Stocks on Bursa Malaysia closed slightly higher last Friday, boosted by persistent buying in blue-chips stocks. The FBM KLCI closed 2.11 points, or 0.14%, higher to 1,466.22. It had opened 1.14 points higher at 1,465.25 and hovered between the 1,463.25 and 1,472.76 throughout the day. On a weekly basis, the benchmark index fell 6.09 points from 1,460.13 a week earlier, as European leaders and the US Fed failed to convince investors on their strategies to prevent the financial crisis from widening. Gainers led losers by 423 to 345, while 314 counters were unchanged. Turnover was higher at 1.8 billion shares worth RM1.33 billion from 1.6 billion shares valued at RM1.25 billion on Thursday. Weekly volume decreased to 8.274 billion shares worth RM6.181 from previous week’s 9.596 billion shares worth RM6.641 billion.
The FBM KLCI was basically in consolidation mode the whole of last week. The key index opened the week with an up gap of 3.6 points at 1,463.73 and moved to the intra-week high of 1,474.55 before settling at 1,467.10 on Monday. The FBM KLCI declined 1.71 points to 1,465.39 on Tuesday after touching the intra-day low of 1,457.31. On Wednesday, the key index declined 2.27 points to 1,463.12 after trading in a narrow range. On Thursday, taking cue from the weak performance on Wall Street overnight, the FBM KLCI opened with a down gap of 3.25 points at 1,458.10 and plunged to the intra-week low of 1,448.54 before recovering to close in the positive territory with a gain of 0.99 of a point at 1,464.11, and chart-wise, it formed a white hammer candlestick, which is a bottom reversal candle pattern. On Friday, the FBM KLCI continued its rebound from Thursday and moved to the intra-day high of 1,472.76 before pulling back on profit-taking to close the week at 1,466.22.
On the weekly chart, the FBM KLCI formed a white spinning-top candlestick with a longer lower shadow which represents uncertainty, and indecision of market direction. However, the formation of this spinning-top candlestick after the occurrence of a long black candlestick the previous week also showed that the market was consolidating at current level, moreover, the key index was able to hold above the 5, 10 and 20-week simple moving average (SMA) after piercing through them, and hence might stage a rebound this week. However, the 80-week SMA at 1,478 might serve as a strong resistance to the up move.
On the daily chart, the FBM KLCI formed a white inverted hammer with a long upper shadow which indicates the key index was continuing its up move from Thursday’s rebound, but later sellers appeared to take profit and caused a pulled back of the key index from its intra-day high of 1,472.76, and the FBM KLCI might continue to consolidate today but with an upward bias with immediate overhead resistance at 1,472 posted by the 10-day SMA, while immediate downside support is at 1,462 provided by the 20-day SMA.
Weekly MACD continued to climb higher, indicating a continued improvement of the weekly momentum. Nonetheless, it is still below the zero-line, and this might just be part of a technical rebound. Daily MACD, however, continued to slide lower, but its histogram was turning shorter upward, indicating a slow down in the daily downward momentum. Weekly RSI (14) has hooked up to 48.7 from 47.7 the previous week, indicating a slight improvement of the weekly relative strength, but is still in the mildly bearish zone. Daily RSI (14) was higher at 50.9 from 49.9 on Thursday, indicating a slight improvement of the daily relative strength, and it has moved from bearish bias to the bullish bias neutral zone. Weekly Stochastic was at 83.9, and has continued to move higher, indicating an improvement of the weekly strength of the key index, and continuation of the weekly up cycle. Daily Stochastic, however, was lower at 46.4, indicating a continued loss in the daily momentum or strength of the key index, and a continuation of the daily down cycle. In short, readings from the weekly and daily indicators showed that the FBM KLCI is currently in a consolidation mode, and might continue to consolidate in the short term until a clear breakout sign is observed.
The trend of the FBM KLCI is currently sideways. In order to resume its uptrend, the key index will have to break through the strong overhead resistance zone at 1,480 to 1,507 posted by all the long term moving averages. On the other hand, the downside support zone is at 1,456 to 1,442, and is looking more fragile. The critical support level is at 1,423, and a break below this level will see the FBM KLCI turning very bearish.
Last Friday, the Dow fell a marginal -2.42 points or -0.02% to close at 11,866.39. This week, the FBM KLCI is likely to trade within a range of 1,425 to 1,501, and for today, it is likely to trade within a range of 1,452 to 1,483.
This week's expected range: 1425 – 1501
Today’s expected range: 1452 – 1483
Resistance: 1472, 1477, 1483
Support: 1452, 1457, 1462
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