Stocks on Bursa Malaysia closed mixed to higher last Friday on the back of persistent buying momentum in small capitalised and penny stocks amid positive sentiment brought about by strong local economic data. Malaysia’s Gross Domestic Product (GDP) grew 6.4% in the second quarter against 6.2% registered in the first quarter of the year, driven by higher exports and continued strength in private domestic demand. The FBMKLCI ended 2.73 points or 0.15% firmer at 1,864.31 after fluctuating between 1,860.22 and 1,864.62 points throughout the day. On a weekly basis, the FBMKLCI rose 24.44 points from 1,839.87 points recorded on previous Friday. Losers led gainers by 439 to 407 while 336 counters were unchanged. Total volume decreased to 3.41 billion units worth RM2.34 billion from 3.95 billion units worth RM2.58 billion transacted on Thursday. Weekly turnover rose to 17.14 billion shares, valued at RM11.93 billion from 15.28 billion shares, valued at RM11.39 billion last week.
The FBMKLCI was basically in a rebound mode the whole of last week to recoup all of the previous week’s losses, as investors returned on easing geopolitical tensions in Ukraine and following limited United States airstrikes in Iraq. The FBMKLCI opened last Monday 1.92 points higher at 1,841.79 but slipped marginally lower to hit the intra-week low of 1,840.64 after opening. However, the key index rebounded to close Monday 9.45 points higher at 1,849.32, the highest point of the day. Tuesday saw the FBMKLCI trading in the negative territory most of the time but managed to gain 1.07 points to 1,850.39 on a last minute push. The FBMKLCI continued to rise for the next three days with a gain of 7.65 points on Wednesday, 3.54 points on Thursday and another 2.73 points on Friday to close near the highest point of the week.
On the weekly chart, the FBMKLCI formed a bullish Marubozu candlestick in Harami position, a bottom reversal candlestick pattern which indicates a fight back of the bulls after being beaten down consecutively for two weeks, and hence, the FBMKLCI is likely to stage further rebound in the coming week. Immediate overhead resistances are expected at 1,870, 1,876 and 1,880.
On the daily chart, the FBMKLCI formed a small white hangman-like candlestick, a possible top reversal candlestick pattern which indicates waning of the bullish momentum after rising consecutively for four straight sessions. However, a reversal will require confirmation. Immediate overhead resistance on the daily chart is at 1,867-point, the downside gap area formed on August 8th, follow by 1,876.
Weekly MACD was marginally lower, but its histogram contracted upward for the 1st time after expanding southward consecutively for four weeks, signaling a reduction in the weekly bearish momentum. Daily MACD continued to rise towards the signal-line, and the histogram also contracted upward for the fourth consecutive bar, indicating a strong rebound, However, as MACD is still below the signal-line, current rebound will require more data to confirm the reversal. Weekly RSI (14) swung up strongly to 52.8 from 44.3, indicating a change in the index’s weekly relative strength from a mildly bearish state to a mildly bullish state. Daily RSI (14) was higher at 47 from 45.1, indicating further improvement of the index’s daily relative strength towards the neutral zone from a mildly bearish state. Weekly Stochastic was marginally lower at 25.1 from 27.6, indicating a reduction in the bearish momentum, but the weekly cycle is still down. However, daily stochastic was higher at 48.9 from 39.5, indicating further strengthening of the index’s strength on the perspective and continuation of the daily up cycle. In short, readings from the weekly indicators showed that the FBMKLCI is still in a consolidation mode but with first bullish sign from the weekly RSI reading. However, daily indicators showed that the FBMKLCI is staging strong rebound which saw the RSI swinging from the low of 28.7 on August 8th to 47 on last Friday, and is also supported by the strong contraction of the daily MACD histogram plus the stochastic reading that is approaching the 50-level from a low of 15 on August 8th. Hence, the FBMKLCI is likely to stage further recovery this week.
The immediate near term trend of the FBMKLCI has turned up with the strong rebound last week, as the key index is now closing above the near term 5 and 10-day simple moving averages (SMA). The short term trend is till down as the key index is still below the 15, 20 and 30-day SMA which are currently at 1,865, 1,867 and 1,874-point level, and a full reversal of the FBMKLCI to an uptrend will require the key index to break above the 1,875-point resistance level posted by a cluster of the 30, 50 and 60-day SMA. On the downside, crucial uptrend supports remain at the 200-day SMA currently at 1,844 and 1,837, the August 8 pivot low. For the coming week, the FBMKLCI is likely to stage further rebound to challenge the overhead resistances, and rotational play on the small caps and penny stocks is likely to continue.
Last Friday, the Dow fell 50.67 points or -0.30% to close at 16,662.91. This week, the FBM KLCI is likely to trade within a range of 1,824 to 1,888, and today, the FBM KLCI is likely to trade within a range of 1,857 to 1,869.
This week's expected range: 1824 – 1888
Today’s expected range: 1857 – 1869
Resistance: 1865, 1867, 1869
Support: 1857, 1859, 1861
Stocks to watch: ARANK, ALCOM, ASIABIO, ASTINO, BDB, BJFOOD, BREM, CONNECT, DSONIC, ECS, GSB, INSAS, KELADI, KIMHIN, LBALUM, MITRA, MULTICO, PLABS, PMCORP, TUNEINS
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