Stocks on Bursa Malaysia had a good run last week with the benchmark index continuously charting new high over the last five days while second and third liners were in rotational play, fueled by good corporate results and the stronger-than-expected second quarter GDP growth of 8.9% announced on Wednesday. The FBM KLCI advanced 34.87 points or 2.56 %, week-on-week, to 1395.02 compared with previous week's closing of 1360.15. Weekly volume increased to 4.9 billion shares worth RM7.78 billion from 3.94 billion shares worth RM5.81 billion the previous week.
The FBM KLCI opened 0.29 point lower at 1359.86 on last Monday and touched the intra-week low of 1358.95 on mild profit-taking, but reversed up to close at 1370.58, charting a new high for the year. It continued to scale new high daily from Tuesday onwards and closed the week at the highest point of 1395.02, which is a fresh 31-month high since February 2008. On the weekly chart, the benchmark index formed a bullish Marubozu candlestick which indicates the bull was in full control, hence, the key index is expected to continue its momentum to climb higher in the coming week to test the 1400 psychological resistance level. If successful, the key index may extend its run towards the next higher target level at 1428.
Weekly MACD continued to climb higher, indicating the medium term upward momentum is gaining strength, and so is the short term daily MACD which indicates a strong upward momentum. Weekly RSI(14) at 70.6 is indicating that the medium term market strength of the key index is turning very bullish, and its daily RSI(14) at 78.3 is also very bullish but has advanced far into the overbought zone. Weekly Stochastic at 94.9 has again hooked up, reflecting the continued up move of the key index. Its daily Stochastic at 99.99 is indicating a very strong up trend, but is also short term overbought. Signals from the indicators are indicating a strong underlying upward strength of the key index with short term overbought sign; hence, a pull-back or correction is expected anytime soon.
The FBM KLCI is now staying above all its short, medium and long term moving averages, indicating a strong uptrend and a very bullish state of the key index, as confirmed by readings from the oscillators. The immediate overhead resistance zone now is at 1400 to 1428, while its immediate downside support lies at 1370 to 1385 provided by the 5 and 10-day MA.
In view of the strong second quarter economic growth and the continue release of corporate results, which is expected to be generally good in the coming week, the market is expected to remain firm. However, the result of Sime Darby which is due to be released on Thursday, 26th August will be the center of focus, and it may have a strong impact to the short term direction of the market.
The Dow fell -57.59 points or -0.56% lower to close at 10,213.62 on last Friday. This week, the FBM KLCI may trade within a range of 1347 to 1436, and for today it is likely to trade within a range of 1385 to 1405.
This week's expected range: 1347 – 1436
Today’s expected range: 1385 – 1405
Resistance: 1397, 1399, 1405
Support: 1385, 1387, 1391
Stock to watch: BSTEAD, INCKEN, IJMLAND
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