Stocks on Bursa Malaysia ended mixed to easier last Friday on profit-taking activities in blue-chip counters. The market's direction was underpinned by waned investor sentiment following weak Chinese trade data, and after Spain's long-term debt rating cut by Standards & Poor's, however, the undertone of the local bourse remained firm, while anticipation over talks of an impending general election saw some UMNO-related stocks recording gains. The FBM KLCI ended 2.44 points or 0.17% lower at 1,442.43 after opening 2.30 points higher at 1,447.17, week-on-week, the benchmark index gained 42.38 points, or 3%, from previous Friday’s 1,400.05. Losers led gainers by 368 to 365 while 260 counters were unchanged. Turnover declined to 1.074 billion shares valued at RM1.223 billion from 1.506 million shares worth RM1.957 billion registered on Thursday. Weekly turnover increased to 5.305 billion shares worth RM6.485 billion from 4.08 billion shares worth RM6.17 billion last week.
On the weekly chart, the FBM KLCI formed a bullish white candlestick which indicates the bulls were in control for the week, and it had risen for three consecutive weeks. The upward momentum may continue into next week, but the key index may face strong resistance at the 1,450 to 1,484 zone. The 80-week moving average at 1,461 may particularly post as a strong resistance. On the daily chart, the FBM KLCI formed a bearish black hanging-man candlestick, which is a top reversal candle pattern, after three consecutive days of strong up move; this indicates that the key index may stage a pullback towards the immediate support level at 1,420 before continuing its uptrend.
Weekly MACD hooked up for the first time after crossing below the signal-line on the 29th July 2011, indicating a turn up in the momentum. Nonetheless, it is still below the signal-line, and could be just a rebound. Daily MACD has continued to climb higher, indicating a continuation in the daily upward momentum. Weekly RSI (14) was higher at 43.1 from 34.3 the previous week, indicating an improvement in the weekly relative strength. However, it is still in the mildly bearish zone. Daily RSI (14) has hooked down gently to 57.9, reflecting the mild pullback on the key index, and is still in the mildly bullish zone. Weekly Stochastic continued to climb higher to 34.7 after crossing over the weekly slow stochastic line last week, indicating a continuation in the weekly up cycle and improvement in the weekly market strength. Daily Stochastic, however, has hooked down gently to 98.4 after hitting the deeply overbought value of 98.9 on Thursday. Readings from the indicators showed that the weekly technical has just started to turn mildly positive, while the daily is turning bullish and overbought.
The short term trend of the FBM KLCI remained up while the medium and long term trend is still down. For the coming week, the FBM KLCI is likely to undergo a pullback correction, which should be shallow given the improving market undertone, better external sentiment on hopes the Euro-zone debt crisis is easing and increasing buying momentum on lower liners and penny stocks. The short term uptrend shall continue after the correction is over. With the volume staying above the 1 billion shares mark, the market is likely to remain active with rotational play on the second and third liners. Immediate strong overhead resistance zone is at 1,450 to 1,484 while the downside support zone is at 1,420 to 1,400.
Last Friday, the Dow rose +166.36 points or +1.45% to close at 11,644.49. This week, the FBM KLCI is likely to trade within a range of 1,371 to 1,504, and for today, it is likely to trade within a range of 1,424 to 1,460.
This week's expected range: 1371 – 1504
Today’s expected range: 1424 – 1460
Resistance: 1448, 1454, 1460
Support: 1424, 1430, 1436