Stocks on Bursa Malaysia closed lower last Friday ahead of a long weekend, and as investors await the outcome of the US Federal Reserve meeting on monetary policy to be held this coming Tuesday and Wednesday. The benchmark FBM KLCI slipped 1.6 points or 0.09% to close at the day's high of 1,770.8 after hitting an intra-day low 1,764.13, amid improved market sentiments after undergoing four days of strong rally. On a weekly basis, the FBM KLCI gained 47 points from previous Friday's 1,723.80. Losers led gainers by 391 to 300, with 311 counters unchanged. Turnover declined to 1.233 billion units worth RM1.383 billion from Thursday's 1.458 billion shares worth RM1.753 billion, and weekly turnover rose to 7.77 billion shares worth RM9.367 billion versus previous week's 6.6 billion shares valued at RM7.62 billion.
The FBM KLCI opened last Monday 2.47 points higher with an upside breakaway gap at 1,726.27, the intra-week low, and moved higher steadily to close 23.23 points higher to 1,747.03 at the highest point of the day. Taking cue from the strong performance of Wall Street overnight and continuing the previous day's strong buying momentum, the key index rose another 17.92 points to 1,764.95 after opening 6.11 points higher at 1,753.14 on Tuesday. The FBM KLCI rose another 3.53 points on Wednesday to 1,768.48 after opening 4.75 points higher, and moved between 1,763.05 and 1,776.11, and sign of uncertainty has appeared with the formation of a black spinning-top candlestick pattern. Taking cue from the three digits gain of the Dow overnight, the FBM KLCI opened Thursday higher with an upside gap of 9.28 points at 1,777.76 and surged to the intra-day high of 1,779.40. However, the rise could not sustained and the key index slipped on heavy profit-taking activity to end the day 3.92 points higher at 1,772.40. The profit-taking activity continued into Friday with the FBM KLCI ended 1.6 points lower at 1,770.80.
On the weekly chart, the FBM KLCI formed a bullish long white candlestick which indicates a fight back of the bulls, and confirmation of the reversal signals issued by the past two hammer candlesticks. With this strong upward move last week, the key index is likely to continue to move higher in the coming week. On the daily chart, the FBM KLCI formed a white hammer-like candlestick, a bottom reversal pattern amid a falling market which indicates buying support, and hence, the FBM KLCI is likely to rebound today. Immediate overhead resistance zone is at 1,779 to 1,788, while the downside support zone is at 1,764 to 1,753.
Weekly MACD has turned flat or hooked upward gently, while its histogram contracted upward, indicating a reduction in the weekly bearish momentum. Daily MACD continued to climb higher albeit still below the zero-line, and the histogram also further extended upward, indicating a further increase in the bullish momentum on the daily chart. Weekly RSI (14) swung upward to56.9 from 46.7, indicating a change in the weekly relative strength from mildly bearish to mildly bullish. Daily RSI (14) hooked downward to 58.9 from 59.7, indicating mild profit-taking on the key index. Weekly Stochastic swung up strongly to 53.7 from 35, and has crossed-over the weekly slow stochastic line, issuing a buy signal on the weekly chart, and indicating the down cycle on the weekly chart has turned up. Daily Stochastic hooked upward to 93.4 from 93.2, indicating the bullish momentum and the short term daily up cycle is still intact. Readings from the weekly indicators showed that the FBM KLCI has just turned mildly bullish, while the daily indicators showed that the short term momentum is turning bullish, and hence, the FBM KLCI might climb higher after the correction is over.
The short term trend of the FBM KLCI remained up albeit the profit-taking on last Friday, as the key index continued to stay above the 5, 10 and 20-day SMA. The medium term trend has turned sideways as the 50 and 60-day SMA has turned flat. Nevertheless, the long term uptrend still remained intact. For this holiday-shortened week, the FBM KLCI is likely to consolidate or move range-bound on Tuesday and Wednesday as investors wait for the outcome of the US FOMC meeting on the bond buying program.
Overnight, the Dow rose 118.72 points or +0.77% to close at 15,494.78. This week, the FBM KLCI is likely to trade within a range of 1,705 to 1,811, and today, the FBM KLCI is likely to trade within a range of 1,759 to 1,777.
This week's expected range: 1705 – 1811
Today’s expected range: 1759 – 1777
Resistance: 1773, 1775, 1777
Support: 1759, 1761, 1766
Stocks to watch: BRAHIMS, IRCB, IRCB-WA, MMODE, SERSOL, SERSOL-WA, SUMATEC, SUMATEC-WA