Stocks on Bursa Malaysia rebounded to close higher last Friday due to eleventh hour buying of selected heavyweights ahead of the weekend. Positive local sentiment, as opposed to the weaker European market and a string of good corporate results which has started to come in, may have driven the rally. The FBM KLCI ended 2.84 points or 0.17% better at the day’s high of 1,645.36, which surpassed the all-time high closing of 1,645 registered on 18th July 2012 by 0.36 of a point; and week-on-week, the benchmark index gained 10.32 points, or 0.6% from previous Friday’s closing of 1,635.04. Gainers led losers by 357 to 348 while 359 counters were unchanged. Total turnover rose to 1.229 billion shares, worth RM1.545 billion, compared with Thursday’s 884.651 million shares worth RM1.348 billion; and weekly volumes stood at 5.837 billion shares worth RM8.217bil, against 5.885 billion shares valued at RM8.193bil changed hands the prior week.
On the weekly chart, the FBM KLCI formed a bullish white candlestick with a short lower shadow which continued the rebound from previous week, and this indicated that the bulls were in control last week in pushing the key index higher. On the daily chart, the FBM KLCI opened 1.52 points lower at 1,641.00 last Friday and moved sideways in a narrow range for a major part of the day, it touched an intra-day low of 1,639.21 and was staying in the negative territory throughout the day before a last minute buying of selected blue-chips which helped pushed the key index to close at a fresh new all-time high closing level. This clearly shows the bulls’ intention in pushing the benchmark index to a higher level. Hence, The FBM KLCI is likely to climb higher this week to challenge the all-time intra-day high of 1,647.94 registered on 19th July 2012. If the key index is able to break through this all-time high level convincingly with good volume, then it is likely for it to rally higher to the next target levels of 1,650, 1,655 and 1,665.
Weekly MACD continued to climb higher, and its histogram also turned longer after two weeks of contraction, indicating a resumption of the weekly upward momentum. Daily MACD and its histogram was also higher, but the MACD line is still below the signal line, indicating a rebound is taking place, but the upward momentum was not fully bullish yet until it makes a golden-cross over the signal line. Weekly RSI (14) was higher at 65 from 63.2 previously, and daily RSI (14) was also higher at 64.9 from 63.1 previously, both weekly and daily RSI readings indicated the benchmark index is in a bullish state. Weekly Stochastic has hooked upward but is still below the weekly slow stochastic line, indicating the up move on the weekly chart could be a rebound until a crossover is observed. Daily Stochastic, however, has surged higher to 83.3, indicating a bullish state of the FBM KLCI from the daily perspective, and the short term up cycle continues. Readings from the weekly and daily indicators showed that the FBM KLCI is currently in a bullish state, and the upward momentum may carry it to a higher level.
The FBM KLCI is currently in a bullish uptrend as it is staying above all the short, medium and long term moving averages, and this trend is likely to continue. Immediate overhead resistance is the all-time high level of 1,647.94, and the benchmark index is likely to see some struggle at this level, and a break above this level will see the FBM KLCI moving into an uncharted territory with an upside target of 1,665 based on the Fibonacci expansion for the range taken from 19th to 27th July. Overall daily volume remained lukewarm in the 1 to 1.2 billion shares level, and a higher volume is required to keep the momentum going. The FBM KLCI is likely to move higher in the early part of this week but may see strong profit-taking activity and buying momentum dwindling towards the later part of the week ahead of the long Hari Raya Puasa holidays the following week.
Last Friday, the Dow rose +42.76 points or +0.32% to close at 13,207.95. This week, the FBM KLCI is likely to trade within a range of 1,621 to 1,660, and for today, it is likely to trade within a range of 1,635 to 1,652.
This week's expected range: 1621 – 1660
Today’s expected range: 1635 – 1652
Resistance: 1648, 1650, 1652
Support: 1635, 1637, 1641