Stocks on Bursa Malaysia ended lower last Friday in sync with most Asian bourses, taking cue from the fall on Wall Street overnight. The FBM KLCI closed 5.48 points or 0.3% lower at 1,803.65 after moving in a broad range of between 1,798.74 and 1,806.90 throughout the day. On a weekly basis, the FBM KLCI advanced 21.9 points or 1.6% from 1,781.75 on previous Friday. Losers thumped gainers by 471 to 325 with 314 counters unchanged. Total volume decreased to 2.12 billion shares worth RM3.14 billion from 2.21 billion shares worth RM1.84 billion on Thursday. Weekly turnover decreased to 10.37 billion units worth RM10.59 billion from previous week’s 13.09 billion units worth RM10.43 billion.
Following the weak performance of Wall Street on previous Friday, the FBM KLCI opened last Monday 4.47 points lower at 1,777.28 and slipped lower to hit the intra-week low of 1,774.30 shortly after opening, extending the previous session’s decline. The FBM KLCI rebounded strongly to stay in the positive territory for a major part of the day but last minute profit-taking activity sent the key index to close 1.21 points lower at 1,780.54. Following overnight gains on Wall Street, the FBM KLCI rose 7.33 points on Tuesday to settle at 1,787.87 as Asian bourses received some boost after the US stock market registered a more than 1% gain as investors cheered a pause in the greenback’s rally and eyed renewed weakness in oil prices. Wednesday saw the benchmark index registering 9.7 points gains to 1,797.57, ahead of the US Federal Reserve’s decision on interest rate later in the night. The FBM KLCI extended its gain on Thursday to close 11.56 points higher at 1,809.13 after the dovish statement from the Federal Reserve that it is not ready to raise interest rates anytime soon. Friday saw profit-taking set-in after a three day rally to closed 5.48 points lower at 1,803.65.
On the weekly chart, the FBM KLCI formed a bullish engulfing candlestick pattern, a bottom reversal pattern which indicates the fight back of the bulls after being beaten down for two consecutive weeks. Hence, the FBM KLCI is likely to stage a follow through rebound in the coming week to move higher towards the 1,815 to 1,831 overhead resistance zone. On the daily chart, the FBM KLCI formed a white spinning-top or Doji-like candlestick in Harami position, indicating uncertainty of market direction amid consolidation. Hence, the FBM KLCI is likely to further consolidate today but with an upward bias. Immediate overhead resistance zone is at 1,806 to 1,815, while the immediate downside support zone is at 1,798 to 1,787.
Weekly MACD hooked upward slightly, but its histogram was marginally lower, indicating a state of consolidation. Daily MACD, however, continued to rise and made a golden-cross over the zero-line, issuing a weak buy signal as MACD is still below the signal-line. Weekly RSI (14) hooked upward to 50.5 from 46.4, indicating the weekly relative strength of the FBM KLCI has turned neutral from a mildly bearish state before. Daily RSI (14), however, hooked downward to 53.5 from 56.5, indicating a mild pullback correction on Friday. Weekly Stochastic was marginally lower at 78.7 from 79.9, indicating a state of consolidation. However, daily Stochastic rose to 56.3 from 46.2, indicating the short term up cycle is still intact despite the pullback on Friday. Mixed readings from the weekly indicators showed that the FBM KLCI is still in a state of consolidation but with an upward bias. However, readings from the daily indicators showed signs of mild bullishness in MACD and stochastic oscillator, and hence, the FBM KLCI is likely to climb higher after a pullback consolidation.
The short term trend of the FBM KLCI has turned up as the key index is staying above the short term moving averages, and the 5-day simple moving average (SMA) has also made a golden-cross over the 10-day SMA, issuing a short term buy signal. The medium term trend has also turned up as both the 50 and 60-day SMA are up. However, the long term trend is still sideways range-bound as the FBM KLCI is staying above the 100 and 120-day SMA but is bound on top by the 200, 240 and 360-day SMA. For the coming week, the FBM KLCI is likely to stay sideways range-bound within a range of 1,774 to 1,831, and a breakout on either side of the range will see the FBM KLCI moving in the direction of breakout. For a topside breakout, a successful breakthrough of the strong resistance at 1,831.41 points would see the FBM KLCI turning decisively bullish, moving higher towards the 1,850-point level.
Last Friday, the Dow rose 168.62 points or 0.94% to close at 18,127.65. This week, the FBMKLCI is likely to trade within a range of 1,738 to 1,857, and today, the FBMKLCI is likely to trade within a range of 1,791 to 1,815.
This week's expected range: 1738 – 1857
Today’s expected range: 1791 – 1815
Resistance: 1807, 1811, 1815
Support: 1791, 1794, 1799
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