Stocks on Bursa Malaysia closed higher last Friday amid positive global sentiment following the US Federal Reserve's decision to leave the stimulus program intact. The FBM KLCI rose 8.92 points or 0.50% to 1,801.83 after hovering between 1,794.81 and 1,805.15 throughout the day. Week-on-week, the key index gained 31.03 points or 1.73% from previous Friday's 1,770.80. Gainers led losers by 445 to 350, with 284 counters unchanged. Turnover rose to 2.39 billion shares worth RM2.44 billion against Thursday's 1.94 billion shares, worth RM2.73 billion.
Bursa Malaysia kicked off the holiday-shortened week following the Malaysia Day holiday on Monday with the FBM KLCI advancing a cautious 4.14 points to 1,774.94 on Tuesday from the previous week’s close of 1,770.80, and most Southeast Asian bourses traded nearly flat to weaker as investors await the outcome of the two-day policy meeting on the prospect of monetary stimulus tapering. The FBM KLCI fell 3.54 points to 1,771.40 on Wednesday ahead of the outcome of the US FOMC policy meeting which conclude at a later time of the day. Fed surprised the investing world by maintaining the stimulus program which led The FBM KLCI to jump 21.51 points or 1.21% to 1,792.91 on Thursday, and follow through buying on Friday continued to push the key index to close above the psychological resistance level of 1,800 at 1,801.83.
On the weekly chart, the FBM KLCI formed a bullish white candlestick which continued the previous week's upward move, and the key index is likely to continue its upward momentum to challenge the record high of 1,810 registered on July 24th. On the daily chart, the FBM KLCI formed a bullish white candlestick which gaps away from Thursday's candlestick, forming a runaway gap which indicates market participants were enthusiastic in adding their stock position. Hence, the FBM KLCI is likely to climb higher in the coming week with an immediate resistance zone at the 1,810 to 1,811 level, while the downside support zone is at the breakaway gap area of 1,781 to 1,787.
Weekly MACD hooked upward and its histogram continued to contract upward, indicating a further reduction of the weekly bearish momentum. Daily MACD and its histogram climbed higher, indicating an increase of the bullish upward momentum on the daily perspective. Weekly RSI (14) was higher at 62.1 from 56.9, indicating the weekly relative strength of the FBM KLCI has turned bullish from a mildly bullish state the previous week. Daily RSI (14) was higher at 67.8 from 65.4, indicating a further gain in the index's bullishness. Weekly Stochastic was higher at 69.5 from 53.1, indicating a an improvement of the weekly market strength and continuation of the weekly up cycle. Daily Stochastic was higher at 95.05 from 94.3, indicating a very strong market strength, and is in the short term overbought zone. Readings from the weekly and daily indicators showed that the FBM KLCI is gradually gaining its bullishness, but the overbought reading on the daily stochastic may signify a mild pullback correction is imminent.
The trend of the FBM KLCI is up and bullish as the key index is now closing above all the short, medium and long term moving averages. The immediate short term 5-day SMA has crossed above the 60-day SMA last week, and the 10-day SMA has just did the same on Friday, indicating the short term outlook of the FBM KLCI is bullish. Nevertheless, the immediate overhead resistance zone at 1,810 to1,811 is likely to post as a strong hurdle to the index's upward move, a breakout of the resistance level will likely see the FBM KLCI rallying higher to re-test the historical all-time intra-day high of 1,826.22, registered on May 6, 2013.
Last Friday, the Dow fell 185.46 points or -1.19% to close at 15,451.09. This week, the FBM KLCI is likely to trade within a range of 1,756 to 1,828, and today, the FBM KLCI is likely to trade within a range of 1,785 to 1,815.
This week's expected range: 1756 – 1828
Today’s expected range: 1785 – 1815
Resistance: 1806, 1811, 1815
Support: 1785, 1790, 1796
Stocks to watch: HIBISCS, HIBISCS-WA, HOVID, KONSORT, PELIKAN, MMODE, SERSOL, SERSOL-WA, SUCCESS, TAS, WONG