FBM KLCI Technical Outlook
Stocks on Bursa Malaysia snapped a three-day losing streak to end higher last Friday on bargain hunting in selected heavyweights, which saw late fund buying of Tanaga Nasional and Malayan Banking. Bargain hunting by institutional funds supported the local market but further gains were limited by fears of a better-than-expected US third-quarter gross domestic product data which will be out later of the day. Asian stock markets were mixed as they were still affected by a flurry of major corporate earnings reports across the region and the declining oil prices. The ringgit weakened further against the US dollar at 4.1970/1020 from the 4.1810/1900 recorded on Thursday, tracking the performance of emerging Asian currencies. At close, the FBM KLCI settled at 1,670.27, up 1.24 points or 0.07%, from Thursday’s close of 1,669.03, after opening 0.58 of a point higher at 1,669.61 and moved between 1,666.97 and 1,671.72 throughout the day. On a weekly basis, the benchmark index gained 0.29 of a point from 1,669.98 on previous Friday. Losers led gainers by 428 to 335 with 387 counters unchanged. Volume was lower at 1.48 billion units worth RM1.66 billion from 1.49 billion units worth RM1.61 billion on Thursday. Weekly turnover increased to 7.58 billion units worth RM8.62 billion versus previous week’s 5.75 billion units worth RM8.51 billion.
FBM KLCI Weekly Chart:
On the weekly chart, the FBM KLCI formed a white shooting-star candlestick, a top reversal candlestick pattern, which indicates the key index had experienced some profit taking activity at latter part of the week after the initial upsurge on last Monday. Hence, the FBM KLCI is likely to further consolidate or correct downward in the coming week. On the daily chart, however, the FBM KLCI formed a white spinning-top candlestick in bullish Harami position, in which the white spinning-top indicated indecision of market direction with mild upward bias and the two-day bullish Harami pattern indicated a change in market sentiment from very bearish on Thursday to mildly bullish on Friday, and hence, the FBM KLCI is likely to stay in range-bound consolidation today with mild upward bias. Immediate downside support zone is at 1,666 to 1,663 points, while the immediate overhead resistance zone is at 1,674 to 1,679 points.
Weekly MACD continued to climb higher after hooking upward the previous week, and made a golden-cross over the zero-line, issuing a buy signal on the weekly timeframe, and its histogram also extended upward for a second bar, indicating further increase in the weekly momentum. Daily MACD, still above the zero-line and the signal-line, continued to slide lower and its histogram also further contracted downward, indicating further decline in the index’s daily momentum. Weekly RSI (14) was marginally higher at 51.3 from 51.2, indicating mild improvement in the weekly relative strength and a state of consolidation. Daily RSI (14) hooked upward to 51.5 from 50.4, indicating a mild technical rebound. Weekly Stochastic, still below the slow stochastic line, rose to 38.2 from 37, indicating a mild improvement of the weekly strength. Daily stochastic slipped lower to 69.6 from 78.7, indicating further weakening of the FBM KLCI on the daily timeframe and continuation of the daily down cycle. In short, readings from the weekly indicators showed that the FBM KLCI was gaining mild upward momentum, while the daily indicators showed that the FBM KLCI was losing its momentum and is in a consolidation mode.
The technical picture of the FBM KLCI still remained the same in that the trend is sideways range-bound for the short, medium and long term as indicated by the trend channel in blue colour, and the key index is still trapped in the bigger triangle formation. With the mild rebound on last Friday, the FBM KLCI continued to stay below the immediate horizontal support turned resistance at 1,672-point, and the key index is also closing below the 5-day SMA but is still staying above the 10-day SMA, indicating the key index has fallen back to the short term sideways range of 1,652 to 1,672 points. For the coming week, the FBM KLCI is likely to drift within a range of 1,651 to 1,691 points while waiting for fresh leads.
Last Friday, the DJIA fell 8.49 points or -0.05% to close at 18,161.19. For the coming week, the FBMKLCI is likely to move within a range of 1,651 to 1,691, and today, the FBMKLCI is likely to move within a range of 1,662 to 1,676.
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source: SJ Securities – 31/10/16