Stocks on Bursa Malaysia ended mixed last Friday, but gains in key heavyweights like PETGAS and MISC pushed the benchmark FBM KLCI to close at another historic high. The market started higher in early trade as investors took the cue from the positive overnight performance on Wall Street, but later succumbed to profit-taking. However, late buying in selected heavyweights pushed the index to end at its peak. The FBM KLCI rose 4.5 points or 0.28% to close at 1,594.74, week-on week, it rose 11.8 points or 0.75% from previous Friday’s close of 1,582.94. Decliners led advancers by 390 to 287 while 366 were unchanged. Volume fell to 810.53 million shares worth RM1.57 billion from 1.27 billion shares worth RM2.07 billion on Thursday. Weekly volume rose to 4.66 billion shares valued at RM8.63 billion from the 4.52 billion shares valued at RM8.27 billion the previous week.
The FBM KLCI opened 1.18 points higher at 1,584.12 on last Monday and fell to the intra-week low of 1,577.81 before ending the day 0.59 points lower at 1,582.35. On Tuesday, the FBM KLCI basically traded in a narrow range to close 0.5 of a point lower at 1,581.85. The benchmark index staged a breakout on Wednesday from its consolidation to close 9.49 points higher at its new historic peak of 1,591.34 on strong buying interest in blue-chips. The key index ran into profit-taking mode on Thursday after touching the historical intra-day high of 1,595.87 to settle the day 1.1 points lower at 1,590.24. And on Friday, the FBM KLCI was basically in correction mode for a major part of the day, but last minute gain in selected heavyweights artificially pushed the benchmark index to another record close of 1,594.74.
On the weekly chart, the FBM KLCI formed a bullish white candlestick which indicates the bulls were in control for the week, and the barometer may likely to continue its upward climb to test the 1,600-point psychological level. On the contrary, the daily chart, despite the benchmark index closing at record high level, the FBM KLCI formed a hanging-man candlestick, which is a bearish top reversal candle pattern. This bearish daily candlestick pattern actually reflects heavy selling pressure despite the last minute cover up action on the key index, and hence there is a high likely hood that the FBM KLCI may not be able to sustain at this high level, and a correction is imminent.
Weekly and daily MACD continued to climb higher, indicating a continuation in the weekly and daily upward momentum. However, the daily histogram did not gain much, and was almost flat over the last three sessions, giving out a possible divergence signal. Weekly RSI (14) continued its up thrust to 66.8, indicating the weekly relative strength is in a bullish state. Daily RSI (14) has re-hooked up and is at 74.1, climbing further into the short term overbought zone. Weekly Stochastic is higher at 98.3, but shows sign of tapering off. Daily Stochastic is at 93.9, has turned upward and crossed above the slow stochastic, indicating the key index’s strength has reversed upward after a few sessions of consolidation. Readings from the indicators showed that the benchmark FBM KLCI is currently very bullish; however, as most indicators are already at the overbought zone, a pullback correction is likely to happen.
The underlying uptrend of the FBM KLCI remained intact, and the market barometer is likely to test the 1,600-point psychological level anytime this week before a major correction takes place. Immediate resistance level is envisage at the 1,600-point level, while the downside support zone is at 1,585 to 1,577. Judging from the volume, the overall market is likely to remain sluggish with rotational play on some second and third liner.
Last Friday, the Dow fell -62.29 points or -0.49% to close at 12,657.20. This week, the FBM KLCI is likely to trade within a range of 1,565 to 1,614, and for today it is likely to trade within a range of 1,578 to 1,605.
This week's expected range: 1565 – 1614
Today’s expected range: 1578 – 1605
Resistance: 1598, 1602, 1605
Support: 1578, 1581, 1588