Stocks on Bursa Malaysia ended lower last Friday as traders trimmed their positions ahead of the weekend amid cautious external environment. Traders remained cautious on the development in the Middle East which was disrupting the oil routes. The FBM KLCI closed 5.05 points or 0.28% lower at 1,813.37, after moving between 1,813.30 and 1,818.31 throughout the day. On a Friday-to-Friday basis, the FBM KLCI gained 9.72 points or 0.54% from 1,803.65 on previous Friday. Losers edged gainers by 391 to 354 with 362 counters unchanged. Total volume fell to 1.64 billion units worth RM1.82 billion from 2.43 billion units worth RM1.95 billion on Thursday. Weekly turnover decreased to 10.21 billion units worth RM9.5 billion from 10.37 billion units worth RM10.59 billion on previous week.
Despite the strong gain on Wall Street the previous Friday, the FBM KLCI opened last Monday 2.42 points lower at 1,801.23. It rebounded to hit an intra-day high of 1,811.08 before selling pressure dragged it to close 7.8 points lower at the day’s low which was also the intra-week low of 1,795.85. The FBM KLCI rebounded strongly on Tuesday to close 18.19 points higher at 1,814.04 boosted by strong buying in selected index-linked counters ahead of the month-end first quarter window dressing activity. The FBM KLCI rose further on Wednesday on follow through buying activity on selected index-linked counters, it hit an intra-week high of 1,823.19 before pulling back to close 5.06 points higher at 1,819.1. Profit-taking activity emerged on Thursday with the FBM KLCI closing 0.68 point lower at 1,818.42 as sentiment was dampened by weakness in regional markets as traders turned cautious following escalating tensions in the Middle East and losses on Wall Street. The FBM KLCI continued its correction on Friday to close another 5.05 points lower at 1,813.37.
On the weekly chart, the FBM KLCI formed a bullish white candlestick which served to confirm the reversal signal issued by the bullish engulfing pattern on the previous week, and hence, the FBM KLCI is likely to extend its upward move in the coming week to re-test the overhead resistance of 1,823. On the daily chart, the FBM KLCI formed a black inverted hammer candlestick, a weak bottom reversal candlestick pattern which indicates consolidation, and hence, the FBM KLCI is likely to further consolidate today. Immediate overhead resistance zone is at 1,818 to 1,823, while the downside support zone is at 1,810 to 1,798.
Weekly MACD was higher, albeit still below the zero-line, and its histogram also extended higher, indicating an increased in the weekly momentum to the upside. Daily MACD was slightly higher but its histogram contracted slightly, indicating consolidation. Weekly RSI (14) was higher at 52.3 from 50.5, indicating an improvement in the weekly relative strength of the FBM KLCI to the mildly bullish side from a neutral state. Daily RSI (14) slipped lower to 56.1 from 59.1, indicating mild correction of the key index. Weekly Stochastic was marginally lower at 78.5 from 78.7 and is still below the slow stochastic line, indicating a state of consolidation. Daily Stochastic hooked down to 87.3 from 89.9, indicating a pullback correction. Readings from the weekly indicators showed that the FBM KLCI is gradually gaining its upward momentum amid consolidation as indicated by the weekly stochastic reading. Daily indicators, however, showed pullback correction is taking place after the recent uptrend. Hence, for the coming week, the FBM KLCI is likely to stay in consolidation with a mild upward bias.
The technical picture of the FBM KLCI still remained very much unchanged in that the short and medium term trend is up, while the long term trend is still sideways range-bound. The FBM KLCI is currently staying above the short and medium term simple moving average (SMA), but is capped on top by the cluster of long term moving average. The FBM KLCI tested the declining 200-day SMA for the third time over the last two months in mid-week last week, and pullback from it on profit-taking activity. It is possible that the FBM KLCI may stage another test of the 200-day SMA which is currently at 1,822 in the immediate near term, and a convincing breakthrough of this all-important long term bull-bear division line will trigger a rally to test the uppermost moving average resistance posted by the 240-day SMA at 1,830, which may see the key index running higher towards the 1,850 level. On the contrary, a break of the immediate downside support at 1,795 may see the FM KLCI falling further to test the pivot support of 1,774. For the coming week, the FBM KLCI is likely to stay sideways range-bound with an upward bias.
Last Friday, the Dow rose 34.43 points or 0.19% to close at 17,712.66. This week, the FBMKLCI is likely to trade within a range of 1,771 to 1,850, and today, the FBMKLCI is likely to trade within a range of 1,806 to 1,823.
This week's expected range: 1771 – 1850
Today’s expected range: 1806 – 1823
Resistance: 1816, 1820, 1823
Support: 1806, 1809, 1811
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