Stocks on Bursa Malaysia ended last Friday higher on hopes of a global recovery following positive news on the Euro-zone debt crisis and the recovery of the US economy. Despite weakness on regional markets, the benchmark FBM KLCI was able to sustain its positive momentum on buying interest in recently beaten down stocks. The FBM KLCI gained 3.76 points or 0.25% to 1,489.02 against Thursday's 1,485.26, and week-on-week, the benchmark index gained 57.47 points from previous Friday’s close of 1,431.55. A total of 1.71 billion shares worth RM1.36 billion changed hands compared to the 1.66 billion shares worth RM1.79 billion on Thursday, and weekly volume decreased to 6.21 billion shares, worth RM6.74 billion, from previous week’s 7.27 billion shares, worth RM5.51 billion.
Bursa Malaysia was closed for Awal Muharram holiday last Monday. The FBM KLCI staged a rebound when it re-opened on Tuesday buoyed by positive global sentiment where the key index ended 13.17 points higher at 1,444.72 supported by institutional buying of finance stocks after opening 6.22 points higher at 1,437.77. The FBM KLCI continued the up move into Wednesday with a gain of 27.38 points or 1.89% to close at 1,472.10. On Thursday, Taking cue from the 490 points gain of the Dow overnight, the FBM KLCI opened with a big up gap of 14.82 points at 1,486.92 and climbed to the intra-week high of 1,502.53 before pulling back on profit taking to close 13.16 points higher at 1,485.26. The benchmark index went into a consolidation mode on Friday, but still made another gain of 3.76 points to close the week 57.47 points higher week-on-week at 1,489.02.
On the weekly chart, the FBM KLCI formed a bullish white candlestick which indicates the bulls were in control for the week, and with the strong upward momentum seen last week, the key index is likely to move further upward this week. Immediate overhead resistances are posted by the 30-week simple moving average (SMA) at 1,497 and the 60-week SMA at 1,507. If the FBM KLCI can break through the resistance zone convincingly, then it would resume its bullish uptrend.
On the daily chart, the FBM KLCI formed a black spinning-top candlestick which indicates indecision of market direction and consolidation. The key index may continue to consolidate with a possibility of covering the gap formed on Thursday before continuing the uptrend. Immediate overhead resistance zone on the daily chart is at 1,493 to 1,509. If the FBM KLCI is able to sail through this strong resistance zone, then it may rally towards the next higher target level of 1,536, which is the 78.6% Fibonacci retracement level measuring from the 1,597 record high of July 11 to the recent pivot low of 1,310 on Sept 26, and the possible eventual target is 1,607 as indicated by the red dotted line.
Weekly MACD has hooked upward, indicating resumption in the weekly upward momentum after the recent consolidation. Daily MACD also made a bullish golden-cross over the signal-line, flashing a buy signal. Weekly RSI (14) has crossed above the 50-level to 52.3 from 41.9 the previous week, indicating a change of the weekly relative strength from bearish to mildly bullish. Daily RSI (14) was higher at 60.4, indicating the daily relative strength of the FBM KLCI has turned bullish. Weekly Stochastic continued the up cycle to reach 77.1, indicating a continued improvement in the weekly market strength. Daily Stochastic also surged higher to 79, about to enter the short term overbought zone. Readings from both the weekly and daily indicators showed that the FBM KLCI is turning bullish, and the upward momentum may carry it to a higher level.
The short term trend of the FBM KLCI has turned up, while the medium and longer term trend still remained sideways. Immediate strong overhead resistance zone is at 1,493 to 1,509 while the downside support zone is at 1,483 to 1,472. With the volume continued to stay above the 1 billion shares mark, the market is likely to remain active with rotational play alternating between the blue-chip stocks and the second and third liners.
Last Friday, the Dow fell -0.61 points or -0.01% to close at 12,019.42. This week, the FBM KLCI is likely to trade within a range of 1,410 to 1,568, and for today, it is likely to trade within a range of 1,473 to 1,504.
This week's expected range: 1410 – 1568
Today’s expected range: 1473 – 1504
Resistance: 1494, 1499, 1504
Support: 1473, 1478, 1483
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