Stocks on Bursa Malaysia ended on a firmer note last Friday on continuous buying support for selected heavyweights, amid bargain hunting activities and positive regional market sentiments. The benchmark FBM KLCI gained 21.33 points or 1.20% to end at 1,803.08, after hovering between 1,788.78 and 1,809.33 throughout the day. On a weekly basis, the FBM KLCI rose 59.51 points or 3.41% to 1,803.08 from 1,743.57 on previous Friday. Gainers trounced losers by 534 to 365, while 310 counters were unchanged. Total volume rose to 2.61 billion units worth RM3.1 billion from 2.58 billion units worth RM2.9 billion on Thursday. Weekly turnover increased to 11.32 billion units worth RM12.38 billion from 8.78 billion units worth RM10.24 billion the previous week.
Taking cue from the strong rebound on Wall Street the previous Friday, the FBM KLCI opened last Monday 1.93 points higher at 1,745.50, the intra-week low level, and rebounded strong to close 9.74 points higher at 1,753.31, led by Maybank which gained 19 Sen to RM8.79, as news over its merger and acquisition of RHB resurfaced. The benchmark FBM KLCI eased 3.2 points on Tuesday to close at 1,750.11 on mild profit-taking activity. Wednesday saw the FBM KLCI rose 19.98 points or 1.14% to 1,770.09 after the government revised the budget for Year 2015. The local Bourse finished higher on Thursday, moving in tandem with other regional peers ahead of the European Central Bank (ECB) meeting later of the day, and the FBM KLCI rose 11.66 points to 1,781.75. The upward momentum continued into Friday which saw the benchmark index rising another 21.33 points to 1,803.08 after touching an intra-week high of 1,809.33, on news of the death of King Abdullah of Saudi Arabia.
On the weekly chart, the FBM KLCI formed a bullish long white candlestick which confirmed the reversal signal issued by the piercing-line candlestick pattern formed the previous week, and hence, the FBM KLCI is likely to continue with its upward momentum to climb higher in the coming week. On the daily chart, the FBM KLCI formed a bullish white candlestick with an upside runaway gap which indicates very bullish sentiment, and the key index is likely to climb higher today on follow through buying momentum. Immediate overhead resistance zone is at 1,809 to 1,821, while the immediate downside support zone is at 1,800 to 1,789.
Weekly MACD hooked upward strongly but is still below the signal-line as well as the zero-line, indicating a strong change in the FBM KLCI’s momentum to the upside. Daily MACD and its histogram continued to climb higher, indicating an increased in the bullish momentum. Weekly RSI (14) increased strongly to 50.6 from 38.8 a week ago, indicating a strong change in the weekly relative strength of the FBM KLCI from bearish to neutral. Daily RSI (14) was higher at 66.7 from 61.5, indicating the key index is getting more bullish for the short term. Weekly Stochastic swung upward to 47.2 from 38.2, indicating a change in the weekly cycle from a state of consolidation to an uptrend. Daily Stochastic continued its up cycle to 95 from 88, indicating very strong index strength. However, the FBM KLCI has entered the short term overbought zone, and a pullback correction might be expected ahead. In short, readings from the weekly momentum indicators showed that the FBM KLCI is just turning around from a bearish state before, whilst the daily indicators showed that the key index is getting more bullish but is a little overbought and a pullback correction might be expected ahead.
The short term trend of the FBM KLCI is up, while the medium term trend has just turned bullish from a bearish state before, as the key index has closed above the short and medium term simple moving averages (SMA). Nonetheless, the long term trend is still down as the FBM KLCI continues to stay below the long term moving averages, in particular the 360-day SMA which is currently at 1,821-point. Nevertheless, the FBM KLCI has closed above the 100-day SMA on last Friday, and also made an attempt to test the overhead resistance of 1,810 posted by the 120-day SMA, issuing initial bullish signs of long term trend reversal. However, in order for the FBM KLCI to turned bullish for the long term, the FBM KLCI will have to break through the critical overhead resistance zone posted by a cluster of long term moving averages at 1,810 to 1,835, where 1,835-point is the highest moving average resistance level posted by the 200-day SMA, and a breakthrough of the overhead resistance zone at 1,835-point level will see the FBM KLCI turning up and bullish again with a potential to run higher to test the all-time high level in the medium term. Market sentiment has turned bullish towards the end of last week as can be seen from the total volume traded and the positive market breadth, and this will lead into a Chinese New Year rally for the short term.
Last Friday, the Dow fell 141.38 points or -0.79% to close at 17,672.60. This week, the FBMKLCI is likely to trade within a range of 1,698 to 1,873, and today, the FBMKLCI is likely to trade within a range of 1,770 to 1,830.
This week's expected range: 1698 – 1873
Today’s expected range: 1770 – 1830
Resistance: 1812, 1821, 1830
Support: 1770, 1779, 1791
Stocks to watch: ASUPREM, BPURI, CENSOF, DELEUM, DNEX, EVERGRN, FAVCO, FITTERS, HHGROUP, IJMLAND, INTEGRA, LIONDIV, MAGNUM, MPI, PJDEV, PRIVA, SYSTECH, TMCLIFE, TUNEINS, WONG
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