Stocks on Bursa Malaysia closed lower last Friday on profit-taking as investors trim their positions ahead of the Christmas and New Year holidays. The benchmark FBM KLCI fell 11.75 points or 0.70% to 1,658.85, was dragged down by losses seen in key heavyweights and consumer-related counters, after opening 3.51 points lower at 1,667.09, and moved between 1,658.85 and 1,668.42. On a weekly basis, the benchmark barometer gained 6.87 points from 1,651.98 previously. Losers led gainers by 380 to 266, while 328 counters were unchanged. Volume dropped to 699.962 million shares worth RM1.203 billion from Thursday's 883.819 million shares worth RM1.378 billion, and weekly turnover fell to 3.874 billion shares worth RM6.569 billion from the 4.31 billion shares worth RM7.6 billion done in the previous week.
The FBM KLCI opened last Monday on a weak note with a downside gap of 3.36 points lower at 1,648.62 and slipped to the intra-week low of 1,643.78 before rebounding to close near the opening level with a loss of 3.4 points at 1,648.58. Taking cue from the strong performance of Wall Street overnight, the FBM KLCI opened Tuesday 1.91 points higher at 1,650.49 and continued surging higher to close 10.86 points higher at the day's high of 1,659.44. Wednesday saw the benchmark index opened with an upside gap of 6.98 points higher at 1,666.42 but to end the day 6.2 points higher at 1,665.64 after falling to the intra-day low of 1,660.99. The FBM KLCI opened on a weak note on Thursday with 2.37 points lower at 1,663.27 and slipped to the intra-day low of 1,661.24 before rebounding to close at the intra-week high of 1,670.60 with a gain of 4.96 points. However, heavy profit-taking set in on Friday which dragged the FBM KLCI to close the week 11.75 points off its peak to 1,658.85.
On the weekly chart, the FBM KLCI rose for the third consecutive week and formed a white inverted hammer-like candlestick pattern which indicates selling pressure at the later part of the week, and hence the formation of a longer upper shadow. Hence, the FBM KLCI is likely to take a breather to consolidate itself during this holiday-shortened week after a three week rally which saw the key index running up from the low of 1,590.67 registered on 28th November to the high of 1,670.60 on last Thursday, with a gain of 80 points. On the daily chart, the FBM KLCI formed a bearish black candlestick last Friday which indicates heavy selling pressure on index-linked stocks, and hence the downward momentum is likely to continue into today. Immediate downside support zone is expected at 1,650 to 1,643 while the overhead resistance zone is at 1,670 to 1,680.
Weekly MACD continued climb higher albeit still below the weekly signal-line and its histogram also contracted upward, indicating an improvement in the weekly momentum. Daily MACD was marginally higher and is tapering off with a contraction in the histogram, indicating a reduction in the daily momentum. Weekly RSI (14) was higher at 58.8 from 57.2, indicating the weekly relative strength is improving and is in the mildly bullish zone. Daily RSI (14) fell to 62.4 from a reading of 73.3 on Thursday, reflecting the pullback correction, and is back to the bullish zone after entering the very bullish or overbought zone briefly. Weekly Stochastic was higher at 58.8 from 40.8, indicating an improvement in the weekly market strength and continuation of the weekly up cycle. Daily Stochastic was however lower at 93.2 and has crossed below the slow stochastic line, indicating a likely consolidation to take place. Readings from the weekly indicators showed that the FBM KLCI is gradually turning bullish on the weekly chart, whereas, from the daily perspective, the FBM KLCI was overbought, and is currently undergoing a pullback correction.
The overall trend of the FBM KLCI remained up. However, as of last Friday's close, the key index has for the first time closing below the 5-day SMA, indicating a short term correction or consolidation is likely to take place, but the correction is expected to be shallow with immediate downside support provided by the 10-day SMA at 1,653 and 1,643 provided by the 50-day SMA. The FBM KLCI may stage a rebound towards the end of the week on likely window-dressing activity, but strong overhead resistance at 1,670 to 1,679 is expected.
Last Friday, the Dow fell 120.88 points or -0.91% to close at 13,190.84. This week, the FBM KLCI is likely to trade within a range of 1,618 to 1,697, and today, the FBM KLCI is likely to trade within a range of 1,646 to 1,678.
This week's expected range: 1618 – 1697
Today’s expected range: 1646 – 1678
Resistance: 1665, 1672, 1678
Support: 1646, 1652, 1655