Stocks on Bursa Malaysia ended the first trading week of 2012 weaker, in line with its regional peers as sentiment continued to be influenced by the uncertainty looming over the Euro-zone debt problem. The FBM KLCI ended last Friday 0.30 point lower at 1,514.13, after fluctuating between 1,508.93 and 1,515.27 throughout the day, and week-on-week, the key index fell 16.6 from previous Friday's close of 1,530.73. Losers outnumbered gainers by 391 to 377 while 299 counters were unchanged. Volume decreased to 1.466 billion shares, worth RM1.389 billion, from 1.668 billion shares, worth RM1.462 billion, on Thursday. Total weekly volume increased to 6.399 billion shares worth RM5.785 billion from last week’s 6.21 billion shares worth RM6.74 billion.
The FBM KLCI was basically in consolidation mode throughout the whole of last week which saw the key index opened 7.13 points lower at 1,523.60 on the first trading day of the year and closed lower on heavy profit-taking to end Tuesday at 1,513.54. The key index continued to slide lower to hit the intra-week low of 1,502.09 before rebounding slightly to close Wednesday at 1,504.22, losing another 9.32 points. On Thursday, the FBM KLCI staged a rebound and recovered some lost ground to close 10.21 points higher at 1,514.43, and on Friday, the key index traded in a range-bound manner to end the day 0.3 of a point lower at 1,514.13.
On the weekly chart, the FBM KLCI formed a bearish black hammer-like candlestick in Harami position, a top reversal candlestick pattern, which indicates profit-taking activity after a strong up move the previous week. With the appearance of this bearish Harami candle pattern, the FBM KLCI is likely to continue to consolidate this week. Nevertheless, the key index is still closing above all the moving averages on the weekly chart which indicates that it is still bullish, after down move last week may just be a pullback correction after two weeks of strong up move. Immediate overhead resistance zone is at 1,525 to 1,530, while the downside support zone is at 1,502 to 1,490.
On the daily chart, the FBM KLCI formed a white hammer-like candlestick in Harami position which indicates consolidation. The key index is now closing below the 5-day SMA but remained above the 10-day SMA, which further strengthen the perception of consolidation. Immediate overhead resistance zone is at 1,515 to 1,530 while the downside support zone is at 1,508 to 1,500, and the cluster of long term moving averages may provide some cushion to any down move.
Weekly MACD continued to climb higher, and has just made a golden-cross, sending out a bullish buy signal for the medium term. Daily MACD was also higher, but the daily histogram was getting shorter indicating a slow down in the upward momentum and the key index is moving into a consolidation mode. Weekly RSI (14) was lower at 55.4, reflecting the pullback correction, and nonetheless, it is still in the mildly bullish zone. Daily RSI (14) was marginally lower at 61, indicating the daily relative strength of the key index is still in the bullish zone. Weekly Stochastic continued to climb higher to 96.1, indicating very strong market strength and continuation of the weekly up cycle. Daily stochastic continued to slide lower to 74.4, indicating a continued loss in the daily momentum. Readings from the weekly and daily indicators showed that the FBM KLCI is bullish from the weekly perspective, while from the daily side, it is currently undergoing a consolidation phase, and the key index should resume it upward momentum once the correction is over.
The longer term trend of the FBM KLCI remained bullish and up, while for the immediate short term, it is in correction mode. With the longer term trend still up, the FBM KLCI is likely to resume its short term uptrend once the current correction phase is over. While the index link heavyweights may continue to consolidate, the overall market is likely to be dominated by active trading in second and third liners stock on rotational play. Last Friday, the Dow fell -55.78 points or -0.45% to close at 12,359.92. This week, the FBM KLCI is likely to trade within a range of 1,479 to 1,549, and for today, it is likely to trade within a range of 1,503 to 1,522.
This week's expected range: 1479 – 1549
Today’s expected range: 1503 – 1522
Resistance: 1517, 1520, 1522
Support: 1503, 1506, 1510
Stocks to watch: UNISEM, PUNCAK, KPS, DKSH
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