Stocks on Bursa Malaysia closed marginally softer across the board last Friday. The market traded within a narrow range amid a lack of fresh leads, while investors nibbled at the lower liners and penny stocks. The FBM KLCI ended 2.49 points or 0.16% lower at 1,523.07, and week-on-week, the key index gained 8.94 points from previous Friday’s 1,514.13. Losers led gainers by 397 to 373 while 339 counters were unchanged. Turnover was higher at 1.766 billion shares valued at RM1.608 billion compared with Thursday’s 1.515 billion shares worth RM1.579 billion.
The FBM KLCI was basically in a range-bound consolidation mode with a weak upward move the whole of last week. The key index opened last Monday 0.93 point higher at 1,515.06 and pulled back to touch the intra-week low of 1,513.35 before rebounding to close Monday 7.6 points higher at 1,521.73. The benchmark index traded in narrow range on Tuesday and Wednesday making marginal gains of 0.26 and 0.3 point respectively. The FBM KLCI closed 3.27 points firmer at 1,525.56 on Thursday but ended 2.49 points lower at 1,523.07 on Friday after hitting intra-week high of 1,526.27.
On the weekly chart, the FBM KLCI formed a small white candlestick which indicates low volatility and consolidation but with an upward bias. The key index is likely to further consolidate this week with immediate overhead resistance at 1,530-point level, while the lower support zone is at 1,513 to 1,502.
On the daily chart, the FBM KLCI formed a bearish dark-cloud-cover candlestick pattern, which is a top reversal candle pattern, and hence, the key index is likely to further consolidate itself and move in a range-bound mode. The underlying trend is up as the key index continued to stay above all the short, medium and long term moving averages. Immediate support by the 10-day SMA is at 1,519 and the lower support zone at 1,506 to 1,500 formed of the cluster of longer term moving averages shall form a strong cushion area.
Weekly MACD continued to climb higher after crossing the zero-line the previous week, indicating the weekly upward momentum is still intact. Daily MACD has turned downward and the histogram also turned shorter, indicating a continued loss in the daily momentum, and hence, the FBM KLCI is likely to go into a consolidation mode. Weekly RSI (14) has hooked up to 56.7, indicating the weekly relative strength is in the mildly bullish state. Daily RSI (14) has slide lower to 63.1, reflecting the pullback on last Friday, and the daily relative strength is still in the bullish zone. Weekly Stochastic has hooked downward gently to 95.6 from 96.1 the previous week after entering the overbought zone. Daily Stochastic has also hooked downward to 85.5, and just crossed the slow stochastic line, indicating the key index’s strength might turn weaker. Readings from the weekly and daily indicators showed that the FBM KLCI’s weekly momentum is still positive while the daily momentum is turning weak, and likely to extend its consolidation.
The overall uptrend of the FBM KLCI is still intact. Immediate strong overhead resistance zone is expected at 1,530 to 1,539 formed by the down gap. If the key index is able to breakthrough this zone decisively with volume, it might continue its rally towards the 1,550-point level. Nonetheless, it is likely to go into a short term range-bound consolidation for the time being as indicated by the continued loss of momentum on the daily chart. As the key index-linked counters continue to consolidate, the market is likely to be continued dominated by the third liners and penny stocks.
Last Friday, the Dow fell -48.96 points or -0.39% to close at 12,422.06. This week, the FBM KLCI is likely to trade within a range of 1,502 to 1,540, and for today, it is likely to trade within a range of 1,516 to 1,531.
This week's expected range: 1502 – 1540
Today’s expected range: 1516 – 1531
Resistance: 1526, 1528, 1531
Support: 1516, 1519, 1521
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