Stocks on Bursa Malaysia closed broadly higher last Friday following Wall Street's overnight rally on the back of strong US corporate earnings and encouraging economic reports. The FBMKLCI rose 8.18 points or 0.45% to close at 1,818.86, after opening 3.64 points higher at 1,814.32 and moved between 1,810.02 and 1,819.23 throughout the day. On a weekly basis, the FBMKLCI rose 30.55 points from previous Friday's 1,788.31. Gainers outpaced losers by 625 to 254, while 251 counters were unchanged. Total volume rose to 1.88 billion shares valued at RM1.77 billion from 1.59 billion shares worth RM2.01 billion on Thursday. Weekly turnover for the holiday shortened week declined to 6.76 billion shares worth RM7.37 billion from previous week’s 9.90 billion shares valued at RM10.53 billion.
The FBMKLCI staged a strong rebound last week after going through six consecutive weeks of correction where it opened last Monday 1.76 points higher at 1,790.07, the intra-week low, and climbed higher for the rest of the day to close 14.83 points higher at 1,803.14, tracking the strong rebound on Wall Street the previous Friday. Tuesday saw mild profit-taking on the local bourse with the key index giving back 6.92 points to 1,796.22 ahead of the Deepavali holiday on Wednesday. Bursa Malaysia resumed trading on Thursday with the FBMKLCI doing a catch up to close 14.46 points higher at 1,810.68, boosted by strong buying interest following the overnight fall in oil prices. The key index continued its upward trend on Friday to gain another 8.18 points to 1,818.86 after hitting an intra-week high of 1,819.23.
On the weekly chart, the FBMKLCI formed a bullish Marubozu candlestick which indicates a returned of the bulls after being beaten down for six consecutive weeks. Hence, the FBMKLCI is likely to continue to climb higher this week on follow through buying momentum, and the key index is likely to meet strong resistance at the 1,829 to 1,840 point levels. On the daily chart, the FBMKLCI formed a bullish white candlestick which continued the rebound on last Thursday to close near the high of the day, indicating strong buying support after initial profit-taking activity at earlier part of the day. Hence, the FBMKLCI is likely to continue its upward move to climb higher today. Immediate overhead resistance zone is at 1,822 to 1,824, the gap area formed on October 10th, follow by the next higher gap area of 1,830 to 1,833.
Weekly MACD was slightly lower, while its histogram contracted upward for the first time after expanding southward for six consecutive weeks, indicating a rebound amid a reduction of the bearish momentum. Daily MACD traced out a golden-cross, indicating a change in the momentum from bearish to bullish and a buy signal on the daily perspective. Weekly RSI (14) was higher at 42.1 from 30.3, indicating a strong rebound which lifted the FBMKLCI from a bearish state to a mildly bearish state on the weekly chart. Daily RSI (14) was higher at 48.7 from 45, indicating further improvement of the key index’s relative strength to the neutral zone from a mildly bearish state. Weekly Stochastic rose to 22.4 from 12.1, and has made a golden-cross, issuing a stochastic buy signal on the weekly chart, and indicating a possible end of the weekly down cycle. Daily Stochastic was higher at 50.9 from 43.8, indicating further improvement of the index’s daily strength and continuation of the daily up cycle. In short, readings from the weekly indicators showed that the bearish momentum is reducing and a reversal buy signal was shown by the weekly stochastic oscillator; and readings from the daily indicators showed that the FBMKLCI is gradually gaining strength and is moving out of the bearish state and a MACD golden-cross buy signal was formed.
The general trend of the FBMKLCI is still down. However, with the strong rebound last week, the FBMKLCI formed a “V” shape reversal which saw the key index recovering 51 points in five sessions from the close of 1,767.77 on previous Thursday, and the short term trend has turned up with the 5-day simple moving average (SMA) making a golden-cross over the 10-day SMA, and at the same time, the key index has also closed above the 15 and 20-day SMA, indicating the key index is turning bullish for the short term. Hence, the FBMKLCI is likely to continue with its bullish upward to move higher to test the overhead resistance zone of 1,820 to 1,829, posted by the 360-day SMA which is currently at 1,820 and the 30 and 300-day SMA resistance at 1,829. On the downside, the FBMKLCI is likely to see some good support at the 1,809, 1803 and 1,797 point levels by the 15, 5 and 10-day SMA.
Last Friday, the Dow rose 127.51 points or 0.76% to close at 16,805.41. This week, the FBM KLCI is likely to trade within a range of 1,770 to 1,848, and today, the FBM KLCI is likely to trade within a range of 1,803 to 1,828.
This week's expected range: 1770 – 1848
Today’s expected range: 1803 – 1828
Resistance: 1822, 1825, 1828
Support: 1803, 1806, 1812
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