Stocks on Bursa Malaysia closed higher last Friday on institutional investors' half-yearly book closing activities, and in line with the regional markets as positive spill-over from US strength continued to fuel bullish sentiment in the market. Regional stocks rose as US Federal Reserve officials hinted at keeping easy-money policies in place until the economy is back on its feet. The FBM KLCI chalked up 21.97 points, or 1.25%, to close at 1,773.54, after moving between 1,754.46 and 1,773.54 throughout the trading session. On a weekly basis, the benchmark index gained 17.69 points from previous Friday's 1,755.85. Gainers doubled losers by 508 to 253, with 306 counters unchanged. Total volume rose to 1.48 billion shares worth RM2.73 billion from yesterday's 1.32 billion shares worth RM2.19 billion. Weekly turnover slipped to 7.521 billion shares, worth RM12.38 billion compared with previous week's 8.724 billion shares, worth RM11.063 billion.
Bursa Malaysia went through a volatile week last week which saw the FBM KLCI plunging on last Monday and Tuesday with a loss of 17.66 points and 9.55 points respectively, and hit an intra-week low of 1,723.74 on Tuesday before staging a strong rebound in tandem with regional bourses on Wednesday through Friday to close the week at the highest point of the week on institutional buying of blue-chips ahead of the half-yearly book closing.
On the weekly chart, the FBM KLCI formed a bullish white hammer candlestick, a bottom reversal candlestick pattern, which indicates the bulls were staging a comeback after being beaten down in the previous two weeks. Hence, the FBM KLCI might continues its reversal to move higher this week, with immediate overhead resistance zone expected at 1,782 to 1,795.
On the daily chart, the FBM KLCI formed a bullish white Marubozu candlestick with an upside runaway gap, indicating a very bullish sentiment as fund managers rushed in to grab more stocks for the half-yearly book closing activities. Hence, the FBM KLCI is likely to continue its upward surge to move higher today. However, as the key index had gained almost fifty points in a short span of three trading days from the low registered on last Tuesday, profit-taking activities is likely to set in which might cap further gains. Immediate resistance is expected at 1,782-point level, while the immediate downside support is at 1,754.
Weekly MACD turned upward slightly, but its histogram continued to contract, indicating a tapering of the weekly momentum. Daily MACD has turned upward, and the histogram also contracted upward for the third bar, indicating a strong technical rebound as the MACD is still below the zero-line. Weekly RSI (14) hooked upward to 67.5 from 64.4, indicating the weekly relative strength is still in a bullish state. Daily RSI (14) has crossed over the 50-level to 55.2 from 47.4, indicating the daily short term relative strength of the FBM KLCI has returned to the mildly bullish state from the bearish state before this. Weekly Stochastic continued to slide lower and is below its slow stochastic line, indicating the key index is still in a consolidation mode on a weekly perspective. Daily Stochastic, continued to rise to 45.9 from 24.1, indicating an improvement in the short term market strength and continuation of the daily up cycle. Readings from the weekly indicators showed that the FBM KLCI is still in a consolidation mode from a weekly perspective, while the daily indicators showed that the FBM KLCI is turning mildly bullish.
The trend of the FBM KLCI has again turned up as the key index is now closing above all the short, medium and long term moving averages. Nevertheless, from a bigger picture, the FBM KLCI will still have to break above the 1,795-point level in order for it to stay uptrend, otherwise, it is still considered trap in a sideways consolidation pattern within the range of 1,723 to 1,795. As the reversal in the short term trend seen last week was too steep, a pullback on profit-taking is likely to happen. Nonetheless, the pullback might offer an opportunity to buy into weakness, as the FBM KLCI might continue its uptrend to test the 1,800-point psychological level.
Last Friday, the Dow fell 114.89 points or -0.76% to close at 14,909.60. This week, the FBM KLCI is likely to trade within a range of 1,707 to 1,807, and today, the FBM KLCI is likely to trade within a range of 1,741 to 1,792.
This week's expected range: 1707 – 1807
Today’s expected range: 1741 – 1792
Resistance: 1780, 1786, 1792
Support: 1741, 1748, 1760