Stocks on Bursa Malaysia ended the week lower last Friday as investors stayed on the sidelines to await the outcome of European policymakers' meeting over the weekend. Losses were mostly seen in Genting, which dragged the FBM KLCI 2.35 points or 0.16% lower to close at 1,438.83, and week-on-week, the benchmark index eased 3.6 points or 0.25% from previous Friday's closing of 1,442.43. Losers led gainers by 366 to 323 while 278 counters were unchanged. Total market volume dropped to 1.253 billion units valued at RM1.095 billion from 1.309 billion units valued at RM1.155 billion on Thursday. Total weekly volume surged to 7.391 billion shares worth RM6.584 billion from 5.305 billion units valued at RM6.485 billion the previous week.
The FBM KLCI opened with an up gap of 9.54 points at 1,451.97 on last Monday and ended the day near the intra-week high at 1,645.35. Tuesday saw a strong pullback in the key index where it fell 25.41 points to close at 1,439.94 after opening 5.77 points lower at 1,459.58. Taking cue from the strong gain on Wall Street overnight, the FBM KLCI rebounded on Wednesday to close 10.31 points higher at 1,450.25. On Thursday, stocks ended on a softer note as weaker sentiment globally eased investors' confidence, resulting in selling across the board, and the benchmark index closed 9.07 points lower at 1,441.18. On Friday, the FBM KLCI was basically in a consolidation mode and traded in a narrow range for a major part of the day, it however, went on a roller-coaster ride near the end of the day where it suddenly tumbled to the low of 1,371.18, due probably to some errors in trade execution, losing 70 points at its worst, before recovering to close 2.35 points lower to end the week at 1,438.83.
On the weekly chart, the FBM KLCI formed a black hangman candlestick which indicates consolidation; however, as the long lower shadow was due to some trading error, it can be ignored. It showed that the key index was taking a breather and gone into consolidation after three consecutive weeks of up move. It hit into the 80-week moving average (MA) and pulled back. Nonetheless, it is now above the 5 and 10-week MAs. The FBM KLCI is likely to continue its consolidation this week but with an upward bias.
On the daily chart, the FBM KLCI formed a hammer candlestick with extremely long lower shadow. Taking away the long lower shadow, the price action of the key index indicated continued consolidation. Immediate support is at 1,429 while the immediate overhead resistance zone is envisaged at 1,447 to 1,450.
Weekly MACD continued to climb higher, indicating an improvement in the weekly upward momentum; nonetheless, the weekly MACD is still below the signal-line in the negative zone. Daily MACD was higher but tapering off, together with the shorter histogram, it indicated a loss in the daily upward momentum, and hence, might extend its consolidation. Weekly RSI (14) hooked down slightly to 42.6 reflecting the pullback on the weekly chart, and the weekly relative strength is still in the mildly bearish zone. The daily RSI (14) had continued to slide lower to 53.9, reflecting the consolidation and the daily relative strength is losing its strength and moved lower into the mildly bullish zone. Weekly Stochastic continued to climb higher to 41.7, indicating the current weekly up cycle is still intact. Daily Stochastic, however, fell lower to 80.1, reflecting the pullback correction in the key index for the last few days. If the daily stochastic continue to slide below the 80 level, then the down cycle may extend itself, signaling an end to the recent up cycle. Readings from the indicators showed that the FBM KLCI is taking a breather after the recent rally from the low of 1,310.
The short term trend of the FBM KLCI remained up, as it continued to stay above the short term 10, 20 and 30-day MAs. But for the immediate term, it has gone into a sideways consolidation. In order to breakout from this consolidation, the FBM KLCI will have to break above the immediate resistance posted by the 5-day MA at 1,447, and it may then re-test the recent high of 1,465. The medium and long term trend remained down. For the coming week, the FBM KLCI may continue to consolidate but with an upward bias. However, the second and third liners may continue to dominate the active counters scene.
Last Friday, the Dow rose +267.01 points or +2.31% to close at 11,808.79. This week, the FBM KLCI is likely to trade within a range of 1,389 to 1,503, and for today, it is likely to trade within a range of 1,423 to 1,459.
This week's expected range: 1389 – 1503
Today’s expected range: 1423 – 1453
Resistance: 1443, 1448, 1453
Support: 1423, 1429, 1433
Stocks to watch: FABER, KPS, JAKS, PUNCAK, SALCON
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