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Monday, November 1, 2010

FBM KLCI - closing above 1,500 at 33-month high

Stocks on Bursa Malaysia ended last week mostly higher, with gains in banking stocks boosting the major indices. The listing of Malaysia Marine and Heavy Engineering Bhd, the rig-building arm of MISC Bhd last Friday, also gave the market a boost. The benchmark FBM KLCI ended last week 15.02 points or 1.01% higher, week-on-week, to 1505.66 from 1490.64 the previous Friday, charting a 33-month high compared to its all-time historical high of 1,524.69 on January 14 2008. Weekly turnover declined to 6.275 billion shares valued at RM8.958 billion from 6.971 billion shares valued at RM8.674 billion the previous week.

The FBM KLCI opened 2.89 points higher last Monday but ended 0.80 of a point to 1491.44 after trading in a narrow range. The key index rebounded on Tuesday to close 5.50 points at 1496.94. On Wednesday, the key index staged a follow through rebound to close 2.17 points higher at 1499.11. Coming to Thursday, the overall market sentiment on Bursa Malaysia remained firm amid range-bound trading activities, and the benchmark index rose a marginal 0.33 point to 1499.44. On Friday, the FBM KLCI continued its rebound to close the week at the intra-week high of 1505.66, charting a 33-month new high.

On the weekly chart, the benchmark FBM KLCI formed a bullish white candlestick without any upper shadow, which indicates the bulls were very much in control. This candlestick also confirmed the reversal signal issued by the Doji formed the previous week. With the bullishness shown, the key index is likely to continue its up move to test the historical highest close level of 1516.22 registered on Jan 11, 2008.

On the daily chart, the FBM KLCI also formed a similar bullish white candlestick without upper shadow on last Friday, signifying the bull is in full control and is likely to continue its surge upward. Immediate overhead resistance lies at 1516, 1521 and 1524, while the immediate support zone is at 1500 to 1490.

Weekly MACD continued to move higher, indicating a strong continuation of the upward momentum. However, the weekly histogram is turning shorter, indicating a slower upward pace. Daily MACD has turned upward but still below its signal-line, indicating a gradual pick up in the upward momentum.

Weekly RSI (14) continued to move higher, and is at 80.05, indicating the medium to long term market strength of the FBM KLCI is very bullish. However, do beware of a possible strong pullback when the key index moves into this very bullish or overbought zone. Daily RSI (14) at 72 is currently entering the short term overbought zone, indicating the key index is turning very bullish for the short term, and may continue its upward momentum to move higher.

Weekly Stochastic is at 94.8, and is above its slow Stochastic, indicates a very strong underlying medium to longer term market strength. Daily Stochastic at 87.9 continued its up move into the overbought zone, indicating the FBM KLCI has move out of its short term consolidation to swing into an up cycle.

The underlying uptrend of the FBM KLCI remained very strong as all its moving averages are pointing northeast. For this coming week, the FBM KLCI is expected to continue moving higher to challenge the historical all-time high levels, while the overall market will remain buoyant with active rotational play on second and third liners.

The Dow rose a marginal +4.54 points or +0.04% higher to close at 11,118.49 last Friday. This week, the FBM KLCI may trade within a range of 1481 to 1524, and for today it is likely to trade within a range of 1492 to 1514.

This week's expected range: 1481 – 1524
Today’s expected range: 1492 – 1514

Resistance: 1508, 1511, 1514
Support: 1492, 1495, 1500

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