Stocks on Bursa Malaysia closed firmer last Friday bolstered by gains in selected heavyweights with intermittent bargain hunting noted for most parts of the day. The uncertainty over the outcome of the European Central Bank meeting and the lack of fresh stimulus from the US Federal Reserve had kept investors sidelined. The FBM KLCI finished 1.59 points better at 1,635.04, after fluctuating between 1,627.2 and 1,635.77 points, and week-on-week, the benchmark index gained 10.1 points from previous Friday’s closing of 1,624.94. Losers led gainers by 402 to 334 while 344 counters closed unchanged. Total volume eased to 950.482 shares, worth 1.528 billion, from Thursday’s close of 1.175 billion shares valued at RM1.647 billion, while weekly volume increased to 5.885 billion shares valued at RM8.193 billion from 5.212 billion shares worth RM8.744 billion the previous week.
The FBM KLCI was basically moving in a sideways range-bound mode the whole of last week. The benchmark index opened last Monday 1.92 points higher at 1,626.86 and slipped to the intra-week low of 1,623.26 before rebounding strongly to close 7.41 points higher at the highest point of the day. Tuesday saw the FBM KLCI finished 0.75 of a point lower at 1,631.6, after hovering between 1,628.96 and 1,635.59 throughout the day. On Wednesday, the FBM KLCI was 0.87 of a point higher at 1,632.47, after moving between 1,626.68 and 1,635.33 as investors remained on the sidelines as they awaited positive news from meetings of the US and European central banks with regard to further possible stimulus measures. The uncertainty over the outcome of the ECB meeting on Wednesday and the lack of fresh stimulus by the US Fed kept investors on the sideline, and the FBM KLCI closed 0.98 point higher at 1,633.45 after moving between 1,630.43 and 1,635.43 on Thursday, and Friday saw another marginal gain of 1.59 points in the key index to finish the week near the highest point of the week.
On the weekly chart, the FBM KLCI formed a small white candlestick in Harami position which indicates consolidation after slipping on heavy profit-taking the previous week. The gain registered last week is being viewed as a technical rebound after the sell down on previous week. If only the benchmark index is able to close above the overhead resistance zone of 1,643 to 1,647, then the uptrend will continue, otherwise, it is likely to continue to move sideways range-bound.
On the daily Chart, the FBM KLCI formed a bullish engulfing candlestick which indicates buying support for key index-link counters after the index opened with down gap and slipped lower to the intra-day low of 1,627.20, but managed to recover earlier losses. With the strong reversal shown last Friday, the FBM KLCI is likely to move higher on follow through buying momentum today. Immediate overhead resistance zone is expected at 1,639 to 1,647, while the downside support zone is at 1,627 to 1,620.
Weekly MACD was marginally higher but its histogram was shorter, indicating consolidation on the weekly chart. On the other hand, the daily MACD was lower but its histogram was shorter upward which indicates waning of the daily downward momentum. Weekly RSI (14) hooked upward to 63.2, indicating the weekly relative strength is still in the bullish state. Daily RSI (14) was higher at 61 from 59.9, indicating a continued improvement of the short term daily relative strength and the key index is gradually turning bullish. Weekly Stochastic was lower at 88.8 from 90.1, indicating consolidation, while daily stochastic was higher at 47.4 from 43.2, indicating improvement in the daily market strength and continuation of the daily up cycle. Mixed signals from the weekly and daily indicators showed that the FBM KLCI is currently in a sideways consolidation mode but with an upward bias on the daily chart.
The short term trend of the FBM KLCI on the daily chart is currently sideways while the medium and longer term trend is still up. The key index has again closing above the short term 5, 10 and 20-day SMA, indicating a potential up move is in the brewing. However, from Elliott Wave study, the FBM KLCI is probably running into a corrective wave-B, and a down wave-C with a possible downside target of 1,609, 1,602 and 1,592 cannot be ruled out at the moment unless the key index is able to continue its rise and break above the 1,647 point all-time high level. For this week, the FBM KLCI is likely to continue with its sideways range-bound trend with an upward bias.
Last Friday, the Dow rose +217.29 points or +1.69% to close at 13,096.17. This week, the FBM KLCI is likely to trade within a range of 1,614 to 1,648, and for today, it is likely to trade within a range of 1,621 to 1,644.
This week's expected range: 1614 – 1648
Today’s expected range: 1621 – 1644
Resistance: 1638, 1641, 1644
Support: 1621, 1624, 1629
Stocks to watch: LATEXX, SBCCORP, BOILERM