Stocks on Bursa Malaysia closed easier last Friday as traders booked profits ahead of the weekend bogged down by losses in selected heavyweights and blue-chips. Regionally, Asian equities ended mixed following a better-than-expected US employment report. The benchmark FBMKLCI ended 3.78 points or 0.2% lower at 1,884.91 after moving between 1,884.91 and 1,891.43 throughout the day. On a weekly basis, the key index gained 3.98 points from previous Friday’s 1,880.93. Market breadth was positive as advancers outpaced decliners by 480 to 345, with 342 counters unchanged. Total volume dropped slightly to 1.78 billion units, worth RM1.73 billion, from Thursday’s 1.791 billion shares worth RM2.237 billion. Weekly turnover increased slightly to 8.98 billion shares, valued at RM9.97 billion, from previous week’s 8.49 billion shares, valued at RM9.99 billion.
The FBMKLCI extended sideway trading last Monday, the last day of trade for the first half of the year where it opened 1.1 points lower at 1,879.83 and moved in a tight range for a major part of the day, but a last-minute window-dressing lifted blue chips to close off lows with a gain of 1.78 points at 1,882.71. The key index continued to slip lower on Tuesday to end 3.59 points lower at 1,879.12, after hitting the intra-week low of 1,876.60. Fuelled by the overnight jump in the Wall Street and Europe stocks, the FBMKLCI gained 7.72 points on Wednesday to close at 1,886.84, and the uptrend continued into Thursday with another 1.85 points gain at 1,888.69, but profit-taking on Friday trimmed earlier gains.
On the weekly chart, the FBMKLCI formed a bearish white inverted hammer candlestick, a top reversal candlestick pattern which indicates profit-taking after an initial upsurge; moreover, the key index failed to overcome the top resistance of 1,892.33 where it stopped at 1,891.43, and hence, the FBMKLCI is likely to further consolidate in the coming week. On the daily chart, the FBMKLCI formed a bearish engulfing candlestick pattern which indicated heavy profit-taking activity on Friday after touching an intra-day high of 1,891.34. Hence, the key index is likely to extend its consolidation into today if the profit-taking momentum continues. Immediate downside support zone is at 1,884 to 1,876, while the overhead resistance zone is at 1,890 to 1,892.
Weekly MACD was almost flat, but its histogram contracted slightly, indicating consolidation. Daily MACD, however, crossed gently below the signal-line after crossing above it on Thursday, indicating a state of consolidation. Weekly RSI (14) hooked upward to 63.2 from 62.1, indicating mild improvement of the weekly relative strength in the bullish zone. Daily RSI (14), however, hooked downward to 54.9 from 58.5, reflecting a strong pullback in the key index and the daily relative strength is in the weaker side of the mildly bullish zone. Weekly Stochastic was higher at 89.3 from 88.6, indicating mild improvement of the weekly index strength and continuation of the weekly up cycle, and the daily stochastic was higher at 75.2 from 66.5 after making a golden-cross on Thursday, indicating a continuation of the daily up cycle. In short, mixed signals on both weekly and daily indicators showed that the FBMKLCI is in a state of consolidation but with an upward bias as indicated by the weekly and daily stochastic readings.
The technical picture of the FBMKLCI is very much unchanged in that it is still on a bullish uptrend as the key index continues to stay above all the short, medium and long term moving averages. The pullback on Friday was nothing but just a profit-taking correction after a run up to a level near the all-time high. Hence, for the coming week, the FBMKLCI is likely to stay sideways range-bound within the range of 1,876 to 1,892, but with an upward bias to re-test the upper range, and a break of the top resistance level of 1,892.33 will see the FBMKLCI moving higher to the psychological target level of 1,900-point. On the downside, key uptrend supports are at the 30-day simple moving average (SMA) at 1,876, followed by the 50-day SMA level at 1,874, while better chart supports are at the 100- and 200-day SMA support at 1,855 and 1,832, respectively.
Last Friday, the US market was closed for the Independence Day holiday, while the Dow was closed at the new record high of 17,068.26 on last Thursday. This week, the FBM KLCI is likely to trade within a range of 1,862 to 1,906, and today, the FBM KLCI is likely to trade within a range of 1,876 to 1,898.
This week's expected range: 1862 – 1906
Today’s expected range: 1876 – 1898
Resistance: 1889, 1893, 1898
Support: 1876, 1880, 1882
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