Stocks on Bursa Malaysia ended on a mixed note last Friday in a market that was generally dominated by rotational play. The bellwether FBM KLCI, however, finished last week at another new historic high level of 1,582.94. The stronger close on Wall Street overnight gave Bursa a positive lead and more good news from Greece also supported sentiment. The market barometer, which slipped into negative territory to a low of 1,576.89 and stayed in red most of the time after opening 1.76 points higher at 1,580.83, recovered at the last minute to end 3.87 points, or 0.24%, at 1,582.94. Week-on-week, the key index gain 18.28 points, or 1.17% from previous Friday’s close of 1,564.66. Decliners led advancers by 388 to 352 while 317 were unchanged. Daily volume dropped to 801.954 million shares valued at RM1.4 billion from 947.614 million shares valued at RM1.814 billion on Thursday, and weekly turnover declined to 4.517 billion shares valued at RM8.266 billion from last week's 4.602 billion shares valued at RM7.637 billion.
Taking cue from the poor performance of Wall Street on the previous Friday, the FBM KLCI opened last Monday with a down gap of 3.34 points at 1,561.32 and hit the intra-week low of 1,560.32 before rebounding to close at 1,562.52, losing 2.14 points on Monday. The FBM KLCI rebounded on Tuesday to end 7.5 points higher at 1,570.02, boosted by gains in selected finance blue chips and newly-listed MSM Holdings' encouraging performance. The FBM KLCI continued to rise on Wednesday to close 4.99 points higher at 1,575.01, helped by gains in selected blue chips, month-end window-dressing and portfolio tweaking by hedge fund managers ahead of their first-half earnings reports. On Thursday, 30th June, the benchmark FBM KLCI ended with a gain of 4.06 points at its historic high of 1,579.07 with most heavyweight counters posting gains on steady buying amid mid-year window dressing. And on Friday, the market barometer continued its upward momentum to close at another new historic high level of 1,582.94 after slipping into the negative territory for a major part of the day.
On the weekly chart, the FBM KLCI formed a bullish Marubozu candlestick, which indicates the bulls were in total control for the week in pushing the key index higher. The key index is likely to continue scaling new high this week. However, the appearance of a bullish Marubozu at high level like this may not be a good sign, and it can mean pushing up for distribution. Hence, some form of profit-taking pullback is expected this week. On the daily chart, despite closing at historical high level, the FBM KLCI formed a bearish hanging-man candlestick, which is a top reversal signal, and the benchmark index is likely to face some profit-taking selling pressure after running up continuously for four days. The FBM KLCI is likely to continue its upward momentum making its way towards the short term target of 1,600-point level.
Weekly MACD continued to climb higher after making a golden-cross last week, indicating the weekly momentum has turned positive after almost half a year of consolidation. Daily MACD continued to surge higher, indicating a continuation of the daily upward momentum. Weekly RSI (14) was higher at 64.6, indicating the weekly relative strength has turned bullish. Daily RSI (14) was also higher at 69.8, approaching the short term overbought level of 70. Weekly Stochastic continued to climb higher to 97.6, indicating the weekly market strength is very strong and continuation of the weekly up cycle. Daily Stochastic is at 99.2, and is tapering off, indicating the key index was very much short term overbought, and a pullback is expected soon. Readings from both the weekly and daily indicators showed that the benchmark FBM KLCI is currently bullish with a strong upward momentum, however, as both daily RSI and stochastic is at the short term overbought level, some pullback is expected soon.
The underlying short, medium and long term trend of the FBM KLCI is currently up, with the key index at its historical high level in the uncharted territory. The FBM KLCI is likely to continue charting new high in the short term. Immediate overhead resistance zone is at 1,585 to 1,600 point-level, while the immediate downside support zone is at 1,570 to 1,560 point-level. As the FBM KLCI has already turned bullish on the weekly chart, any pullback should be viewed as an opportunity to buy into weakness for quality stocks.
Last Friday, the Dow rose +168.43 points or +1.36% to close at 12,582.77. This week, the FBM KLCI is likely to trade within a range of 1,545 to 1,606, and for today it is likely to trade within a range of 1,572 to 1,589.
This week's expected range: 1545 – 1606
Today’s expected range: 1572 – 1589
Resistance: 1585, 1587, 1589
Support: 1572, 1574, 1578