Stocks on Bursa Malaysia ended the final week of 2011 on a strong note as investors look for year-end cheer. Late window-dressing in heavyweights helped lift the bourse to ensure the benchmark index ended the year above 1,500. Interests were confined to high-yielding stocks in the banking, plantation, technology and consumer sectors. The FBM KLCI closed at its best in nine months, with a gain of 24.04 points, or 1.60%, to 1,530.73. Week-on-week, the key index gained 34.58 points or 2.31% from previous Friday’s close of 1,496.15. Year-on year, the benchmark gained 11.82 points from 1,518.91 on 30 December 2010. Market breadth was positive with gainers leading losers by 468 to 327. Volume declined to 1.33 billion shares worth RM1.53 billion from 1.59 billion shares valued at RM1.16 billion registered on Thursday.
As a quick recap, 2011 was a year of roller-coaster ride whereby the market witnessed a number of unpleasant surprises from conflicts in the Middle East and North Africa to the natural disasters in Japan. Economically, Greece's debt problem had triggered instability in the Euro-zone while over in the US, the Standard and Poor’s downgrade of the US' triple-A rating sparked panic selling across the globe. Despite all the negativities, the FBM KLCI still surged to close the year at 1,530.73, surpassing last year's close of 1,518.91, and makes it the best performing index in this region.
The FBM KLCI was basically on an uptrend mood last week with the key index closing the first trading day of the week at 1,500.91 on Tuesday, after sliding to the intra-week low of 1,490.16. The benchmark index continued its rise over the next three trading days despite numerous profit-taking activities to end the week at its highest point of 1,530.73. On the weekly chart, the FBM KLCI formed a bullish white candlestick which indicates the bulls were in action and sent the key index passed the resistance at 1,506 posted by the 60-week SMA. With this strong up move, the FBM KLCI has already closed above all the weekly moving averages, and has resumed its bullish uptrend.
On the daily chart, the FBM KLCI formed a bullish white Marubozu candlestick which indicates the bulls were fully in control, and it closed right on the target level of 1,530 as forecasted in the last few analysis. With the strong upward momentum, the key index is likely to surge further this coming week. However, the gap area at 1,530 to 1,546 may post as a strong resistance zone, with immediate resistance level envisaged at 1,539. If the FBM KLCI is able to breakthrough this strong resistance zone, then it stand a high chance of running higher to re-test the all time high level of 1,594.74 registered on July 8 2011. Nonetheless, as the key index was being pushed up in the last minute, this may attract some profit-taking on the index-link counters which may cause a dip in the index this week.
Weekly MACD continued to climb higher, and so is the daily MACD, indicating a continued improvement in the weekly and daily momentum. Weekly RSI (14) was higher at 58.4, indicating the weekly relative strength is approaching the bullish zone. Daily RSI (14) has surged to 71.1 from 64.8 a day earlier, indicating the short term relative strength of the key index has turned bullish. However, it has also entered the short term overbought level, the 70-level, for the first time after breaking below it on 11th July 2011, and some profit-taking is likely to happen. Weekly Stochastic continued to climb higher to 92.9, indicating a strong weekly market strength and continuation of the weekly up cycle. Daily Stochastic, however, only gained gently to 97.5 from 97.1 on Thursday, indicating some inherent technical weakness, and some profit-taking pullback might happen. Readings from the weekly and daily indicators showed that the FBM KLCI has turned bullish and the upward momentum is likely to carry the key index higher amid some mild profit-taking activity.
The trend of the FBM KLCI is now up and has turned bullish as the key index is now closing above all the short, medium and long term moving averages. The uptrend is likely to continue with intermittent profit-taking activity. It is likely to see the FBM KLCI re-testing the all time high level within the first half of year 2012 as plenty of positive news flows were likely this year given the feel good factors generated from the 13th general election which is widely speculated to be held within the first half of this year and the rolling out of the Economic Transformation Programme (ETP).
Last Friday, the Dow fell -69.48 points or -0.57% to close at 12,217.56. This week, the FBM KLCI is likely to trade within a range of 1,463 to 1,571, and for today, it is likely to trade within a range of 1,493 to 1,553.
This week's expected range: 1463 – 1571
Today’s expected range: 1493 – 1553
Resistance: 1539, 1546, 1553
Support: 1493, 1501, 1515