Stocks on Bursa Malaysia closed broadly higher last Friday taking cue from the strong gains on Wall Street last Thursday. The FBM KLCI gained 9.63 points or 0.72% to close the week at 1345.68. Week-on-week, it gained 9.03 points from 1,336.65 the previous Friday. Total volume for the week rose to 4.175 billion shares worth RM6.527 billion from 3.4 billion shares worth RM5.937 billion the previous week.
The FBM KLCI was in a choppy mode last week. It opened last Monday on a weak note and traded lower to hit the intra-week low of 1327.98, but rebounded on Tuesday. It continued to move higher on Wednesday but faced strong profit-taking activities when it touched the intra-day high of 1344.96. The key index corrected downward on Thursday, losing 4.97 points to 1336.05, and rebounded strongly on Friday to close the week at its highest point at 1345.68.
On the weekly chart, the FBM KLCI formed a bullish continuation candlestick, in which the benchmark index was closing higher for the third consecutive weeks, and it is likely to continue its upward swing to move higher to re-test the psychological resistance level at 1350 this week. As pointed out in last Monday’s analysis, a firm breakout from the 1350 level will bring the key index to a medium to longer term target of 1450.
On the daily chart, the FBM KLCI formed a bullish white Marubozu candlestick, which indicates the Bulls or buyers were in control for the day, and the key index is now staying above all the short, medium and long term moving averages, hence, is expected to continue its upward momentum. The key index is expected to face strong resistance when it comes close to the 1350 psychological resistance level.
Weekly MACD continued to curve upward, albeit still below its weekly signal line but is approaching it, and the histogram is turning shorter indicating a gradual pick up in the medium term upward momentum. Daily MACD has hooked up, indicating a pick up in short term upward momentum, and in fact, it is in a bullish state.
Weekly RSI(14) is at 61.8, and continued to move higher into the bullish zone, indicating the medium term market strength is turning strong. Daily RSI(14) at 64.1 is also in the bullish zone.
Weekly Stochastic at 86.4, is picking up strongly from a reading of 74.4 last week, indicating the medium term price momentum is very strong and is entering the medium term overbought zone. Daily Stochastic at 91.6 has hooked up, is also very strong and continued to remain in the overbought zone. Signals from the indicators are pointing towards a bullish outlook for the benchmark FBM KLCI.
The FBM KLCI is currently staying above all its short, medium and long term moving averages (MA), indicating a bullish state of the key index. The short term trend is up, while the medium term trend is sideways as indicated by the medium term MAs, nonetheless, the long term trend remained up.
Immediate strong resistance is expected at the 1350 psychological level, if this level is penetrated successfully, the next resistance level is at 1357 and 1363. Immediate support zone for the key index is now at 1330 to 1340.
The announcement of corporate results which will peak next month will continue to give support to the local market, while on the external side, the fewer-than-expected European banks that failed the stress tests is expected to help boost overseas markets.
The Dow gained +102.32 points or +0.99% higher to close at 10,424.62 on last Friday. This week, the FBM KLCI may trade within a range of 1316 to 1375, and for today it is likely to trade within a range of 1337 to 1351.
This week's expected range: 1316 – 1375
Today’s expected range: 1337 – 1351
Resistance: 1347, 1349, 1351
Support: 1337, 1339, 1342
Stock to watch: POS, HEXZA
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