Stocks on Bursa Malaysia closed sharply higher last Friday on window-dressing activity, in line with the rally in regional markets fuelled by the ample liquidity injection from global central banks and accommodative monetary policy. The benchmark FBM KLCI advanced 10.89 points or 0.69% to 1,596.33, close to its all-time high of 1,597.08, and a week-on-week gain of 10.50 points from 1,585.83 previously. Advancers beat decliners by 402 to 360 while 334 counters were unchanged. Overall volume was thinner with 1.245 billion shares worth RM2.083 changed hands compared with 1.496 billion shares valued at RM1.398 billion on Thursday. Weekly turnover stood at 7.747 billion shares valued at RM7.784bil, against 12.395 billion units worth RM8.045bil which changed hands the prior week.
The benchmark FBM KLCI was basically in a consolidation mode during the first four days of the week, where on Monday, the key index closed 2.85 points lower at 1,582.98 after trading in a narrow range. The FBM KLCI rose 5.12 points to 1,588.10 on Tuesday buoyed by the rally in regional markets sparked by comments from US Federal Reserve chairman Ben Bernanke that easy monetary policy would remain to reduce unemployment. On Wednesday, the FBM KLCI closed 4.35 points lower to 1,583.75 in tandem with losses in global markets. The key index gained 1.69 points to close at 1,585.44 on Thursday after hitting the intra-week low of 1,581.79. Friday saw active window-dressing activity as the first quarter came to a close which helped pushed the benchmark index higher with a gain of 10.89 points to 1,596.33, just 0.75 of a point below the all time high of 1,597.08.
On the weekly chart, the FBM KLCI formed a bullish white candlestick which indicates continuation of buying supports from previous week, and on the daily chart, the FBM KLCI formed a bullish white candlestick with a breakaway gap from the hammer candlestick formed on Thursday, and this indicates a bullish euphoria in action. The upward momentum may carry the key index to a higher level in the uncharted territory this week to test the psychological resistance level of 1,600-point. If the FBM KLCI is able to breakthrough the 1,600-point with conviction, it may have a possible near term target of 1,625, while from the medium term perspective it may have a possible target of 1,670 to 1,700.
Weekly MACD continued to climb higher, whereas its histogram was slightly shorter, indicating a continuation of the bullish weekly momentum with mild internal weakness. Daily MACD had just made a golden-cross over its signal-line, flashing out a buy signal. Weekly RSI (14) was higher at 66.3 and the daily RSI (14) was also higher at 66.1, indicating both weekly and daily relative strength are in the bullish mode. Weekly Stochastic has hooked up and crossed over its weekly slow stochastic line, indicating the consolidation phase was probably over, and the daily stochastic also hooked upward to 85.6, indicating a continuation of the short term up cycle after the recent consolidation. Readings from both the weekly and daily indicators showed that the FBM KLCI has just turned bullish after the recent consolidation phase, and the upward momentum may carry it to a higher level.
The uptrend of the FBM KLCI remained intact as it is staying above all the short, medium and long term moving averages. Immediate overhead resistance will be at the 1,600-point psychological level while the downside support zone is at 1,588 to 1,581. With almost all technical momentum and trend indicators flashing bullish signals, investors can expect further upside for the FBM KLCI to chart new record highs this coming week. However, given the weak follow-through buying momentum as shown by the dwindling volume on the broader market, selling on strength may increase to limit upside potential. The ACE market penny stocks may continued their consolidation while the index-linked blue chips could likely dip on profit-taking post first-quarter window-dressing.
Last Friday, the Dow rose +66.22 points or +0.50% to close at 13,212.04. This week, the FBM KLCI is likely to trade within a range of 1,571 to 1,611, and for today, it is likely to trade within a range of 1,583 to 1,605.
This week's expected range: 1571 – 1611
Today’s expected range: 1583 – 1605
Resistance: 1599, 1602, 1605
Support: 1583, 1585, 1591
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