Stocks on Bursa Malaysia closed higher last Friday on bargain hunting across the board in line with the stronger regional stock markets as Southeast Asian stock markets staged a mild rebound, tracking the firmer US equities board as Wall Street shook off concerns over recent Federal Reserve policy. The FBMKLCI ended 2.31 points or 0.13% higher at 1,820.48 after hovering between 1,816.85 and 1,821.69. Week-on-week, the key index gained 15.36 points from 1,805.12 on previous Friday. Gainers outpaced losers by 439 to 328, with 322 unchanged. Turnover stood at 1.75 billion shares worth RM3.12 billion from Thursday’s 1.51 billion shares worth RM1.85 billion. Weekly turnover fell to 7.29 billion shares worth RM10.08 billion from previous week’s 8.45 billion shares worth RM10.34 billion.
The FBMKLCI staged a rebound last week, helped by external market strength after a peaceful referendum by Crimea to join Russia, tame sanctions by the United States and European Union on Russia and improved US trade data. Concerns over a sooner-than-expected rise in US interest rates following the conclusion of a two-day Federal Open Market Committee (FOMC) meeting on last Tuesday and Wednesday that further reduced monthly bond purchases by US$10 billion (RM33 billion) were discounted by stronger economic data, which suggested sustained recovery for the world's largest economy. The FBMKLCI opened last Monday 1.03 points higher at 1,806.15 but slipped to the intra-week low of 1,802.88 before staging a rebound to close the day with a gain of 10.04 points at 1,815.16. Follow through buying was seen on Tuesday which pushed the key index another 5.54 points higher to 1,820.7. The FBMKLCI staged a mild pullback correction on Wednesday to finish 3.26 points lower at 1,817.44, and the key index further corrected on Thursday morning before a last minute buying on selected blue-chips which lifted the index from the negative territory to close with a minor gain of 0.73 point at 1,818.17. The rebound continued into Friday to hit an intra-week high of 1,821.69 before pulling back to close slightly off high at 1,820.48.
On the weekly chart, the FBMKLCI formed a bullish white piercing-line candlestick pattern, a bottom reversal pattern which suggested a fight back of the bulls after being beaten down the previous week. Hence, the FBMKLCI is likely to stage further rebound in the coming week. On the daily chart, the FBMKLCI formed a white spinning-top candlestick which indicates uncertainty of market direction but with an upward bias. Hence, the FBMKLCI is likely to stay range-bound today with a mild bullish bias. Immediate overhead resistance is at 1,822, follow by 1,828 and 1,838, while the downside is at 1,816, follows by 1,811 and 1,802.
Weekly MACD continued to slide lower, but its histogram contracted upward, indicating a reduction in the weekly bearish momentum. Daily MACD hooked upward slightly, and its histogram further contracted upward, suggesting an improvement in the daily momentum to the positive side albeit the daily MACD is still below the zero-line. Weekly RSI (14) hooked upward to 53.9 from 49.5, indicating a rebound on the weekly chart that lifted the weekly relative strength of the key index to a mildly bullish state from a mildly bearish state before. Daily RSI (14) was slightly higher at 49.5 from 48.1, indicating a mild rebound on the daily chart, and the index is still in a state of short term consolidation. Weekly Stochastic was lower at 44 from 48.5, indicating a continuation of the weekly down cycle, and daily stochastic hooked downward slightly to 44.2 from 44.2, indicating consolidation. Mixed signals from both the weekly and daily indicators showed that the FBMKLCI is likely to extend its range-bound consolidation until a clear breakout sign is observed.
The technical picture of the FBMKLCI remained very much unchanged in that the rebound last week merely brought the key index back to the short term sideways range-bound zone of 1,802 to 1,838 and the key index is trapped within the cluster of short and medium term moving averages, reinforcing the sideways consolidation. In order to breakout from this moving average resistance zone, the FBMKLCI must at least close above 1,824, the highest moving average resistance level posted by the 30-day SMA. The current strong resistance level is at 1,838, in which a breakout above this level will see a rally towards the 1,850 to 1,882 zone. Nonetheless, the long term trend still remained up. As the month of March is coming to an end which coincides with a quarterly closing, some windows dressing activity might be expected towards the end of the week which might prop up the key index.
Last Friday, the Dow fell 28.28 points or -0.17% to close at 16,302.77. This week, the FBM KLCI is likely to trade within a range of 1,789 to 1,840, and today, the FBM KLCI is likely to trade within a range of 1,812 to 1,826.
This week's expected range: 1789 – 1840
Today’s expected range: 1812 – 1826
Resistance: 1822, 1824, 1826
Support: 1812, 1814, 1817
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