Stocks on Bursa Malaysia closed mixed last Friday ahead of the long weekend for the Hari Raya Aidilfitri celebrations as investors locked in their profits ahead of the holidays, and the market was closed on Monday and Tuesday. The benchmark FBM KLCI lost 0.30 of a point to 1,649.79 after hitting another new all-time intra-day high of 1,654.53, and week-on-week, the benchmark index rose 4.43 points from 1,645.36 the previous Friday. Advancers outnumbered decliners by 373 to 369 while 341 counters were unchanged. Turnover decreased to 1.481 billion shares worth RM1.645 billion from 1.562 billion shares worth RM1.402 billion on Thursday, while weekly volume increased to 6.155 billion shares, worth RM6.715 billion, from 5.837 billion shares, worth RM8.217 billion, registered the previous week.
As per last Monday’s forecast, the FBM KLCI was moving higher in the first half of last week but fell on profit-taking in second half of the week. The FBM KLCI opened last Monday with an up gap of 1.94 points higher at 1,647.30 and continued to move higher to register new all-time high throughout the week with the all-time highest close of 1,653.78 registered on last Wednesday, 15th August, and an all-time intra-day high of 1,654.53 charted on last Friday before closing off high on selling pressure due to profit-taking.
On the weekly chart, the FBM KLCI formed a small white spinning-top candlestick which indicates uncertainties of market direction and consolidation. The slightly longer upper shadow of the candlestick showed slightly heavier selling pressure from profit-taking activity after making new highs last week, and hence the FBM KLCI is likely to go into consolidation in this holiday-shortened week.
On the daily chart, the FBM KLCI recorded another new all-time intra-high of 1,654.53 before slipping lower to close in the negative territory, forming a second bearish black spinning-top candlestick with a slightly longer upper shadow which showed profit-taking activity has dominated the index-link counters on last Friday ahead of the long holiday break, and the correction mode is likely to carry into this week as most investors are probably still on their extended holiday. Immediate downside support zone is at 1,648 to 1,644 while the overhead resistance zone is at 1,655 to 1,660.
Weekly MACD and its histogram continued to climb higher, indicating continued improvements in the weekly momentum. On the flip side, daily MACD has turned downward with its histogram contracting for the second bar, reflecting the correction mode. Nevertheless, MACD is still above the signal-line, and hence this could well be just a mild correction due to profit-taking activity.
Weekly RSI (14) was marginally higher at 65.76 from 65 previously, indicating the weekly relative strength is still in the bullish state. Daily RSI (14), however, continued to slip lower to 64.38 from 65.15, reflecting the corrective mode on the daily chart. Nevertheless, the daily short term relative strength is still in the bullish zone.
Weekly Stochastic was higher at 94.45 from 89.43 previously, indicating the weekly up cycle is still intact amid an overbought situation. Daily Stochastic, on the other hand, has turned downward and crossed below the slow stochastic line, indicating the beginning of a short term down cycle. In short, contrasting readings from the weekly and daily indicators showed that the FBM KLCI is undergoing a short term correction on the daily timeframe while the longer term outlook as shown by the weekly chart is still bullish.
The underlying trend of the FBM KLCI still remained up and bullish technically. However, the FBM KLCI has closed below the 5-day SMA last Friday, indicating further correction is in sight, and is likely to slip lower to the next support level of 1,644 provided by the 10-day SMA. The critical short term support level is at 1,636, provided by the 30-day SMA, in which a break below this level is likely to see the FBM KLCI turning bearish for the short term. On the back on the upcoming Budget 2013, positive corporate results, and the better-than-expected growth in Malaysia's second quarter gross domestic product, the FBM KLCI is likely to remain buoyant with immediate target level of 1,665 remained unchanged.
Overnight, the Dow fell -68.06 points or -0.51% to close at 13,203.58. This week, the FBM KLCI is likely to trade within a range of 1,634 to 1,665, and for today, it is likely to trade within a range of 1,640 to 1,661.
This week's expected range: 1634 – 1665
Today’s expected range: 1640 – 1661
Resistance: 1654, 1657, 1661
Support: 1640, 1644, 1646
Stocks to watch: MAHSING, HARTA, KEURO, SUCCESS, THHEAVY