Stocks on Bursa Malaysia ended last Friday higher in tandem with steady gains on regional markets, prompted by progress in Europe's debt plan and better growth of the US gross domestic product (GDP) for the third quarter. Besides, the key index was lifted by the positive mood in Wall Street on Thursday, where the DJIA jumped 2.86 per cent and the broader S&P 500 surged 3.43 per cent. The FBM KLCI rose 10.89 points or 0.74% to end at 1,481.82 after opening 9.29 points higher at 1,480.22, and week-to-week, the key index advanced 42.99 points from previous Friday's closing of 1,438.83. Gainers led losers by 470 to 338 while 319 counters were flat. Turnover stood at 1.877 billion shares worth RM2.295 billion from Thursday’s 1.877 billion worth RM2.413 billion. While total weekly volume declined to 6.033 billion shares worth RM7.097 billion from 7.391 billion shares worth RM6.584 billion the previous week.
On the weekly chart, the FBM KLCI formed a bullish white candlestick which indicates reversal from the consolidation on the previous week, and a continuation of the weekly uptrend. With the strong up move last week, the key index is likely to continue moving higher this week targeting the 1,500 to 1,508 resistance zone, where the 1,508 resistance is posted by the 30 and 60-week moving averages (MA).
On the daily chart, the FBM KLCI gap up 9.29 points at 1,480.22 and surged to hit the 61.8% Fibonacci retracement (FR) level at 1,488 and pulled back strongly, and it formed a white inverted hammer candlestick with a big up gap from the previous candle, which indicates pushed up for distribution. This candlestick formation on the daily chart looks like a shooting-star candle formation which could indicates possible reversal, hence, the key index might possibly take a breather to consolidate itself before making further attempt to challenge higher target levels.
Weekly MACD continued to rise, albeit below the zero-line, but is approaching the signal-line, indicating a continued pick up in the weekly momentum. Daily MACD has continued to surge higher into the positive zone and the daily histogram also continued to rise, indicating a resumption of the daily upward momentum after the recent consolidation. Weekly RSI (14) continued to move higher to 50.3 and has made an important breakthrough to cross the 50-level, indicating the weekly relative strength has turned bullish for the first time after it broke below the 50-level on the August 5th,2011. Daily RSI (14) climbed higher to 64.4, indicating the daily relative strength is getting more bullish. Weekly Stochastic continued to climb higher to 53.4, indicating a continuation in the weekly up cycle and continued improvement of the weekly market strength. Daily Stochastic was also higher at 94.5, indicating a continuation in the daily up cycle and the daily market strength is very strong. Readings from both the weekly and daily indicators showed that the FBM KLCI is turning bullish, and the upward momentum may carry the key index higher in the short term.
The short and medium term trend of the FBM KLCI is currently up as the key index was closing above the short and medium term moving averages. For the long term, the key index has just crossed above the 360-day MA but is still below the 120, 200, 240 and the 300-day MAs, which together formed a resistance zone at 1,500 to 1,513-point levels. If the FBM KLCI is able to breakthrough this strong resistance zone, then it would turn very bullish. With Euro-zone debt crisis settling down and the improvement in US economic data, the market is likely to continue its uptrend. Rotational plays on second and third liners are likely to continue with focus on oil & gas, construction, property and consumers sectors.
Last Friday, the Dow rose +22.56 points or +0.18% to close at 12,231.11. This week, the FBM KLCI is likely to trade within a range of 1,432 to 1,529, and for today, it is likely to trade within a range of 1,467 to 1,499.
This week's expected range: 1432 – 1529
Today’s expected range: 1467 – 1499
Resistance: 1488, 1493, 1499
Support: 1467, 1472, 1477