Stocks on Bursa Malaysia kicked off September on a positive note with the key FBM KLCI rising 1.85 per cent at the close of last Friday on bargain hunting, after the three days break due to Hari Raya and Merdeka Day celebrations, as investors played catch-up following positive gains by regional bourses. The benchmark FBM KLCI was 26.82 points or 1.85% higher at 1,474.09 after opening 13.39 points better at 1,460.66, lifted mostly by gains on selected heavyweights namely CIMB, IOI, Genting Malaysia and DiGi. Advancers thumped decliners by 505 to 238 while 240 counters were unchanged. Volume rose to 852.4 million shares worth RM2.14 billion from 447.13 million shares worth RM893.58 million on Monday.
The FBM KLCI rebounded in tandem with regional markets on Monday. It opened 3.4 points higher at 1,448.21 and hit the intra-day day high of 1,456.18 before closing the half-a-day trading 2.46 points higher at 1,447.27. Bursa Malaysia was closed from Tuesday to Thursday for Hari Raya and Merdeka Day holidays. The benchmark index re-opened on Friday with an up gap of 13.39 points at 1,460.66, and surged to the intra-day high of 1,483.79 before pulling back on profit-taking to close the week 29.28 points higher at 1,474.09.
On the weekly chart, the FBM KLCI formed a bullish Harami candlestick pattern, a bottom reversal candlestick pattern, which indicates fight back by the bulls after seven consecutive weeks of losses, and the key index might stage a follow through rebound for the coming week. The FBM KLCI rebounded off the 80-week moving average (MA) support after hitting it, but pulled back after touching the overhead resistance posted by the 5-week MA. The overhead resistance zone at 1,487 to 1,510 is the immediate hurdle to the current rebound.
On the daily chart, the FBM KLCI gap up to open above the 5-day and the 360-day MA at 1,460.66 and touched the intra-day high of 1,483.79 before pulling back to close at 1,474.09. It formed a bullish white candlestick which indicates buyers were in control for the day. However, the up move was met with the resistance by the 10-day MA, and the key index closed below the 10-day MA after penetrating it briefly but is now resting on the horizontal support level of 1,474. Immediate strong overhead resistance level is expected at 1,489-point level, where the 20 and 300-day MA meets, which also coincided with the 38.2% Fibonacci retracement level. Immediate downside support zone is envisaged at 1,460 to 1,442-points level.
Weekly MACD continued to slide lower. However, the histogram turned shorter upward, indicating a slow down in the weekly downward momentum. Daily MACD has hooked upward, but is still below the signal line in the bearish zone, indicating the upward move may just be a technical rebound. Weekly RSI (14) has hooked upward to 39.9, while daily RSI (14) is higher at 40.6, and both readings showed that the relative strength is still bearish despite a rebound. Weekly Stochastic continued to slide lower to 25.4, and daily stochastic is also lower at 26.1, indicating the down cycle is still in continuation and is approaching the oversold zone. Readings from the weekly and daily indicators showed that the FBM KLCI is still in a bearish mode, where the up move may just be a technical rebound in a bearish downtrend, and the key index is likely to continue its consolidation until clearer signals of confirmed reversal is observed.
The trend of the FBM KLCI remained down and bearish, and the up move on last Friday is read as a technical rebound which could be short-live. If the key index cannot move above the 1,500-point level, at least, then it might continue with its southward move to re-test the support level at 1,442. The gap at 1,460-point may provide a possible immediate strong support.
Last Friday, the Dow fell -253.31 points or -2.20% to close at 11,240.26. This week, the FBM KLCI is likely to trade within a range of 1,414 to 1,521, and for today it is likely to trade within a range of 1,438 to 1,507.
This week's expected range: 1414 – 1521
Today’s expected range: 1438 – 1507
Resistance: 1485, 1496, 1507
Support: 1438, 1449, 1461
Stocks to watch: EnO, TM