Stocks on Bursa Malaysia rebounded to close steadier last Friday on renewed optimism sparked by encouraging US economic data and Greece's bailout hopes. The benchmark FBM KLCI rose 6.66 points to close at 1,557.15, after opening 3.19 points better at 1,553.68, and on a Friday-to-Friday basis, the FBM KLCI eased 4.51 points to 1,557.15 from previous Friday’s 1,561.66. Weekly volume increased to 11.968 billion shares valued at RM10.437 billion, from 11.06 billion shares worth RM9.08 billion on previous week.
On the weekly chart, the FBM KLCI formed a bearish black spinning-top candlestick which indicates profit-taking correction and indecision of market direction after a strong upward move the previous week. It is likely that the key index may continue to consolidate this week until a breakout above the immediate overhead resistance of 1,567-point is observed. Immediate downside support level is at 1,549, if this level could not hold, then the FBM KLCI may slides lower to test the lower support zone of 1,540-1,530.
On the daily chart, the FBM KLCI formed a bullish Harami candlestick which indicated a technical rebound, and had registered an intra-day high level of 1,559.92. The rebound last Friday managed to keep the key index above the middle line of the trend channel, and it also rebounded off the 10-day SMA, but was below the 5-day SMA. In short, the trend is still up. If the FBM KLCI is able to break above the 5-day SMA which is currently at 1,560, the key index might climb higher to re-test the immediate resistance at 1,567 follow by the next resistance level at 1,577
Weekly MACD continued to climb higher; however, its histogram was marginally shorter, indicating a possible slowdown in the weekly upward momentum. Daily MACD, on the contrary, was lower, indicating a slowdown in the daily momentum. Weekly RSI (14) has hooked downward slightly to 61.5, reflecting the mild pullback in the weekly index. Daily RSI (14) has hooked upward to 63.3, reflecting the weak rebound last Friday. Nevertheless, both weekly and daily RSI (14) showed that the key index is still in the bullish zone. Weekly Stochastic continued to climb higher into the overbought zone and is at 96.1, indicating strong market strength on the weekly chart. Daily Stochastic, however, continued to slide lower to 81.9, indicating a continuation in the short term down cycle. Mixed signals from the weekly and daily indicators showed that the FBM KLCI might go into a short term consolidation mode. Nevertheless, the signals showed an overall upward bias.
The overall trend of the FBM KLCI remained up as the key index continued to stay above the middle line of the trend channel. For the coming week, the key index may move range-bound with an upward bias. Immediate overhead resistance zone is at 1,567 to 1,577 while the downside support zone is at 1,549 to 1,540.
Last Friday, the Dow rose 45.79 points or 0.35% to close at 12,949.87. This week, the FBM KLCI is likely to trade within a range of 1,531 to 1,584, and for today, it is likely to trade within a range of 1,547 to 1,567.
This week's expected range: 1531 – 1584
Today’s expected range: 1547 – 1567
Resistance: 1561, 1564, 1567
Support: 1547, 1550, 1553