Stocks on Bursa Malaysia ended last Friday on an easier note amid economic growth concerns both locally and in the region, with the FBM KLCI settling below the 1,650 level. The benchmark index fell 3.39 points or 0.21% to close at 1,648.22, after opening 0.30 of a point better at 1,652. On a Friday-to-Friday basis, the key index lost 1.25 points from previous Friday’s closing of 1,649.47. Losers led gainers by 434 to 322, while 331 counters were unchanged. Turnover increased to 1.28 billion shares worth RM1.189 billion from 1.192 billion shares worth RM1.303 billion registered on Thursday. Weekly volume decreased to 3.826 billion shares worth RM4.115 billion, from 6.155 billion shares worth RM6.715 billion registered last week.
The FBM KLCI was basically in a profit-taking consolidation mode last week where it started last Wednesday on a positive note after a two-day break for the Hari Raya Aidilfitri celebration. It opened 2.43 points higher at 1,652.22 and surged to a new all-time intra-day high of 1,655.39 and retraced on profit-taking to finish 2.46 points better at 1,652.25. Thursday saw the FBM KLCI closed 0.64 of a point easier at 1,651.61, after hovering between 1,650.53 and 1,655.24 throughout the day. Profit-taking activity continued to looms on Friday with the key index losing 3.39 points to end the week at 1,648.22.
On the weekly chart, the FBM KLCI formed a bearish black inverted hammer-like candlestick which indicates selling pressure was dominant due to heavy profit-taking activity. The black inverted hammer-like candlestick coupled with previous week’s candlestick also formed dark-cloud-cover pattern, which is a bearish top reversal candlestick pattern. On the daily chart, the FBM KLCI also formed a black inverted hammer candlestick with a lower high which indicates distribution. Hence, the FBM KLCI is likely to further correct itself in the coming week to the immediate support zone of 1,644 to 1,631
Weekly MACD continued to climb higher but the histogram turned shorter, indicating a reduction in the weekly upward momentum. Daily MACD slipped lower and made a dead-cross below the signal-line, sending out a sell signal, and indicated the beginning of a short term correction. Weekly RSI (14) hooked downward to 65.3 from 65.8, indicating a mild pullback. Daily RSI (14), however, fell to 60.8 from 65.4, indicating the correction on the daily timeframe is heavier. Weekly Stochastic continued to climb higher to 96 from 94.4, indicating the weekly up cycle is still intact but is overbought. Daily Stochastic, however, continued to slide lower to 83.4 from 85.8 previously, indicating the daily down cycle is intact. Mixed readings from the weekly and daily indicators showed that the FBM KLCI is going into a consolidation mode on the daily timeframe but the weekly outlook is still bullish.
The overall trend of the FBM KLCI still remained up, but for the immediate short term, it is likely to turn downtrend as it has already closed below the 5 and 10-day SMA, and it is likely to slide towards the 20 and 30-day SMA support at 1,640 and 1,639. A break below the 1,639-point level will likely see the FBM KLCI turning more bearish with a downside target of 1,631 follow by 1,624, the 50-day SMA support, and the critical support is at 1,620, the July 27th pivot low. Immediate strong overhead resistance remained at 1,655-point level.
Last Friday, the Dow gained +100.51 points or +0.77% to close at 13,157.97. This week, the FBM KLCI is likely to trade within a range of 1,635 to 1,665, and for today, it is likely to trade within a range of 1,639 to 1,661.
This week's expected range: 1635 – 1665
Today’s expected range: 1639 – 1661
Resistance: 1653, 1657, 1661
Support: 1639, 1643, 1645