Stocks on Bursa Malaysia ended mixed last Friday on lack of buying support ahead of the weekend. However, the benchmark FBMKLCI rose 4 points or 0.22% to close at 1,835.66, after moving between 1,825.82 and 1,836.14 throughout the day. On a weekly basis, the FBMKLCI gained 4.92 points from previous Friday’s 1,830.74. Market breadth was negative with losers leading gainers by 582 to 268, with 305 counters unchanged. Volume rose to 2.45 billion shares worth RM2.68 billion, from 2.38 billion shares worth RM2.09 billion on Thursday. Weekly turnover fell to 13.2 billion shares worth RM11.29 billion, from previous week’s 15.74 billion shares worth RM12.18 billion.
The FBMKLCI was basically in a sideways consolidation mode last week. It opened last Monday 0.7 of a point higher at 1,831.44, but ended the day 2.06 points lower at 1,828.68, after moving between 1,826.53 and 1,833.80 throughout the day. Tuesday saw the benchmark index rebounded to close 5.07 points higher at 1,833.75. Taking cue from the weak overnight close on Wall Street, the FBMKLCI fell 11.2 points to close at 1,822.55 on heavy selling pressure after opening 3.54 points lower at 1,830.21. However, the key index staged a strong rebound on Thursday with a gain of 9.11 points to 1,831.66 after Wall Street’s positive performance overnight and the rebound continued into Friday to end the week on a positive note.
On the weekly chart, The FBMKLCI formed a white hangman candlestick, a top reversal candlestick pattern which indicates a possible reversal maybe in sight. Nonetheless, a confirmation of the reversal will require the index to close below the immediate low of 1,822 in the coming week. However, as the strong hand managed to reverse the reversal which started on Wednesday to close the week near the highest point, and hence, the FBMKLCI may continue its upward momentum to move higher. On the daily chart, the FBMKLCI formed a bullish white candlestick which closed near the highest point of the day after opening 5.47 points lower at 1,826.19 and hovered in the negative territory for a major part of the day, and a last minute buying on selected blue-chips managed to push the key index through the immediate resistance of 1,833-point, indicating the bulls are still in control. Hence, the FBMKLCI is likely to move higher in the coming week if the buying support continues. Immediate overhead resistance zone is at 1,838 to 1,850, while the downside support zone is at 1,822 to 1,813.
Weekly MACD continued to curve up and its histogram also further contracted upward, indicating a continued improvement in the weekly momentum to the bullish side. Daily MACD continued its upswing from Thursday, and the histogram also expanded upward for the first time after contracting for six consecutive sessions, indicating a possible completion of the consolidation process over the last two weeks. Weekly RSI (14) was higher at 59.8 from 58.6, indicating a further improvement of the index weekly relative strength to a bullish state. Daily RSI (14) was higher at 58 from 56.1, indicating a further improvement of the index’s daily relative strength albeit still in the mildly bullish zone. Weekly Stochastic was higher at 52.3 from 44.3, indicating a continuation of the weekly up cycle, and the weekly market strength has started to turn to the strong side as the stochastic has crossed above the 50-level. Daily Stochastic, however, was lower at 82.6 from 87.5, indicating the key index is still in a consolidation mode. In short, readings from the weekly indicators showed that the FBMKLCI is gradually turning bullish, while on the daily perspective, the key index is still in a consolidation mode but with an upward bias.
The technical picture of the FBMKLCI remained very much unchanged where the short and medium term trend still remained sideways range-bound. However, with a last minute push up of the key index on last Friday, the immediate short term trend of the FBMKLCI has skewed to the upside, and the long term uptrend still remained intact. For the coming week, the FBMKLCI is likely to stay sideways range-bound with an upward bias amid positive external developments like the bullish testimony by United States Federal Reserve chairman Janet Yellen that it may consider the prospects of continued quantitative easing until there is solid data on economic strength is also good news to investors. Rotational play on the small-cap and penny stocks is likely to continue with focus on different theme.
Last Friday, the Dow rose 49.06 points or 0.30% to close at 16,321.71. This week, the FBM KLCI is likely to trade within a range of 1,813 to 1,850, and today, the FBM KLCI is likely to trade within a range of 1,818 to 1,846.
This week's expected range: 1813 – 1850
Today’s expected range: 1818 – 1846
Resistance: 1839, 1842, 1846
Support: 1818, 1822, 1828
Stocks to watch: AIRASIA, ASUPREM, ENCORP, EURO, IDMENSN, IJMLAND, INARI, MPAY, N2N, UEMS
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