Stocks on Bursa Malaysia ended marginally steadier in range-bound trade last Friday in line with other bourses in Asia. Buying support for select heavyweights helped the FBM KLCI to finish 1.03 points higher at 1,624.94. The index, which opened at 1,624.97, traded between 1,620.76 and 1,630.57, and week-on-week, it lost 18.06 points from previous Friday’s 1,643. Gainers outpaced losers by 396 to 365 while 337 counters closed flat. Turnover was lower at 978.76 million shares valued at RM1.7102 billion compared with 1.15 billion shares worth RM1.82 billion on Thursday, and weekly volume decreased to 5.212 billion shares valued at RM8.744 billion from previous week’s 5.916 billion shares worth RM8.29 billion.
Following the weak performance of Wall Street the previous Friday, the FBM KLCI opened last Monday 0.16 of a point lower at 1,642.84 and rebounded briefly to the intra-week high of 1,643.33 before plunging to end near the low of the day. Tuesday saw stocks on Bursa Malaysia closed lower on continued selling amid a lack of any major catalyst to move up the market with the FBM KLCI slipping 3.6 points to 1,632.57 ahead of the listing of IHH Healthcare Bhd. Bursa Malaysia ended on a mixed note on Wednesday following the dual listings of IHH Healthcare Bhd, Asia’s largest hospital operator, on the Malaysian and Singapore stock markets, and the FBM KLCI rose 2.52 points to 1,635.09 after hovering between 1,624.88 and 1,635.09. Stocks on Bursa Malaysia closed lower across-the-board on Thursday amid weaker buying momentum with sentiment dampened by fear of a global economic slowdown, and the FBM KLCI plunged 11.18 points, or 0.68%, to 1,623.91, and on Friday, the benchmark index rebounded slightly to close 1.03 point higher at 1,624.94 after hitting the intra-week low of 1,621.31.
On the weekly chart, the FBM KLCI formed a bearish engulfing candlestick which indicates heavy selling pressure throughout last week and the benchmark index registered a low that is lower than the previous week’s low. On the daily chart, the FBM KLCI formed a Doji candlestick which indicated a pause in the short term downtrend and indecision of the market direction. Hence, the FBM KLCI is likely to further consolidate itself in this coming week with immediate overhead resistance zone at 1,631 to 1,639 while the downside support zone is at 1,620 to 1,611, and the 30-day SMA at 1,617 will be a critical support to watch.
Weekly MACD was marginally higher but has tapered off, while the weekly histogram has turned shorter, reflecting the pullback in the key index and reduction of the weekly upward momentum. Daily MACD and its histogram, however, continued to slip lower, indicating a continued loss in the daily momentum. Nevertheless, as the MACD is still above the zero line, current weakness is being viewed as correction in an uptrend. Weekly RSI (14) was lower at 61.4, indicating the weekly relative strength is still in a bullish state, while daily RSI (14) has hooked upward slightly to 54.3, reflecting the mild rebound and indicated that the benchmark index is currently in a mildly bullish state. Weekly Stochastic has turned downward to 90.1, crossing below the weekly slow stochastic line, indicating a strong pullback in the key index. Daily Stochastic, however, continued to slide lower to 35.9, indicating continuation of the short term down cycle and weakening of the market strength. Readings from the weekly and daily indicators showed that the FBM KLCI is currently undergoing a pullback correction, where it is still bullish from the weekly perspective but is just mildly bullish from the daily perspective, and the benchmark index is likely to further consolidate and move range-bound in the coming week.
The trend of the FBM KLCI on the weekly chart is still up and bullish as the key index is still closing above all the moving averages. However, the key index is now sitting right above the 5-week SMA which is currently at 1,622.8, and a close below this level might see the FBM KLCI sliding lower towards the 10-week SMA support at 1,599. On the daily chart, the short term trend has turned down as the key index is closing below the 5, 10 and 20-day SMA. The next critical support level to watch is the 1,617-point level provided by the 30-day SMA, and a break below this level is likely to see the FBM KLCI going into an extended correction mode. In order for the daily short term trend to reverse up, the FBM KLCI will have to at least close above 1,631-point.
Last Friday, the Dow rose +187.73 points or +1.46% to close at 13,075.66. This week, the FBM KLCI is likely to trade within a range of 1,593 to 1,666, and for today, it is likely to trade within a range of 1,610 to 1,641.
This week's expected range: 1593 – 1666
Today’s expected range: 1610 – 1641
Resistance: 1630, 1635, 1641
Support: 1610, 1615, 1620