FBMKLCI - likely to trend higher
Stocks
on Bursa Malaysia ended on a firm note last Friday with the benchmark
FBMKLCI hitting more than a two-week high, boosted by year-end
window-dressing activities. Bursa Malaysia was closed on Thursday for
Christmas holiday. The benchmark FBM KLCI rose 14.70 points or 0.84% to
1,764.44 after moving within a range of 1,747.20 to 1,765.61 throughout
the day. On a Friday-to-Friday basis, the key index gained 48.45 points
or 2.82% from previous Friday’s 1,715.99. Gainers trounced losers by 436
to 255, while 301 were unchanged. Total volume fell to 846.49 million
shares worth RM870.12 million from 1 billion shares worth RM995.56
million on Wednesday. Weekly turnover dropped to 4.99 billion shares
worth RM5.17 billion from 9.42 billion shares worth RM10.63 billion the
previous week.
The
FBMKLCI staged a technical rebound to close higher last week, where the
key index opened last Monday with an upside gap of 7.88 points at
1,723.87 and pulled back to hit the intra-week low of 1,722.67, but
rebounded to end the day 28.06 points or 1.64% to higher at 1,744.05.
The benchmark FBMKLCI gained 5 points on Tuesday to 1,749.05 on
continuous buying support for selected heavyweights and index-linked
stocks amid mixed regional markets. The key index went into a
consolidation mode on Wednesday, the Christmas Eve, to gain 0.69 of a
point to end the day at 1,749.74 after hitting an intra-day low of
1,732.15, despite Wall Street breaching the 18,000 mark on Tuesday.
Bursa Malaysia was closed on Thursday for Christmas holiday, and the
FBMKLCI continued to rise on Friday which gained 14.70 points to
1,764.44 on year-end widow-dressing activities. On the weekly chart, the FBMKLCI formed a bullish white candlestick which indicates the bulls were in control for the week and it also covered the downside gap formed the previous week, and hence, confirming the bottom reversal signal from the hammer candlestick formed previous week. Thus, the FBMKLCI is likely to continue with its upward momentum to climb higher this week with strong overhead resistance expected at the 1,780 to 1,800 zone. On the daily chart, the FBMKLCI also formed a bullish white candlestick after opening 2.49 points lower but ended near the high of the day, indicating the bulls were in control on Friday, and hence, the key index is likely to continue to rise higher on follow through buying momentum. Immediate overhead resistance zone is at 1,778 to 1,789, while the downside support zone is at 1,747 to 1,732.
Weekly MACD was marginally lower and is turning flat, while its histogram contracted upward after extending downward for three consecutive weeks, indicating a reduction in the weekly bearish momentum. Daily MACD continued to rise above the signal-line, but is still below the zero-line, and its histogram also extended upward, indicating further gain in the bullish momentum. Weekly RSI (14) rose to 40.7 from 28.6, indicating a strong gain which lifted the key index from a very bearish state to a mildly bearish state on the weekly perspective. Daily RSI (14) was higher at 52.1 from 48.1, indicating the FBMKLCI has turned mildly bullish from a mildly bearish state on the daily chart. Weekly Stochastic swung up strongly to 26.8 from 11.8 and has made a golden-cross over the slow stochastic line, issuing a stochastic buy signal on the weekly perspective, and the changed in the weekly cycle from down to up. Daily Stochastic was higher at 87.1 from 73.8, indicating further strengthening of the key index and continuation of the short term up cycle. In short, readings from the weekly momentum indicators showed that the bearish momentum is waning and the FBMKLCI is starting to turn up; while readings from the daily indicators showed that the FBMKLCI is turning mildly bullish but is entering the stochastic overbought zone, and a pullback correction might be expected ahead.
The medium to long trend of the FBMKLCI is still down as the key index continues to stay below the medium to long term simple moving averages (SMA). However, the short term trend has turned up as the index is now closing above the short term 5, 10, 15 and 20-day SMA, and the 5-day SMA also made a golden-cross over the 20-day SMA on Friday, issuing a short term bullish or buy signal. Immediate overhead resistance zone is at 1,769 to 1,795 posted by the medium term simple moving averages, and the strong overhead resistance zone is at 1,800 to 1,845 posted by a cluster of the long term moving averages. Immediate strong resistance is expected at 1,778, the 50% Fibonacci Retracement (FR) level of the 1,660 low of August 28 2013 to the 1,896 record high of July 8 2014, with next hurdle at 1,806, the 38.2% FR level. With only three days to go before trading for this year comes to a close on Wednesday, further window-dressing gains is likely to meet significant profit-taking resistance. As for Year 2015, Bursa Malaysia could remain choppy in the first half of next year amid the prevailing uncertainty in the direction of crude oil prices, still weak earnings growth trajectory and the short-term setback on consumption post-Goods and Services Tax implementation.
Last Friday, the Dow rose 23.50 or 0.13% to close at 18,053.71. This week, the FBMKLCI is likely to trade within a range of 1,653 to 1,751, and today, the FBMKLCI is likely to trade within a range of 1,693 to 1,808.
This week's expected range: 1693 – 1808
Today’s expected range: 1734 – 1784
Resistance: 1770, 1777, 1784
Support: 1734, 1740, 1752
Stocks to watch: AEON, CAREPLS, DNEX,
DRBHCOM, JFTECH, KNM, KRETAM, MAGNUM, MHB, MRCB, MITRA, N2N, OPENSYS,
PMHLDG, POHUAT, SUNZEN
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