Stocks on Bursa Malaysia ended last Friday on a positive note, lifted by a rotational foreign fund influx amid moderate profit-taking. The benchmark FBM KLCI rose 6.31 points or 0.36% to close at 1,772.38 after hovering between 1,752.26 and 1,772.89 throughout the day. On a weekly basis, the benchmark index gained 77.61 points from previous Friday's 1,694.77. Gainers thrashed losers by 745 to 174 while 201 counters were unchanged. Volume increased to 2.54 billion shares worth RM2.86 billion from 2.44 billion shares worth RM2.52 billion on Thursday. Weekly turnover surged to 11.54 billion shares worth RM17.29 billion from previous week's 3.23 billion shares worth RM7.97 billion.
The FBM KLCI staged a breakout rally last Monday with a huge upside gap of 76.85 points at 1,771.62 after the 13th general election was concluded on Sunday with Barison Nasional returning to power. The key index surged to a fresh all-time intra-day high of 1,826.22, rising 131.45 points, within the first five minutes of trading. However, heavy profit-taking which emerged sent to key index lower to the intra-day low of 1,743.14 before rebounding to close off low at a record high of 1,752.02, making a net gain of 57.25 points or 3.38 percent. The FBM KLCI continued to climb higher on Tuesday to register a fresh record high of 1,776.73, up 24.71 points from Monday's close. Wednesday saw profit-taking appearing which sent the key index 2.73 points lower to close at 1,774, after opening 5.17 points higher at 1,781.90. Profit-taking activity on blue-chips continued into Thursday which saw the key index losing another 7.93 points to 1,766.07 after hovering between 1,764.71 and 1,776.25 throughout the day. The FBM KLCI staged a strong rebound on Friday to close 6.31 points higher at 1,772.38 after opening 13.81 points lower at 1,752.26.
On the weekly chart, the FBM KLCI formed a high wave black spinning-top candlestick which gaps away from the previous week's candlestick, indicating uncertainty of market direction with a downward bias where buying euphoria pushed the key index to a fresh record high level, but heavy profit-taking activity also emerged at the same which capped gains on the key index. Hence, the FBM KLCI is likely to consolidate in the coming week within a range 1,718 to 1,800.
On the daily chart, the FBM KLCI formed a bullish white piercing-line candlestick, a bottom reversal candlestick pattern, on Friday after two successive sessions of profit-taking correction since last Wednesday. This indicates the bulls are returning after locking in their profits, and hence, the FBM KLCI is likely to continue its upward momentum to challenge the immediate overhead resistance at 1,783 follow by the 1,800-point psychological resistance level.
Weekly MACD and its histogram continued to climb higher, indicating an acceleration in the bullish momentum. Daily MACD also climb higher, but its histogram was marginally lower, indicating a mild deceleration of the daily momentum. Weekly RSI (14) surged to 71.9 from 59.9, indicating a huge advancement of the weekly relative strength from a mildly bullish state to a very bullish or overbought state. Daily RSI (14) hooked upward gently to 71.9 from 70.6, indicating the daily relative strength is still in a very bullish state. Weekly Stochastic, however, continued to curved down and has crossed below the slow stochastic line, indicating the key index might go into correction or consolidation. Daily Stochastic hooked downward slightly to 60.7 from 61.7, but is still above the daily slow stochastic line, indicating consolidation. Readings from the weekly indicators showed that the FBM KLCI is in a very bullish state but correction may set in, while the daily indicators showed that the upward momentum is reducing, and the FBM KLCI may consolidate.
The trend of the FBM KLCI remained up and bullish as the key index continues to stay above all the moving averages. Nevertheless, as the market is short-term overbought fuelled by the breakout rally, investors can expect blue-chips to extend profit-taking consolidation this week. Nonetheless, the strong buying momentum seen last week, if is able to sustain, would be able to cushion the downside with profit-taking dips to be shallow as those who missed the rally will be looking to buy on market dips. Nevertheless, second and third liners are expected to continue their rotational play. Immediate downside support is expected at 1,743, last Monday's intra-day low, follow by 1,738 and 1,721 provided by the 10 and 20-day SMA.
Last Friday, the DJIA rose 35.87 points or +0.24% to close at 15,118.49. This week, the FBM KLCI is likely to trade within a range of 1,697 to 1,818, and today, the FBM KLCI is likely to trade within a range of 1,738 to 1,793.
This week's expected range: 1697 – 1818
Today’s expected range: 1738 – 1793
Resistance: 1779, 1786, 1793
Support: 1738, 1745, 1758
Stocks to watch: FITTERS, IVORY, JCY, MUHIBAH, SENDAI, WTK