Stocks on Bursa Malaysia closed broadly higher last Friday with the benchmark FBMKLCI ended the week on a positive note, driven by gains in selected heavyweight counters. The benchmark index rose 2.22 points or 0.12% to close at 1,819.37 points, after moving between 1,813.9 and 1,820.38 throughout the day. On a weekly basis, the FBMKLCI rose 10.78 points or 0.6% from 1,808.59 on previous Friday. Gainers thumped losers by 525 to 273, while 313 counters were unchanged. Volume dipped to 2.37 billion shares worth RM2 billion from 2.52 billion shares worth RM2.08 billion traded on Thursday. Weekly turnover improved to 12 billion shares worth RM10.36 billion from previous week’s 6.498 billion shares worth RM8.034 billion.
The FBMKLCI continued its rebound from previous week to close higher last week, where the benchmark index opened last Monday with an upside gap of 4.39 points higher at 1,812.98 and pulled back to hit the intra-week low of 1,812.29 briefly after opening, and it rose by 7.55 points to close Monday at 1,816.14 points. Tuesday and Wednesday saw the FBMKLCI rose by another 8.03 points and 1.47 points to close at 1,824.17 and 1,825.64 points respectively on continued buying momentum in blue-chips. However, heavy profit-taking activity set-in on Thursday which saw the key index losing 8.49 points to close at 1,817.15 points, and on Friday, the FBMKLCI staged a mild rebound to end the week in positive territory.
On the weekly chart, the FBMKLCI formed a white inverted hammer-like candlestick which breakaway from previous week’s candlestick, indicating a bullish euphoria in the beginning of the week, and profit-taking activity appeared at a later part of the week which erased about half of the week’s range. Hence, the FBMKLCI is likely to stay range-bound in the coming week but with an upward bias. On the daily chart, the FBMKLCI formed a bullish piercing-line candlestick pattern, a bottom reversal candlestick pattern which indicates the bulls were fighting back after being beaten at the early session on Friday, and hence, the FBMKLCI is likely to continue its rebound from last Friday to move higher today. Immediate overhead resistance zone is at 1,820 to 1,828, while the downside support zone is at 1,812 to 1,800.
Weekly MACD, which is still above the zero-line continued to slide lower. However, its histogram contracted upward for the first time after expending for four consecutive weeks, indicating a reduction in the bearish momentum. Daily MACD continued to rise, and is still below the zero-line, but its histogram contracted marginally over the last two bars, indicating a state of consolidation on the daily perspective. Weekly RSI (14) was higher at 55.8 from 52.9, indicating an improvement of the weekly relative strength to a mildly bullish state. Daily RSI (14) hooked upward to 52.8 from 51.9, indicating a mild rebound of the key index on Friday. Weekly Stochastic hooked upward to 34.8 from 27.4, and has made a golden-cross over the weekly slow stochastic line, issuing a buy signal on the weekly stochastic indicator, and it also indicated that the weekly or down cycle which started at the last week of December is probably coming to an end, and the possible beginning of a weekly up cycle. Daily Stochastic, however, continued to slide lower to 87.4 from 92.5, but is still above the daily slow stochastic line, indicating a mild pullback correction. In short, readings from the weekly indicators showed that the FBMKLCI correction on the weekly perspective has probably come to an end, and the possible beginning of a weekly bullish or up cycle; and readings from the daily indicators showed a mild pullback correction has taken place, and a rebound is in sight.
The short term trend of the FBMKLCI is up as the key index continued to stay above the short term moving averages. However, the medium term trend has turned sideways as the 50 and 60-day SMA has turned flat, and hence, the FBMKLCI is likely to move sideways range-bound in the medium term within the range of 1,769 to 1,882. The long term trend, nonetheless, still remained up and bullish. For the coming week, the FBMKLCI is likely to stage a follow-through rebound which may see the key index moving higher to re-test the overhead resistance zone of 1,828 to 1,838, and the small-cap and penny stocks should stay robust on active rotational interest in stocks with positive news flow.
Last Friday, the Dow rose 126.80 points or 0.79% to close at 16,154.39. This week, the FBM KLCI is likely to trade within a range of 1,795 to 1,845, and today, the FBM KLCI is likely to trade within a range of 1,808 to 1,827.
This week's expected range: 1795 – 1845
Today’s expected range: 1808 – 1827
Resistance: 1821, 1824, 1827
Support: 1808, 1811, 1815
Stocks to watch: INARI, JCY, KPS, MKLAND, MPAY, MUDA, N2N, PERWAJA, UNISEM, XINQUAN
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