Stocks on Bursa Malaysia ended mixed last Friday following a choppy trade amid see-saw movements in Asian stocks as investors weighed on China's easing inflation. Markets fell globally as US President Barack Obama's job stimulus packages plan failed to spark a rally in the US, and with US Federal Reserve Chief Ben Bernanke not providing any details on the new measures to support the economy, traders continued to worry on the global economic outlook. However, Malaysian market still looked attractive following Bank Negara Malaysia's decision to retain the overnight policy rate at 3 per cent. The FBM KLCI which opened 3.1 points steadier at 1,472.93, went down 0.71 of a point to 1,469.12, and on a Friday-to-Friday basis, it declined 4.97 points from 1,474.09 recorded the previous Friday. Gainers thumped losers by 343 to 297 while 282 counters were unchanged. A total of 739.612 million shares, worth RM977.252 million, changed hands compared with 812.87 million shares, worth RM1.143 billion on Thursday. Weekly volume increased to 3.5 billion shares, valued at RM6.29 billion, from previous week’s 1.3 billion shares, valued at RM3.03 billion.

Taking cue from the 253.31 points plunge on Wall Street the previous Friday, the FBM KLCI opened last Monday 4.32 points lower at 1,469.77 and fell 10.97 points to 1,463.12, the lowest point of the day. The benchmark index continued its slides on Tuesday to close another 8.75 points lower at 1,454.37. In line with the rebound in most regional bourses even though Wall Street fell overnight, the FBM KLCI rebounded 10.24 points higher to close at 1,464.61 after opening 3.68 points steadier at 1,458.05 on Wednesday. The benchmark continued to climb higher on Thursday, finished 5.22 points better at 1,469.83, after the Prime Minister’s seventh update of the Economic Transformation Programme, and on Friday the FBM KLCI closed 0.71 of a point lower to 1,469.12 after touching the intra-day high of 1,480.33. 

On the weekly chart, the FBM KLCI formed a Doji candlestick in Harami position which indicates indecision of market direction after a week of choppy trading. The key index managed to pierce through the 5-week moving average (MA) but failed to stay above it, indicating short term selling pressure continued to prevent the index from moving higher. The key index also hit the 80-week MA and rebounded off it, indicating some support from the long term MA. With the formation of a Doji, the FBM KLCI is likely to remain range-bound for this week, with a downward bias. 

On the daily chart, the FBM KLCI formed a black shooting-star like candlestick, which indicates heavy profit-taking, or sell on strength activity, and this marked an end to the rebound on last Wednesday. The benchmark index is thus likely to move lower today, with immediate support zone at 1,464 to 1,462, provided by the cluster of 5, 10 and 360-day MAs which together converge at the 23.6% Fibonacci Retracement (FR) level of 1,464. If this support zone could not hold, then the key index is likely to re-test the next lower support at 1,453, follow by the 1,442-point level. Critical support is at 1,423-point level, which coincided with the 50% FR level measuring from the 1,243 low of 27/5/10 to the 1,597.08 record high of 11/7/11, a breach of the 1,423-point level will likely see the FBM KLCI correcting further downward to the 61.8% FR level of 1,378.

Weekly MACD continued to slide lower, but its histogram was shorter upward, indicating a slow down in the weekly downward momentum. Daily MACD, however, continued to climb higher, indicating a continued improvement in the daily upward momentum. Nonetheless, as the daily MACD is below the zero-line, the current upward move may just be a bear market rebound. Weekly RSI (14) hooked downward slightly to 39.07 from 39.9 the previous Friday, reflecting the mild pulled back. Daily RSI (14) also pulled back slightly to 41.9. Both weekly and daily RSI readings showed that the FBM KLCI is still in the bearish zone. Weekly Stochastic continued to slide lower to 22.6, while daily stochastic continued to ascend higher to 38.8, indicating the weekly down cycle is still in force, while the daily is undergoing a rebound. Readings from both the weekly and daily indicators showed that the FBM KLCI is likely to extend its consolidation process and to move range-bound.

The FBM KLCI is currently staying above its short term 5 and 10-day MAs, but is still below the 20 and 30-day MAs, indicating a rebound scenario. The main trend, however, remained down and bearish. The only positive (or less bearish) sign is that the key index has been forming higher lows since it hit the low of 1,423 on 9/Aug/2011. The FBM KLCI is likely to be range-bound in the coming week, depending on the overseas market development.

Last Friday, the Dow fell -303.68 points or -2.69% to close at 10,992.13. This week, the FBM KLCI is likely to trade within a range of 1,427 to 1,508, and for today it is likely to trade within a range of 1,452 to 1,493. 

This week's expected range: 1427 – 1508 

Today’s expected range: 1452 – 1493

Resistance: 1477, 1485, 1493

Support: 1452, 1459, 1464