Stocks on Bursa Malaysia ended broadly higher last Friday as strong buying of heavyweights like Maybank, IOI Corporation and Petronas Dagangan in late evening prompted the FBM KLCI to close at the day’s high of 1,622.08, making a gain of 8.03 points or +0.50%. On a weekly basis, the FBM KLCI loss 5.85 points or -0.4% from previous Friday's closing of 1,627.93. Gainers thumped losers by 388 to 259 with 318 counters unchanged. Total volume dropped to 831.57 million shares, worth RM1.497 billion, from Thursday's 1.169 billion units valued at RM1.69 billion, while total turnover for the regular week amounted to 5.021 billion units worth RM7bil, compared with 2.18 billion shares valued at RM3.73bil during the three-day holiday-shortened previous week.
The FBM KLCI was basically weak in the first half of last week where it opened last Monday 1.42 points higher at 1,629.35 and hit the intra-week high of 1,629.91 but ended the day 7.00 points lower at 1,620.93. The key index continued its bearish downward move with further loss of 5.86 and 1.74 points respectively on Tuesday and Wednesday. The FBM KLCI hit an intra-week low of 1,599.94 on Thursday before it rebounded to close at the highest point of the day at 1,614.05, and further buying of selected blue-chips on Friday helped pushed the benchmark index higher, also at the highest point on last Friday.
On the weekly chart, the FBM KLCI formed a typical black hammer candlestick, a possible bottom reversal candlestick pattern which indicates buying support appearing for the key index when it hit the 1,600-point level. The FBM KLCI has tested this important psychological level thrice and rebounded from it, hence enhancing the perception of base forming around the psychological support level, and the key index is likely to rebound in the coming week but the rebound is likely to be constrained in the current sideways consolidation range of 1,600 to 1,650.
On the daily chart, the FBM KLCI formed a second bullish white hammer-like candlestick after the formation of a typical hammer candlestick on Thursday, and this showed that the bulls are continuing its buying momentum which helped to push the key index higher, and served as a confirmation to the bottom reversal signal generated on Thursday. Hence, the FBM KLCI is likely move higher today, but strong overhead resistance zone is expected at 1,630 to 1,635.
Weekly MACD and its histogram continued to slide southward, indicating a continued loss in the weekly momentum. On the contrary, the daily MACD has hooked upward and its histogram also further contracted upward, indicating a continued reduction in the daily bearish momentum. Nonetheless, the daily MACD is still below the daily signal-line, and hence, the current improvement may well be just a technical rebound which could be short-lived.
Weekly RSI (14) was lower at 45.3 from 46.9, indicating a further loss in the weekly relative strength and the weekly key index has moved deeper into the mildly bearish zone. Daily RSI (14), however, short upward to 40.9 from 34, indicating an improvement in the key index's relative strength from a bearish state to the mildly bearish state.
Weekly Stochastic continued to slide lower to 30.9 from 32.6, indicating a continuation of the weekly down cycle and further weakening of the market strength, while daily Stochastic has reversed and crossed above the slow stochastic line, indicating a rebound has took place, and the upward momentum may push the FBM KLCI higher. In short, the weekly indicators showed that the FBM KLCI is still in a consolidation mode, while the daily indicators showed signs of reversal and improvement in the momentum to the upside, and hence the key index may stage a rebound to move higher.
The short term trend of the FBM KLCI has turned sideways as the key index has closed above the 5 and 10-day SMA but still remained below the 20 and 30-day SMA. With the rebound on last Friday, the FBM KLCI has also closed above the 240-day SMA but still remained below the 200-day SMA which is currently at 1,627. A breakthrough above the 1,627-point level, where the 20-day SMA and 200-day SMA meets, will likely see further upside of the FBM KLCI. However, only a close above the 1,650-point level would confirms a reversal of the current bearish downtrend, otherwise, whatever upward move is just a technical rebound in a bigger pictures which would attract selling into strength by the bears.
Last Friday, the Dow rose 119.95 points or +0.86% to close at 14,000.57. This week, the FBM KLCI is likely to trade within a range of 1,574 to 1,660, and today, the FBM KLCI is likely to trade within a range of 1,604 to 1,632.
This week's expected range: 1574 – 1660
Today’s expected range: 1604 – 1632
Resistance: 1625, 1629, 1632
Support: 1604, 1608, 1615
Stocks to watch: DIJACOR, KHSB, KSL, MAYBULK, SCOMIMR, TAMBUN, TEBRAU