Stocks on Bursa Malaysia ended higher last Friday, spurred by strong technical rebounds in regional markets. The market rebounded as sentiment was boosted by positive developments in Greece as Greek Prime Minister George Papandreou was prepared to drop a plan for a referendum on a European Union bailout package, upbeat job market data from US and our better-than-expected trade data. Malaysia's trade surplus stood at RM9.63 billion in September while total trade rose 4.9% to RM107.73 billion. The FBM KLCI rose 15.14 points, or 1.03%, to close at 1,477.51, after opening 8.48 points higher at 1,470.85, while on a weekly basis, the key index lost 4.31 points from previous week’s 1,481.82. Gainers led losers by 591 to 194 while 248 counters were flat. Turnover rose to 2.3 billion shares worth RM1.51 billion from 1.75 billion shares worth RM1.14 billion on Thursday. Total volume for the week increased to 8.15 billion shares valued at RM7.22 billion from 6.033 billion shares worth RM7.1 billion previously. Bursa Malaysia was closed yesterday for the celebration of Hari Raya Aidiladha holiday.
The FBM KLCI went through a volatile week last week with the key index opening on Monday 2.84 points higher at 1,484.66 and rose 10.07 points to close at 1,491.89 after hitting an intra-day low of 1,475.71. On Tuesday, The FBM KLCI fell 16.25 points to close at 1,475.64 as investors took their cues from Wall Street's losses due to weak leads from European markets as Greece government announced that the country would hold a referendum on a new aid package. Taking cue from the heavy losses on Wall Street overnight, the FBM KLCI opened on Wednesday with a down gap of 7.84 points at 1,467.80 and plunged to the intra-day low of 1,457.50 before rebounding to close 4.69 points lower at 1,470.95. On Thursday, the selling pressure continued with the key index plunging to the intra-week low of 1,452.64 before late hour bargain hunting lifted it to close 8.58 points lower at 1,462.37, and on Friday the FBM KLCI staged a rebound to finish the week 15.14 points higher at 1,477.51.
On the weekly chart, the FBM KLCI formed a hanging-man candlestick, which is a top reversal candle pattern, and the appearance of this candlestick pattern after a strong up move indicates the key index might reverse or consolidate. The key index is sitting right below the 20-week moving average (MA) which is currently at 1,486.91, and is above the 80-week MA at 1,466.51 and it might consolidate within this range. If it is able to break above last week’s high of 1,493, it might have a good chance of testing the psychological resistance level of 1,500, but the 30 and 60-week MAs at 1,505 may post as a strong resistance level.
On the daily chart, the FBM KLCI formed a bullish white candlestick which closed at the highest point of the day on last Friday after three consecutive days of losses. As it opened with a strong up gap and closed at the highest point of the day, the key index is likely to stage a follow through up move today. Immediate overhead resistance zone is at 1,486 to 1,493 with the 61.8% Fibonacci retracement level as a key resistance. Nonetheless, the strong resistance zone lies at 1,500 to 1,511 form by a cluster of long term moving averages, if the FBM KLCI is able to break through this zone, then it would again turn bullish for the long term.
Weekly MACD has just made a golden-cross above its signal-line, flashing a buy signal. Nonetheless, it is still below the zero-line. Daily MACD has hooked up, but its histogram continued to turn shorter, indicating the daily upward momentum is reducing. Weekly RSI (14) has hooked downward to 49.5 after touching 50.3 the previous week, reflecting the correction last week and is in the neutral zone. On the flip side, daily RSI (14) has turned upward to 59.5 from 55.4 on Thursday, indicating the daily relative strength has again moved towards the bullish zone. Weekly stochastic continued to climb higher to 60.7, indicating a continued improvement of the weekly market strength and the up cycle. Daily Stochastic was at 81.2 and has hooked up slightly but is still below its daily slow stochastic line, reflecting the rebound last Friday. Readings from the indicators showed that the FBM KLCI is gradually turning bullish on the weekly chart, while on the daily chart, it was already mildly bullish.
The short term trend of the FBM KLCI is up, and the medium term trend represented by the 50 and 60-day MAs has turned flat, while the long term trend represented by a cluster of long term MAs is also flat. For this week, the FBM KCI is likely to move range-bound with an upward bias. Overnight, the Dow rose +85.15 points or +0.71% to close at 12,068.39. This week, the FBM KLCI is likely to trade within a range of 1,433 to 1,534, and for today, it is likely to trade within a range of 1,461 to 1,487.
This week's expected range: 1433 – 1534
Today’s expected range: 1461 – 1487
Resistance: 1481, 1484, 1487
Support: 1461, 1464, 1471