Stocks on Bursa Malaysia closed last Friday lower as the Wall Street's weak overnight performance muted investors' sentiment, with the FBMKLCI closed 2.44 points or 0.13% easier at 1,869.08 points after hovering between 1,866.05 points and 1,871.69 points throughout the day. However, on a weekly basis, the FBMKLCI was 8.1 points better compared with 1,860.98 recorded the previous Friday. Losers led gainers by 422 to 355 while 330 counters were unchanged. Turnover was lower at 1.15 billion shares, worth RM1.51 billion from 1.5 billion shares, worth RM2.5 billion, recorded on Wednesday. The holiday-shortened week saw weekly turnover drop to 7.32 billion shares, worth RM6.96 billion, from previous week's 11.4 billion shares worth RM10.78 billion.
The benchmark FBMKLCI opened last Monday 0.56 of a point higher at 1,861.54 and moved higher to hit the intra-day high of 1,862.97 before profit-taking activity sent it 5.24 points lower at 1,855.74 on weak buying support due to on-going geopolitical risk in Ukraine. On Tuesday, the FBMKLCI opened 3.47 points lower at the intra-week low of 1,852.27 and moved higher gradually throughout the day to end 3.6 points higher at 1,859.34 points on gains in heavyweights as selling pressure on small-cap stocks persisted. Stocks on Bursa Malaysia ended mixed on Wednesday, the last trading day of April, as cautious sentiment clouded the market ahead of the outcome of the US Federal Reserve's two-day meeting which ends later on the day, against a backdrop of continuing tension in Ukraine. However, the FBMKLCI rose 12.18 points to the intra-week high of 1,871.52 points on government fund buying. Bursa Malaysia was closed on Thursday for the May 1st Labour Day holiday, and the key index closed lower on Friday on mild profit-taking after rising for two days.
On the weekly chart, the FBMKLCI formed a white hangman-like candlestick which indicates a fight back of the bulls after being beaten down in the earlier part of the week. However, as the FBMKLCI failed to close above the previous week’s high of 1,870.89 after attempting to break it on Thursday and closed below this immediate resistance level on Friday, and hence, the FBMKLCI is likely to consolidate within a range of 1,852 to 1,871 until a convincing breakout is seen. On the daily chart, the FBMKLCI formed a black spinning-top candlestick which indicates uncertainty of market direction and a pause for a breather after a strong move. Hence, the FBMKLCI is likely to further consolidate today. Immediate overhead resistance zone is at 1,871 to 1,882, while the immediate downside support zone is at 1,866 to 1,857.
Weekly MACD and its histogram continued to climb higher, indicating an increased in the bullish momentum. Daily MACD also continued to rise, and has made a golden-cross over the signal-line, issuing a short term buy signal. Weekly RSI (14) was higher at 64.7 from 62.8, indicating an improvement in the weekly relative strength to a more bullish state in the bullish zone. Daily RSI (14) hooked downward to 61.5 from 63.8, indicating a mild pullback correction, and the key index is still in the bullish zone. Weekly Stochastic continued to rise to 90.4 from 85.7, indicating very strong market strength from the weekly perspective, but is in the overbought zone. Daily Stochastic was also higher at 81.8 from 65.4, indicating continued improvement in the index’s strength and the short term up cycle, and has just entered the short term overbought zone. In short, both the weekly and daily indicators showed that the FBMKLCI is still in a bullish mode, and is likely to extend its uptrend.
The trend of the FBMKLCI remained up and bullish as the key index is staying above all the short, medium and long term moving averages. However, as the stochastic indicators showed an overbought situation, the FBMKLCI is likely to pause for a breather to consolidate its earlier gains. Moreover, heightened geopolitical tensions in Ukraine, following more violence over the weekend, which adversely impacted the US stock market, could act to dampen sentiment and encourage a correction. Nevertheless, as the long term trend of the FBMKLCI is still very much intact, any short term correction should be viewed as an opportunity to accumulate quality stocks for medium to longer term gains. On the broader market, the small-cap and penny stocks are likely to go into further correction and consolidation as can be seen from a fast shrinking volume last Friday.
Last Friday, the Dow fell 45.98 points or -0.28% to close at 16,512.89. This week, the FBM KLCI is likely to trade within a range of 1,837 to 1,891, and today, the FBM KLCI is likely to trade within a range of 1,860 to 1,877.
This week's expected range: 1837 – 1891
Today’s expected range: 1860 – 1877
Resistance: 1871, 1874 1877
Support: 1860, 1863, 1866
Stocks to watch: ALAM, CAMRES, DAYA, KPJ, LATITUD, MINHO, NARRA, OCK, SMRT, TITIJYA, ZELAN
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