Stocks on Bursa Malaysia closed lower last Wednesday on half-a-day trading as trader trimmed positions ahead of the long Chinese New Year holiday. Traders also remained cautious over the weak sentiment fuelled by the ongoing Greek debt saga and despite rising crude oil prices which provided some comfort, especially to oil and gas counters. At close, the benchmark FBM KLCI ended at 1,807.87, down 2.22 points or 0.12% after hovering between 1,806.17 and 1,815.95. On a week-to-week basis, the FBM KLCI added 6.92 points from 1,800.95 on previous Friday. Losers led gainers by 381 to 276, while 284 counters were unchanged. Total turnover contracted to 897.04 million units worth RM887.39 million from 1.66 billion units valued at RM1.49 billion on Tuesday. Weekly turnover was down to 4.62 billion units, valued at RM4.5 billion, from 10.43 billion units, valued at RM11.44 billion, recorded the previous week.
The FBM KLCI opened last Monday 3.99 points higher at 1,804.94 but slipped lower to hit the intra-week low of 1,800.24 shortly after opening. Nevertheless, the key index rebounded to close 7.94 points higher at 1,808.89, underpinned by fund buying of CIMB and TENAGA while plantations advanced on firmer crude palm oil (CPO) prices. The FBM KLCI inched up 1.2 points to finished Tuesday at 1,810.09 on last minute buying after staying in the red for most part of the day. Wednesday saw very slow trading with profit-taking activity dominating the market ahead of the long holiday, and the FBM KLCI ended 2.22 points lower at 1,807.87 after hitting an intra-week high of 1,815.95.
On the weekly chart, the FBM KLCI formed a white spinning-top candlestick in bullish Harami position, indicating uncertainty of market direction with an upward bias. Hence, the FBM KLCI is likely to stay sideways range-bound in the coming week but with a bullish bias. On the daily chart, the FBM KLCI formed a white inverted hammer candlestick pattern, indicating top resistance on heavy profit-taking activity. Hence, the FBM KLCI is likely to stay in consolidation today with an upward bias. Immediate overhead resistance zone is at 1,815 to 1,831, while the immediate downside support zone is at 1,806 to 1,800.
Weekly MACD continued to rise, albeit still below the zero-line, and its histogram also extended higher, indicating an increased in the weekly momentum to the upside. Daily MACD was almost flat, indicating a state of consolidation. Weekly RSI (14) hooked upward to 51.4 from 50.2, indicating a mild improvement in the weekly relative strength to the bullish side. Daily RSI (14) hooked downward to 59.5 from 60.6, indicating mild profit-taking activity. Weekly Stochastic was higher at 76.1 from 69.5, indicating further improvement in the weekly index strength and continuation of the weekly up cycle. Daily Stochastic was higher at 57 from 52.6, indicating a mild increased in the daily index strength and continuation of the daily up cycle. In short, readings from the weekly indicators showed that the FBM KLCI has a bullish bias, while the daily readings showed that the key index is in a state of consolidation.
The technical picture of the FBM KLCI remained very much unchanged in that the short term trend is up, while the medium term trend is still sideways but with an upward bias as the 50-day simple moving average (SMA) has started to turn upward and the 40-day SMA has made a golden-cross over the 60-day SMA. The long term trend is still down as the FBM KLCI continues to stay below the 150, 200, 240, 300 and 360-day SMA. However, the key index has closed above the 100 and 120-day SMA, giving a sign of bullish bias for the long term trend. In order for the FBM KLCI to turn bullish, it will have to break above the immediate overhead resistance zone formed by a cluster of long term moving averages with the uppermost resistance at 1,832 posted by the 240-day SMA, and a break of this resistance zone will trigger a rally towards the next upper target level of 1,845. Follow by the psychological level of 1,850, and 1,858. For the coming week, trading activity is expected to pick up as traders come back from the holiday break and the market is likely to do a catch-up as the Dow closed at fresh record high last Friday.
Last Friday, the Dow rose 154.67 points or 0.86% to close at 18,140.44. This week, the FBMKLCI is likely to trade within a range of 1,784 to 1,832, and today, the FBMKLCI is likely to trade within a range of 1,794 to 1,825.
This week's expected range: 1784 – 1832
Today’s expected range: 1794 – 1825
Resistance: 1813, 1819, 1825
Support: 1794, 1800, 1804
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