Stocks on Bursa Malaysia closed higher last Friday, in tandem with regional stock markets, buoyed by a rebound in oil prices as global benchmark Brent crude rose another 5.8% to US$57.91 a barrel, a fourth successive advance and the highest settlement since late December last year. The benchmark FBM KLCI rose 10.04 points or 0.56% to finish at 1,813.25, after fluctuating between 1,806.3 and 1,814.3 throughout the day. On a Friday-to-Friday basis, the key index rose 31.99 points or 1.8% from 1,781.26 on previous Friday. Gainers outpaced losers by 512 to 291, while 341 counters were unchanged. Total turnover rose to RM1.9 billion units valued at RM2.1 billion from 1.7 billion units valued at RM2.1 billion on Thursday. Weekly turnover for the three trading day week decreased to 5.98 billion units valued at RM6.93 billion from previous week’s 9.74 billion units valued at RM11.07 billion.
Bursa Malaysia was closed on last Monday and Tuesday for the Federal Territory Day replacement holiday and the Thaipusam holiday. Following the strong performance on Wall Street overnight and a strong rebound in crude oil price, the FBM KLCI opened last Wednesday with a big upside gap of 33.46 points at 1,814.72 and surged to hit the intra-week high of 1,831.41 two minutes after opening. However, profit-taking that set in pulled the key index to close off high with a gain of 21.76 points or 1.22% at 1,803.02 points. Thursday saw the FBM KLCI continued the previous day’s gains to close marginally higher, weighed on by profit taking and mixed overseas sentiment, to close 0.19 of a point higher at 1,803.21 after touching an intra-week low of 1,796.41. The FBM KLCI rose another 10.04 points to finish the week at 1,813.25.
On the weekly chart, the FBM KLCI formed a high wave black spinning-top candlestick which indicates uncertainty of market direction amid high volatility. Hence, the FBM KLCI is likely to stay range-bound with an upward bias in the coming week. On the daily chart, the FBM KLCI formed a bullish white candlestick which confirmed the reversal signal issued by the black hammer candlestick on Thursday, and hence, the FBM KLCI is likely to continue the reversal to move higher today. Immediate overhead resistance zone is at 1,820 to 1,831, while the immediate downside support zone is at 1,806 to 1,796.
Weekly MACD continued to climb upward after making a golden-cross the previous week, indicating an increasing upward momentum on the weekly perspective. Daily MACD was higher and its histogram also extended upward, indicating an increased in the momentum to the upside. Weekly RSI (14) hooked upward to 52.3 from 47, indicating the weekly relative strength of the FBM KLCI has turned mildly bullish from mildly bearish. Daily RSI (14) swung upward to 65.1 from 62.4, indicating the daily relative strength is turning more bullish. Weekly Stochastic continued to climb higher to 68.4 from 55.9, indicating improving weekly index strength and continuation of the weekly up cycle. Daily Stochastic swung upward to 74.8 from 69.7 and has made a golden-cross over the slow stochastic line, issuing a stochastic buy signal and indicated that the FBM KLCI is turning bullish after a short period of consolidation. In short, the weekly indicators showed that the FBM KLCI is gradually turning bullish, and the daily indicators showed that the key index is regaining its upward move after a brief consolidation. Hence, the FBM KLCI is likely to move higher in the coming week.
The technical picture of the FBM KLCI has shifted more to the bullish side as the short and medium term trend is up, while on the long term trend, the key index has closed firmly above the 100 and 120-day simple moving average (SMA) on Friday. However, in order for the FBM KLCI to turn bullish for the longer term, it must break above the immediate overhead resistance zone posted by a cluster of long term moving averages with the 200 and 240-day SMA posting as the upper most resistance at 1,833-point level, and a breakthrough of this important resistance level will trigger a rally towards the 1,850-point target level follow by the 1,860, 1,880 and the all-time high level of 1,896. Technically, the FBM KLCI is getting better, suggesting the key index may rise on continuous bargain hunting this week, barring any negative news from overseas. However, with just 7½ trading days left to the Chinese New Year, we can expect liquidation on profit-taking to continue over the next couple of days, but on an intermittent basis, thus capping the upside this week.
Last Friday, the Dow fell 60.59 points or -0.34% to close at 17,824.29. This week, the FBMKLCI is likely to trade within a range of 1,760 to 1,866, and today, the FBMKLCI is likely to trade within a range of 1,799 to 1,822.
This week's expected range: 1760 – 1866
Today’s expected range: 1799 – 1822
Resistance: 1816, 1819, 1822
Support: 1799, 1803, 1808
Stocks to watch: ASTRO, BENALEC, COASTAL, CWORKS, DGSB, DUFU, GHLSYS, HIL, JAKS, KNM, MFCB, MIKROMB, MITRA, OCK, PWROOT, PRESBHD, PSIPTEK, SALCON, TGOFFS, ZELAN
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