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Monday, October 11, 2010

FBM KLCI - bullish uptrend

Stocks on Bursa Malaysia closed mixed last Friday on profit-taking amid lack of strong leads. However, buying interest in selected heavyweights managed to help the benchmark index stay above the 1,480-point level. The FBM KLCI loss a marginal 0.04 point to close last Friday at 1481.41, week-on-week, it was up 15.09 points or 1.03%, from 1466.32 the previous Friday. Weekly volume increased to 5.23 billion shares worth RM8.05 billion from 5.066 billion shares valued at RM7.61 billion the previous week.

The FBM KLCI opened last Monday with an up gap of 3.19 points higher at 1469.51 and surged to the intra-day high of 1474.90. However, selling pressure that emerged in the late afternoon pushed it to close at the low of the day at 1462.27. The key index rebounded on Tuesday to close 9.92 points higher at 1472.19 after consolidating below the 1470 level for more than a week. On Wednesday, the key index opened with a big up gap of 6.13 points and touched the intra-day high of 1483.25 before closing off high at 1479.61, registering a gain of 0.02 point above the recent high of 1479.56. The key index was trading in the negative zone for most part of last Thursday before late buying of selected heavyweights reversed the downtrend to close above the 1480-point barrier at 1481.59, and on Friday, the key index went into a consolidation mode and traded in a narrow range before closing almost unchanged with a marginal loss of 0.04 point at 1481.41.

On the weekly chart, the FBM KLCI formed a bullish white candlestick which indicates continuation of the uptrend. The key index is closing above the recent high of 1479.59 and continued to stay above the 5-week moving average. On the daily chart, the key index formed a Doji candlestick which indicates indecision and a pause to the up move.

Weekly MACD continued to move higher, but at a slower pace, as shown by the shorter histogram, indicates the medium term upward momentum is slowing down. Daily MACD turned downward slightly and is below its signal-line, nonetheless, its daily histogram continued to turn shorter, indicates a reduction in the daily downward momentum. The difference in the weekly and daily MACD signal indicates the medium to longer term upward momentum is intact while for the short term, it is slowing down.

Weekly RSI (14) at 77 continued to move higher, is in the very bullish or overbought zone. Daily RSI (14) at 70.6 is turning flat, and is at the borderline of the very bullish zone.

Weekly Stochastic at 92 has hooked up, but is still below its weekly slow Stochastic, and is in the overbought zone. Daily Stochastic at 92.5 continued to move higher into the overbought zone, nonetheless, it indicates the up cycle is still intact.

Signals from the indicators are indicating that medium to longer term momentum of the FBM KLCI is still strong, whereas, for the short term the mixed signal might indicates consolidation with an upward bias.

The underlying short, medium and longer term trend of the FBM KLCI remained a strong uptrend as the key index is staying above all the moving averages.

For the coming week, the focus will be on the Budget 2011 which will be tabled on the coming Friday, October 15. However, the effect could have been discounted as the key index has been moving up to the current level steadily for the past weeks. The key index is likely to challenge the higher target level of 1491 in the coming week en route to 1500 with rotational play on the key component stocks.

The Dow rose +57.90 points or +0.53% higher to close at 11,006.48 on last Friday. This week, the FBM KLCI may trade within a range of 1445 to 1520, and for today it is likely to trade within a range of 1473 to 1491.

This week's expected range: 1445 – 1520
Today’s expected range: 1473 – 1491

Resistance: 1484, 1487, 1491
Support: 1473, 1476, 1479

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