Stocks on Bursa Malaysia closed mixed last Friday with penny stocks making gains while the blue-chips continued to consolidate. The FBM KLCI gave up earlier gains to close 3.90 points or 0.26% lower at 1,468.75, on profit-taking in heavyweights, and week-on-week, the benchmark index declined 8.76 points from 1,477.51 the previous Friday. Gainers beat losers by 425 to 310 with 282 counters flat. Turnover was lower at 2.068 billion shares worth RM1.23 billion from 2.644 billion shares worth RM1.462 billion previously. Total weekly volume increased to 9.203 billion shares valued at RM6.049 billion from 8.15 billion shares valued at RM7.22 billion the previous week.

Bursa Malaysia was closed last Monday for Hari Raya Aidiladha holiday. Taking cue from the strong performance of Wall Street on last Monday, the FBM KLCI opened on last Tuesday with an up gap of 5.77 points at 1,483.28 and touched the intra-day high of 1,489.91 before profit-taking activity pressed it to close at 1,480.46, making a small gain of 2.95 points. The key index rose 9.18 points or to 1,489.64 on Wednesday moving in tandem with higher regional Asian markets and a firmer overnight Wall Street. Taking cue from the hefty fall of 389 points on the Dow overnight, the FBM KLCI lost 16.99 points to 1,472.65 on Thursday after plunging to the intra-day low of 1,466.25, losing 23.39 points at its worst, and the key index continued its consolidation and closed Friday 3.90 points lower at 1,468.75. 

On the weekly chart, the FBM KLCI formed a bearish black candlestick which serves to confirm the top reversal signal issued by the black hanging-man candlestick formed the previous week, and hence the key index is likely to extend its correction or consolidation this week. Immediate downside support zone is envisaged at 1,466 to 1,452. 

On the daily chart, the FBM KLCI formed a bearish dark-cloud-cover candlestick pattern which indicates heavy profit-taking after hitting the intra-day high of 1,478.33, and the key index is likely to continue its consolidation today with immediate support zone at 1,466 to 1,460, while the overhead resistance zone is at 1,478 to 1,493. Since hitting the recent high of 1,493.28 on 31st October 2011, the key index had moved into sideways consolidation mode forming a triangle pattern, and it may continue to move up and down within this triangle until a decisive breakout on either side of the triangle. If the FBM KLCI is able to breakout decisively above the 1,493-point level, it will rally to test the next higher resistance zone at 1,500 to 1,515.

Weekly MACD had made a golden-cross above its signal-line, flashing a buy signal. This bullish signal came after three months since the weekly MACD made a dead-cross on 29th July 2011. If the FBM KLCI is able to close above the 1,510-point level, the weekly MACD would cross the zero-line, and the key index would turn long term bullish again. Daily MACD, however, continued to slide lower, indicating the key index is still in consolidation on the daily timeframe. 

Weekly RSI (14) continued to dip lower to 48.05 from 49.55 the previous week, reflecting the current consolidation. Anyway, the weekly relative strength is still in the neutral zone with a mildly bearish bias. Daily RSI (14) continued to slide lower to 54.6, indicating a continued loss in the short term relative strength due to the consolidation, nonetheless, the daily relative strength is still in the mildly bullish zone.

Weekly Stochastic continued to climb higher to 70.1 from 60.7 the previous week, indicating a continued improvement of the weekly market momentum and strength. Daily stochastic has turned downward, and crossed below the slow stochastic line, reflecting the consolidation in the key index. Readings from the indicators showed that the FBM KLCI is gradually turning bullish from the weekly perspective, while from the daily perspective, it has gone into a short term consolidation. The key index shall re-gain its upward momentum after the short term consolidation is over, back by the positive weekly momentum. 

The immediate short term trend of the FBM KLCI has turned sideways as the key index has now closed below the 5 and 10-day MAs but is still above the 20 and 30-day MAs. The medium term trend has also turned sideways with the 50 and 60-day MAs turning flat. The long term trend, however, is still bearish bias with the FBM KLCI continued to stay below the long term moving averages. For the coming week, the FBM KLCI is likely to continue its range-bound consolidation until a decisive breakout above the 1,493-point resistance level or a downward breakout below the 1,440-point support level is observed. While the key index-link counters continue to consolidate themselves, the overall market may still be dominated by active trading in penny stocks.

Last Friday, the Dow rose +259.89 points or +2.19% to close at 12,153.68. This week, the FBM KLCI is likely to trade within a range of 1,435 to 1,516, and for today, it is likely to trade within a range of 1,455 to 1,488.

This week's expected range: 1435 – 1516

Today’s expected range: 1455 – 1488

Resistance: 1476, 1482, 1488

Support: 1455, 1462, 1465