Stocks on Bursa Malaysia ended last Friday on a firmer note with the key index supported by strong institutional funds buying in selected heavyweights. The overall market traded within a tight range amid mild profit-taking in selected heavyweights and lower liners after recent gains. The benchmark FBM KLCI closed 2.82 points or 0.19% higher at 1466.32; week-on-week, it was up 15.13 points or 1.04% from the previous Friday’s close of 1451.19. Turnover was slightly lower at 5.066 billion shares, worth RM7.610 billion, from 5.958 billion shares, worth RM7.865 billion the previous week.
The FBM KLCI opened last Monday with an up gap of 7.54 points at 1458.73, taking cue from the hefty rise of 197 points on the DJIA the previous Friday, the key index moved higher on renewed bargain hunting interest to close 13.52 points higher at 1464.71. It corrected on Tuesday in line with the weaker performance of the regional markets to close 5.07 points or 0.35% lower at 1459.64. On Wednesday, the key index rebounded to close 2.14 points or 0.15% higher at 1461.78, as market sentiment was underpinned by the rally in the regional bourses. The key index continued its rebound on Thursday and Friday to close last week on a positive note at 1466.32
On the weekly chart, the FBM KLCI formed a bullish Harami candlestick which indicates a positive outlook for the key index. It is, however, trapped within the overhead resistance of 1480 and the downside support of 1445. A breakout from either one level will see it moving in the direction of the breakout. The short term 5-week moving average (MA) is now at 1451 and is expected to provide support to the key index. The underlying medium to longer term trend as indicated by the longer term MAs still remained in the up direction.
On the daily chart, the FBM KLCI formed four black candlesticks but rose gradually, indicated the strong underlying buying support despite selling pressure which tries to cap gains. After getting trapped between the 5 and 10-day MAs for three days, the key index has moved out of it on Friday, and is now staying above all the MAs, indicating the uptrend is unspoiled. Nonetheless, the key index is still range-bound with a upward bias.
Weekly MACD continued to move higher, but at a slower pace, as indicated by its shorter histogram formation which indicates a gradual loss of the medium term upward momentum. Daily MACD continued to slide lower, however, its daily histogram has begun to turn upward, indicating a slow down in the daily downward momentum.
Weekly RSI (14) at 75.6 has hooked up, the reading indicates that the medium term outlook for the key index is still bullish. Daily RSI (14) at 65.4 continued to climb higher, albeit in a slow pace, is still in the bullish zone.
Weekly Stochastic at 90.2 continued to slide lower and is below its slow Stochastic, indicates consolidation in the medium term perspective. Daily Stochastic at 65.6 has hooked up slightly, reflecting the consolidation mode of the key index.
Signals from the indicators indicated that the medium term perspective of the FBM KLCI is still bullish with a gradual slow down in upward momentum. For the short term, it is range-bound with an upward bias. Immediate overhead resistance zone is at 1480 to 1500 while the downside support zone is at 1440 to 1456.
For this week, the market is expected to remain buoyant, backed by improved market sentiment, as investors look forward to incentives from the government under the budget 2011. Rotational play is likely to prevail as the key heavyweights continue to consolidate.
The Dow rose +41.63 points or +0.39% higher to close at 10,829.68 on last Friday. This week, the FBM KLCI may trade within a range of 1445 to 1491, and for today it is likely to trade within a range of 1458 to 1478.
This week's expected range: 1445 – 1491
Today’s expected range: 1458 – 1478
Resistance: 1469, 1473, 1478
Support: 1458, 1461, 1463
Stock to watch: Gamuda, MAS, Tebrau, E&O
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