KLCI_20120120KLCI_20120120wkStocks on BURSA Malaysia closed higher last Friday on good buying momentum as investors found bargains in heavyweight counters despite some profit-taking ahead of the extended weekend. Sentiment was lifted by a bullish regional performance after overnight gains on Wall Street and solid demand for Spanish and French bonds. The market was closed on Monday and Tuesday for the Chinese New Year celebrations. The FBM KLCI rose 5.85 points or 0.39% to 1,522.66 after opening 1.33 points higher at 1,518.14. Week-on-week, the key index lost 0.41 point from previous Friday’s 1,523.07. Market breadth was positive with gainers led losers by 512 to 249. Turnover was lower with 1.65 billion shares worth RM1.49 billion changed hands compared with 1.94 billion shares worth RM1.62 billion on Thursday. Total weekly volume declined to 7.96 billion shares worth RM7.86 billion from 8.6 billion shares worth RM8.5 billion last week.

The FBM KLCI was basically in a sideways consolidation mode last week, and it entered the third week of consolidation since the beginning of the new year. The FBM KLCI opened on last Monday with a down gap of 2.68 points at 1,520.39 and closed at the intra-week low of 1,509.06. The key index rebounded on Tuesday with a gain of 10.30 points to 1,519.36. On Wednesday, the key index gave back 1.98 points to close at 1,517.38, and closed almost flat on Thursday with a marginal of 0.57 point lower at 1,516.81. On Friday, the FBM KLCI moved higher to end the week near the intra-week high at 1,522.66.

On the weekly chart, the FBM KLCI formed a white hammer candlestick which indicates the bears were initially dominant in pushing the key index down but the bulls later came in to support and pushed up the index. The price action showed that the FBM KLCI was still basically in a range-bound sideways consolidation last week but with an upward bias. Immediate overhead resistance zone is at 1,526 to 1,530. If the key index is able to break through this resistance zone convincingly with volume, then it is likely that it may rally towards the next target level of 1,550.

On the daily chart, the FBM KLCI formed a bullish white candlestick on Friday and closed near the intra-day high. Hence, the key is likely to continue with it upward momentum to move higher today. Immediate resistance levels are anticipated at 1,526 and 1,530-point level.

Weekly MACD continued to climb higher, but the weekly histogram was slightly shorter, indicating weakness is surfacing in the weekly chart. On the contrary, daily MACD continued to slide lower, but its histogram has turned shorter upward, indicating a possible rebound ahead. Weekly RSI (14) was flat at 56.6, reflecting the consolidation mode. Daily RSI (14) was higher at 60.1, indicating the daily relative strength has returned to the bullish zone. Weekly Stochastic was lower and has just made a crossed below the weekly slow stochastic line, giving out a first signal that the up cycle on the weekly chart is probably coming to an end and may go into a consolidation. Daily Stochastic, nonetheless, has continued to move higher and crossed above the daily slow stochastic line, indicating a possible beginning of an up cycle on the daily chart. Readings from the weekly and daily indicators showed that the FBM KLCI was having conflicting signals, in which the key index might continue to consolidate on the weekly perspective, while on the daily perspective, it may stage a rebound.

The short term trend of the FBM KLCI has turned sideways as key index’s daily chart is forming a triangle chart pattern since its close at 1,530.73 on the 30th December 2011, if the key index is able to breakout from this triangle consolidation pattern with volume, it may have a possible target of 1,585. The longer term trend, nevertheless, remained up.
Overnight, the Dow fell -33.07 points or -0.26% to close at 12,675.75. This week, the FBM KLCI is likely to trade within a range of 1,499 to 1,537, and for today, it is likely to trade within a range of 1,512 to 1,530.

This week's expected range: 1499 – 1537
Today’s expected range: 1512 – 1530

Resistance: 1525, 1527, 1530
Support: 1512, 1514, 1518