Stocks on Bursa Malaysia closed higher last Friday lifted by gains in selected heavyweights. The stronger performance staged by the local bourse was in line with its regional peers, prompted by signs that the US nonfarm payrolls report could put some global growth concerns to rest. The FBMKLCI finished the day 10.69 points or 0.59% better at 1,808.59 points, after hovering between 1,797.84 and 1,812.18 throughout the day. On a weekly basis, the FBMKLCI gained 4.56 points from previous Thursday’s 1,804.03. Market breadth was positive as gainers thumped losers by 542 to 256, while 324 counters were unchanged. Volume rose to 1.86 billion shares worth RM2.2 billion from 1.83 billion shares worth RM2.2 billion recorded on Thursday. Weekly turnover rose to 6.498 billion shares, worth RM8.034 billion from previous week’s 5.253 billion shares worth RM7.658 billion.
Taking cue from the 326 points fall of the Dow overnight, the FBMKLCI opened last Tuesday 8.14 points lower at 1,795.89 and plunged to the intra-week low of 1,769.80, losing 34.23 points at its worst. However, the FBMKLCI rebounded to narrow the losses to close 25.2 points lower at 1,778.83. Wednesday saw the FBMKLCI bouncing back from Tuesday’s losses to close 7.05 points higher at 1,785.88, spurred by bargain hunting. The rebound continued into Thursday and Friday which saw the benchmark index gaining 12.02 points to close at 1,797.90 on Thursday and another 10.69 points to end the week at 1,808.59.
On the weekly chart, the FBMKLCI formed a bullish white hammer candlestick, a bottom reversal candlestick pattern which indicates the key index was receiving good buying support after hitting the intra-week low of 1,769.80 and the bulls came in to bargain hunt. In fact, the FBMKLCI was forming white hammer candlestick over the last two weeks, indicating the index was receiving strong buying support at level below 1,800-point. On the daily chart, the FBMKLCI formed a bullish white candlestick, which indicates strong buying momentum, and the candlestick has also covered the downside runaway gap formed on January 24th, indicating the bulls are fighting back after being beaten badly. Hence, the FBMKLCI is likely to stage a follow through rebound in the coming week to challenge the immediate overhead resistance zone of 1,816 to 1,838, and immediate downside support zone is at 1,800 to 1,778.
Weekly MACD and its histogram continued to slide lower, indicating a continued lost in the weekly momentum. However, daily MACD continued to climb higher albeit still below the signal-line, and MACD is likely to make a golden-cross over the signal-line soon as the gap was greatly narrowed. Weekly RSI (14) hooked upward to 52.9 from 51.7 a week ago, indicating a mild improvement in the weekly relative strength. Daily RSI (14) rose to 49.4 from 44.9, indicating the daily relative strength is turning neutral from a mildly bearish state. Weekly Stochastic was marginally lower at 27.37 from 27.55 and is tapering off, indicating a state of consolidation on the weekly perspective. However, daily Stochastic continued to climb higher to 42.4 from 26.4, indicating a strong gain in the market strength and continuation of the daily up cycle. In brief, weekly indicators showed a state of consolidation, while the daily indicators already showed signs of mild bullishness of the FBMKLCI.
The short term trend of the FBMKLCI has turned up as the index is now closing above the 5, 10, 15 and 20-day simple moving averages (SMA), and the key index is likely to move higher to challenge the overhead resistance zone posted by the medium term moving averages at 1,818 to 1,822. A successful breakthrough above the 1,822-point resistance level, posted by the 50-day SMA, will see the FBMKLCI turning bullish again for the medium term. The long term trend continued to stay up and bullish. For the coming week, the FBMKLCI is likely to continue its post Chinese New Year rally from last week to challenge the overhead resistance zone of 1,816 to 1,838.
Last Friday, the Dow rose 165.55 points or 1.06% to close at 15,794.08. This week, the FBM KLCI is likely to trade within a range of 1,754 to 1,839, and today, the FBM KLCI is likely to trade within a range of 1,785 to 1,826.
This week's expected range: 1754 – 1839
Today’s expected range: 1785 – 1826
Resistance: 1814, 1820, 1826
Support: 1785, 1791, 1800
Stocks to watch: ACME, CENTURY, INFOTEC, MKH, MPAY, MUDA, ORNA, SERNKOU
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