Stocks on Bursa Malaysia closed mixed in thin trade last Friday as weak performance in regional markets kept investors sidelined. The Asian markets showed mixed performance amid poor economic data from Japan, the world’s third largest economy, and quiet trading due to the Easter holiday with markets in Australia, Hong Kong and Singapore closed. The FBM KLCI slipped 2.41 points or 0.14% to close at 1,671.63, after opening 5.96 points higher at 1,680. On a weekly basis, the key index gained 44.74 points from previous week's 1,626.89. Advancers and decliners were at the same level of 346, with 293 counters unchanged. Turnover declined to 610.18 million shares worth RM1.169 billion from Thursday's 917.244 million shares worth RM2.073 billion. Weekly turnover reduced to 4.048 billion shares worth RM8.905 billion, compared with 4.594 billion shares valued at RM8.177 billion previously.
The FBM KLCI was basically in a bullish uptrend mode last week where the benchmark index opened last Monday 3.77 points higher at 1,630.66 and dipped to the intra-week low of 1,628.54 within the first 10 minutes, but rebounded strongly and moved higher for the rest of the day to closed 17 points higher at 1,643.89. It opened Tuesday with an upside gap of 7.95 points at 1,651.84 and moved higher to hit the intra-day high of 1,660.80 before pulling back to close 8.94 points at 1,652.83. The key index continued its uptrend move on Wednesday and Thursday before hitting the intra-week high of 1,681.03 on Friday, and heavy profit-taking activity sent the index to close in the negative territory on Friday.
On the weekly chart, the FBM KLCI formed a bullish white candlestick which breakout from its short term consolidation range, and hence, the key index is likely to continue to move higher in the coming week. However, on the daily chart, the FBM KLCI formed a bearish dark-cloud-cover candlestick pattern which indicates the price was being gap up on Friday's opening for distribution, and the selling pressure was strong enough to break Thursday's low of 1,667.91 to hit the intra-day low of 1,666.46 before rebounding to close off low. Hence, the profit-taking activity is likely to continue into this week. Immediate overhead resistance zone is at 1,681 to 1,699, while the immediate downside support zone is at 1,666 to 1,650.
Weekly MACD hooked upward but is still below the signal-line, and the histogram also contracted upward, indicating a reduction in the weekly bearish momentum. Daily MACD and its histogram, however, continued to climb higher, indicating an increase in the bullish momentum. Weekly RSI (14) hooked upward to 58.02 from 47.02, indicating a change in the weekly relative strength from mildly bearish to become mildly bullish. However, daily RSI (14) hooked downward to 66.1 from 67.9, reflecting the mild pullback in the key index, and the daily relative strength of the FBM KLCI is still in the bullish state. Weekly Stochastic hooked upward to 43.9 from 38.1, and has crossed above its slow stochastic line, issuing a weekly buy signal. Daily stochastic was higher at 92.7 from 90.7, and is tapering off, indicating a reduction in the upward strength, and the stochastic has entered the short term overbought zone. Readings from the weekly indicators showed that the FBM KLCI has just started to turn bullish. However, the daily indicators showed that the key index is bullish but is short term overbought, and a pullback correction is likely to happen.
The trend of the FBM KLCI is up as the key index is now closing above all the short, medium and long term moving averages. Nevertheless, from a medium term perspective, the FBM KLCI has turned sideways as the 60-day SMA has turned flat. Moreover, the key index is still moving within the bigger sideways range of 1,699 to 1,597. Until a breakout of the historical peak of 1,699.68 happened, the FBM KLCI is likely to continue swinging up and down within this range. With the strong gap up on last Friday followed by the formation of a top reversal dark-cloud-cover candlestick pattern, heavy profit-taking has taken place when the FBM KLCI moved into the resistance zone of 1,675 to 1,680 as mentioned in previous analysis, and the key index is likely to have completed the 100% upswing target of its A-B-C corrective up wave, and a pullback is poised to happen. Nonetheless, the key index is likely to resume its upward trend after the correction which is expected to be shallow and does not fall below the 50% Fibonacci retracement level of 1,647.
Last Friday, the US market was closed for Easter holiday. This week, the FBM KLCI is likely to trade within a range of 1,607 to 1,712, and today, the FBM KLCI is likely to trade within a range of 1,650 to 1,695.
This week's expected range: 1607 – 1712
Today’s expected range: 1650 – 1695
Resistance: 1680, 1688, 1695
Support: 1650, 1658, 1665
Stocks to watch: ADVENTA, ILB, INARI, INGRESS, MAYBULK, MUHIBAH, TDM.