FBM KLCI Weekly Chart 8-4-2011FBM KLCI Daily Chart 8-04-2011Stocks on Bursa Malaysia closed lower last Friday on some profit-taking given the weaker overnight close in the US market. The FBM KLCI fell 4.44 points or 0.28% to 1,557.49 after opening 0.27 point lower at 1,561.66. Week-on-week, the benchmark index gained 2.11 points from previous Friday’s close of 1,555.38. Gainers led losers by 418 to 405 while 321 counters were flat. Turnover increased to 1.669 billion shares worth RM2.119 billion from Thursday’s 1.575 billion shares worth RM2.283 billion. Weekly volume fell to 8.110 billion shares, worth RM10.675 billion, from last week’s 8.841 billion shares, valued at RM11.383 billion. 

The FBM KLCI opened last Monday with an up gap of 6.56 points at 1,561.94 and surged to the intra-week high of 1,565.04. Profit-taking activities eroded the gains and the key index closed 0.10 of a point to 1,555.48. Profit-taking activities continued to rule on Tuesday and Wednesday which saw the FBM KLCI fell to the intra-week low of 1,549.84 before rebounding on Thursday to close at 1,561.93, and on Friday the key index continued to face some profit-taking activities to end the week at 1,557.49.

On the weekly chart, the FBM KLCI formed a black hanging-man candlestick which indicates the surfacing of selling pressure at this level, and it is also a top reversal pattern. Hence, the FBM KLCI is likely to consolidate this week. On the daily chart, the FBM KLCI formed a dark-cloud-cover candlestick pattern which indicates heavy profit-taking activities on last Friday, and hence, the benchmark index is likely to continue with its downward move today, and may pull back to the 1,550 to 1,544 support zone area.

Weekly MACD continued to climb higher, but its histogram also turned shorter upward, indicating an improved in the weekly upward momentum of the FBM KLCI. Daily MACD also continued to climb higher, however, its daily histogram is turning shorter, indicating a slow down in the daily upward momentum, and hence, the benchmark index may take a breather.

Weekly RSI (14) is higher at 62.1, but is tapering off, indicating a slow down in the weekly upward strength but is still bullish. Daily RSI (14) pulled back to 68.4 after touching 72.3 on Thursday, and is back into the bullish zone after testing the very bullish or overbought zone.

Weekly Stochastic continued to climb higher to 66.7 from 49.2 the previous week, indicating a gain in market strength and a continuation of the up cycle. Daily Stochastic is marginally higher, but is still below its daily slow stochastic line, reflecting the pulled back on Friday. Readings from the indicators showed that the FBM KLCI is turning bullish on the weekly chart. However, signals from the daily indicators showed that the FBM KLCI may goes into a consolidation after the recent strong upward move.

The FBM KLCI has turned sideways for the immediate short term as it was moving within a range of 1,565 to 1,549 over the last five days. Its short term trend as indicated by the 10 and 20-day moving averages (MA) remained up, while the medium term trend is still sideways, as the 30-day MA is still below the 60-day MA which is flat. The long term uptrend, however, is intact. Immediate strong overhead resistance zone is at 1,565 to 1,577, while the immediate downside support zone is at 1,550 to 1,544.

This week, the FBM KLCI is likely to move into consolidation ahead of the Sarawak state election which will be held on this coming Saturday, 16-April. On top of that, there are still external uncertainties, such as the rising oil prices, the fighting in the Middle East and the debt problems in Euro-zone clouding the marketplace. Last Friday, the Dow fell -29.44 points or -0.24% to close at 12,380.05. This week, the FBM KLCI is likely to trade within a range of 1,534 to 1,581, and for today it is likely to trade within a range of 1,549 to 1,570.

This week's expected range: 1534 – 1581
Today’s expected range: 1549 – 1570

Resistance: 1562, 1566, 1570
Support: 1549, 1553, 1555