 1552
Support: 1518, 1524, 1529
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