Stock on Bursa Malaysia closed last Friday on a positive note with investor sentiment boosted by the overnight rally on Wall Street and strong buying in blue-chip stocks. The FBM KLCI ended last Friday 9.4 points or 0.63% higher at 1506.05, after opening 4.16 points better at 1500.81. On a Friday-to-Friday basis, the FBM KLCI closed 6.24 points higher compared with 1499.81 the previous Friday. For the holiday-shortened week, the market had moved within a tight range. Weekly turnover declined to 4.56 billion shares, worth RM6.166 billion, from 8.204 billion shares, valued at RM11.334 billion the previous week.
The FBM KLCI opened last Monday 0.2 point lower at 1499.61 and slipped to the intra-day low of 1497.04, it rebounded and traded sideways in a narrow range throughout the day to close 1.75 points higher at 1501.56. On Tuesday, the FBM KLCI fell to the intra-day low of 1491.76 before rebounding to close 1.98 points higher at 1503.54 on news that South Korea was the latest to follow China to raise interest rate. The market was closed on last Wednesday for the Hari Raya Aidiladha celebration. On Thursday, The FBM KLCI opened 3.23 points lower at 1500.31 and plunged to the intra-day low of 1487.21 within the first thirty minutes, losing 16.33 points at its worst, the key index gradually recovered its lost ground to close the day 6.89 points lower at 1496.65. And on Friday, the key index rebounded strongly to close 9.4 points higher at 1506.05.
On the weekly chart, the FBM KLCI formed a hammer candlestick which indicates sellers were initially dominant in pushing the key index to its intra-week low of 1487.21, but later buyers fought back to push the key index to close near the high of the week at 1506.05. The appearance of the hammer candlestick after the formation of bearish engulfing candlestick pattern the previous week signifies the short term correction is probably over, and the market might continue its rebound to move higher this week.
On the daily chart, the FBM KLCI formed a bullish white candlestick with short lower and upper shadows, which indicates the bull was very much in control. The candlestick formed is a confirmation to the reversal signal issued by the hammer candlestick formed on last Thursday. Hence, the key index is likely to continue its rebound to move higher.
Weekly MACD continued to slide lower, indicating the slow down in the medium term upward momentum. It is however, still positive. Daily MACD continued to slide lower, but at a slower pace, as shown by the shorter histogram, indicating a slow down in the short term downward momentum.
Weekly RSI (14) is at 76.3 and has hooked up, reflecting the rebound on the weekly chart, and is still staying firm in the very bullish zone. Daily RSI (14) has rebounded strongly from 49.4 on last Thursday to 55.5 on Friday, moving back to the neutral to mildly bullish zone.
Weekly Stochastic is at 88.8 and has crossed below its slow stochastic line, reflecting the correction, it is however, still strong until it crossed below the 80 mark. Daily Stochastic is at 32.8 and has turned upward after hitting the low at 28.9 on last Thursday, it is however, still below its slow stochastic line, and the correction would be considered over when the stochastic crossed above its slow stochastic line.
Readings from the indicators and candlestick show that the correction on the FBM KLCI is nearing over, but still require one or two more days’ data for confirmation.
On the trend side, the FBM KLCI is currently holding above the 30-day moving average and is also above the psychological support level of 1500. As it is still below the 10-day MA, the short term trend is still considered sideways. However, the medium to longer term uptrend still remained intact. Immediate overhead resistance zone of the FBM KLCI is at 1510 to 1532 while its immediate support zone lies at 1500 to 1487.
For the coming week, the FBM KLCI is expected to trade higher following positive indicators that Asian equities have stabilized as fears of China hiking interest rates fizzle out, and the European debt crisis was also effectively being contained by the European policymakers.
The Dow rose 22.32 points or +0.20% higher to close at 11,203.55 last Friday. This week, the FBM KLCI may trade within a range of 1470 to 1525, and for today it is likely to trade within a range of 1495 to 1513.
This week's expected range: 1470 – 1525Today’s expected range: 1495 – 1513
Resistance: 1508, 1510, 1513Support: 1495, 1498, 1501