Stocks on Bursa Malaysia closed slightly lower last Friday on profit-taking activities as investors looked to sell assets as the year was coming to a close amid mixed trading sentiment in regional stock markets. The benchmark FBM KLCI ended 0.77 of a point lower at 1,651.98 after opening 0.28 of a point lower at 1,652.47, and moved between 1,644.53 and 1,652.87 throughout the day. Week-on-week, it gained 34.21 points from 1,617.77 previously. Losers led gainers by 340 to 302 while 324 counters were unchanged. Volume shed to 766.45 million shares worth RM1.33 billion from Thursday's 881.12 million shares worth RM1.54 billion. Weekly turnover increased to 4.31 billion shares valued at RM7.6 billion from previous week's 4.199 billion shares valued at RM6.171 billion.
The benchmark FBM KLCI staged a strong follow through rebound last week on strong window-dressing support for key index heavyweight telcos and better-than-expected economic data from the US and China. It opened last Monday 0.48 point higher at 1,618.25 and pulled back to the intra-week low of 1,617.97 right after opening, but staged a strong rally to close 14.38 points at the day’s highest point of 1,632.15. It continued to rally higher on Tuesday with a gain of 9.24 points to close at 1,641.57, and another 8.18 points gain to 1,649.75 on Wednesday. The FBM KLCI hit the intra-week high of 1,656.62 on Thursday and pulled back to close off high but still with a gain of 3.0 points at 1,652.75. Heavy profit-taking activity set in on Friday with the benchmark index falling to the intra-day low of 1,644.53 before a last minute buying support for selected key heavyweights which lifted it to close just 0.77 of a point lower at 1,651.98. Week-on-week, it still gained 34.21 points or 2.1% from 1,617.77.
On the weekly chart, the FBM KLCI formed a bullish long white candlestick which indicates buyers were dominant over the week and push up the index strongly. With the strong upward momentum from last week, the FBM KLCI may continue its upward move to climb high to test the overhead resistance zone of 1,656 to 1,679. On the daily chart, however, sign of weakness has appeared, where the FBM KLCI formed a black spinning-top with an exhaustion gap on Thursday followed by a Doji candlestick with long lower shadow on Friday, which showed an exhaustion of the upward momentum followed by strong profit-taking. Hence, the FBM KLCI is likely to go into a consolidation mode after a week of strong rally, with immediate overhead resistance at 1,656 while the downside support is at 1,644.
Weekly MACD has hooked upward but is still below the signal-line, and its histogram also contracted upward, indicating a reduction in the weekly bearish momentum. Daily MACD and its histogram continued to climb higher, indicating a continuation in the bullish upward momentum. Weekly RSI (14) was higher at 57.2 compared with 48.2 a week ago, indicating the weekly relative strength of the FBM KLCI has changed from mildly bearish to a state of mildly bullish. Daily RSI (14), however, hooked downward to 66.5 from 67.3, reflecting the mild pullback correction on Friday, but the daily relative strength is still in the bullish zone. Weekly Stochastic was higher at 40.8 from 25.2, and has made a golden-cross over its weekly slow stochastic line, indicating a change in the weekly cycle from down to up. Daily Stochastic, however, continued to slide lower to 94.99 from 96.8, reflecting the pullback correction, but is still above the daily slow stochastic line. Readings from the weekly indicators showed that the FBM KLCI has again turned bullish from a week perspective, while on the daily perspective, the key index is undergoing a pullback correction after hitting an extremely overbought situation, but the overall technical picture is still bullish.
The FBM KLCI has regained its uptrend as the key index has closed above all the moving averages, and the immediate short term 5-day SMA is also closing above the rest of the longer period moving averages. Nevertheless, the 10-day SMA is still below the 30, 60 and 120-day SMA, and only when the 10-day SMA is also closing above these medium to longer term moving averages, the FBM KLCI will turned really bullish. As it is, the FBM KLCI still run the risk of a deeper pullback if it breaks below the 1,644-point support level. For the coming week, the FBM KLCI is likely to consolidate itself after a strong rally last week, as the gains last week were not broad-based, but mostly due to window-dressing in selected blue-chip stocks which may not continue for another week.
Last Friday, the Dow fell 35.71 points or -0.27% to close at 13,135.01. This week, the FBM KLCI is likely to trade within a range of 1,589 to 1,695, and today, the FBM KLCI is likely to trade within a range of 1,638 to 1,661.
This week's expected range: 1589 – 1695
Today’s expected range: 1638 – 1661
Resistance: 1655, 1658, 1661
Support: 1638, 1641, 1646