Stocks on Bursa Malaysia ended last Friday on a higher note, recouping early losses on late buying activities. Bargain hunting and short covering lifted the key index to close higher, despite a lack of fresh, local catalysts. The sentiment improved due to external signs of improvement in the US and German economic data, which gave new hope for better global economic growth. The benchmark FBM KLCI advanced 2.11 points, or 0.14%, to close at 1,558.77, while on a Friday-to-Friday basis, the benchmark index earned 1.62 points from 1,557.15 previously. Gainers led losers by 425 to 373 while 344 counters were unchanged. Total turnover declined to 1.695 billion shares worth RM1.941 billion from the 1.951 billion shares worth RM2.109 billion on Thursday, and weekly volume decreased to 9.635 billion shares worth RM9.345 billion from 11.968 billion shares worth RM10.437 billion the previous week.
The FBM KLCI was in a sideways range-bound last week. It opened at 1,557.91 last Monday and climbed to the intra-week high of 1,565.25 on Wednesday before pulling back to close lower on profit-taking. The key index slid lower on Thursday on heavy profit-taking and touched the intra-week low of 1,553.62 on Friday before rebounding to end the week off low at 1,558.77.
On the weekly chart, the FBM KLCI formed a small white spinning-top candlestick; a second consecutive one after the formation of a black spinning-top candlestick the previous week, and they indicated uncertainty and indecision of market direction at this level. As the second spinning-top was bound within the range of the previous one without any new high or low, it shows consolidation. On the daily chart, the FBM KLCI formed a bullish white hammer candlestick last Friday, which is a bottom reversal candle pattern, and hence, the key index may continue its rebound to move higher today. Judging from the weekly and daily candlesticks formation, the FBM KLCI is likely to remain range-bound this week with immediate overhead resistance at 1,567 while the downside support is at 1,549-point level.
Weekly MACD continued to climb higher, but its histogram was shorter, indicating a slow down in the weekly upward momentum. On the contrary, daily MACD continued to slide lower and the daily histogram also turned longer southward, indicating a continued loss in the daily momentum and the key index is in a consolidation mode. Weekly RSI (14) hooked up slightly to 61.75, and daily RSI (14) is also at 61.5, indicating both the weekly and daily relative strength are still in the bullish zone. Weekly Stochastic has hooked downward slightly to 95, and has just touched the weekly slow stochastic line, indicating the key index may further consolidate. Daily Stochastic was lower at 82.6, and continued to stay below the daily slow stochastic line, indicating a possible continuation of the short term down cycle. Readings from both the weekly and daily indicators showed that the FBM KLCI is gradually losing its upward momentum, and may further consolidate.
The short term trend of the FBM KLCI has turned sideways, nevertheless, the medium and longer term trend are still up as the key index is still staying above the 30, 60 and 120-day SMA, and on top of that, it is also staying above the middle line of the uptrend range. As the FBM KLCI is forming a triangle now on the daily chart, it is likely to move range-bound this week with immediate overhead resistance zone at 1,567 to 1,577, while the immediate downside support zone is at 1,549 to 1,540.
Last Friday, the Dow fell a marginal -1.74 points or -0.01% to close at 12,982.95. This week, the FBM KLCI is likely to trade within a range of 1,541 to 1,577, and for today, it is likely to trade within a range of 1,549 to 1,566.
This week's expected range: 1541 – 1577
Today’s expected range: 1549 – 1566
Resistance: 1561, 1564, 1566
Support: 1549, 1551, 1555
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