Stocks on Bursa Malaysia ended last Friday easier amid cautious underlying sentiment. Key heavyweight stocks basically went into consolidation after the Budget 2011 announcement. The benchmark FBM KLCI lost 0.38 point or 0.03% to close at 1490.64 after opening 3.57 points higher at 1494.59. The key index, nonetheless, gained 0.78 point or 0.05%, week-on-week, from 1489.86 the previous Friday. Weekly volume rose to 6.971 billion shares valued at RM8.674 billion compared with the 5.76 billion shares worth RM9.33 billion the previous week.
The FBM KLCI staged a continued correction last Monday following the two days losses on the previous week to close 9.61 points lower at 1480.70. Tracking the steadier performance in the regional indexes, the FBM KLCI rebounded to close 7.95 points higher to 1488.65 on Tuesday. In a knee-jerk reaction to the steep 165 points drop of the DJIA overnight, the FBM KLCI gapped down 8.33 points to 1480.32 in early trading on Wednesday and touched the intra-week low of 1476.56, losing as much as 12.09 points at its worst, but recovered much of its lost ground to close a marginal 1.87 points lower to 1486.78. Taking cue from the 129 points rebound on Wall Street overnight, the key index rose 4.24 points to 1491.02 on Thursday, and on Friday, the key index lost 0.38 point on heavy profit-taking to 1490.64 after opening 3.57 points higher at 1494.59, and touched the intra-week high of 1496.48.
On the weekly chart, the FBM KLCI formed a Doji candlestick with long lower shadow which indicates indecision of the market to move further and was subjected to heavy profit-taking activities. However, the long lower shadow also indicates good buying support by bargain hunters when the key index corrects downward. The medium to longer term uptrend remained intact as the key index continued to close above the 5-week moving average (MA). Immediate support for the FBM KLCI on the weekly chart is at 1476, provided by the 5-week MA.
On the daily chart, the FBM KLCI formed a dark-cloud-cover like candlestick on last Friday, which indicates heavy profit-taking activities. With this candlestick pattern formation, the key index is likely to continue its sideways consolidation or range-bound trade in the coming week. Immediate overhead resistance zone is at 1496 to 1503 while the immediate downside support zone is at 1474 to 1480. If the key index is able to breakthrough the 1500 psychological resistance level, there is a strong likelihood that it will move further the test the historical high of 1524.69.
Weekly MACD continued to climb higher, however, its histogram is getting shorter, indicating a slow down in the medium term upward momentum. In stark contrast, daily MACD continued to move lower, indicating the continuous loss in the key index’s upward momentum and is moving into a range-bound mode.
Weekly RSI (14) at 78.4 has continued to move higher, but is tapering off. The key index has moved into the overbought zone for ten weeks already, hence, is likely to correct itself. Daily RSI (14) at 64.3 has hooked down slightly and continued to stay in the mildly bullish zone.
Weekly Stochastic at 94.5 has turned flat, and continued to stay in the overbought zone. Daily Stochastic at 64.1 too has turned flat, reflecting the sideways mode of the FBM KLCI. Signals from the indicators are pointing towards a strong likelihood of further consolidation or range-bound trade for the FBM KLCI.
For the coming week, stocks prices on Bursa Malaysia are expected to be range-bound amid an underlying cautious sentiment on concerns over a slowdown in China and the outcome of the Group of 20 (G20) meeting. The Economic Transformation Programme (ETP) roadmap will be announced today, and this may give some boost to the construction sectors. The overall market is expected to remain in rotational play with those companies that benefit from the ETP continued to shine.
The Dow fell -14.01 points or -0.13% lower to close at 11,132.56 on last Friday. This week, the FBM KLCI may trade within a range of 1459 to 1516, and for today it is likely to trade within a range of 1480 to 1503.
This week's expected range: 1459 – 1516
Today’s expected range: 1480 – 1503
Resistance: 1495, 1499, 1503
Support: 1480, 1485, 1488
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