Stocks on Bursa Malaysia ended last Friday slightly lower on uncertain global economic sentiment, despite positive regional markets. The FBM KLCI ended 1.89 points or 0.12% lower at 1,623.7 after hovering between 1,619.08 and 1,633.65, while on a weekly basis, the benchmark index lost 19.25 points from 1,642.95. Losers led gainers by 350 to 337 while 366 counters were unchanged. Total turnover was higher at 1.08 billion shares worth RM1.91 billion from 899.29 million shares valued at RM1.46 billion on Thursday. Weekly volume fell to 3.85 billion shares, valued at RM6.99 billion, from previous week's 4.73 billion shares, valued at RM8.52 billion.
The FBM KLCI was basically in a correction mode last week where it started the week on Tuesday with by jumping 3.94 points to 1,646.89, extending the previous two sessions' big gains amid follow-through buying after the long weekend. Bursa Malaysia was closed last Monday for the Malaysia Day holiday. It hit the intra-week high of 1,651.66 but could hold, and started to slip on heavy selling pressure due to profit-taking. The key index staged a weak rebound on Wednesday but plunged 20.52 points or 1.25% to 1,625.59 on Thursday. The benchmark index continued its correction on Friday to hit the intra-week low of 1,619.08 before rebounding to end the week off low.
On the weekly chart, the FBM KLCI formed a bearish dark-cloud-cover candlestick which indicates heavy profit-taking activity after a strong rebound the previous week, and hence, the key index is likely to further correct or consolidate itself this week with immediate weekly support at 1,613 and 1,601. On the daily chart, the FBM KLCI formed a black spinning-top candlestick which indicates uncertainties of market direction with a downward bias. However, as this spinning-top candlestick appeared after a long black candlestick, it also means a slowdown in the selling pressure and the index may consolidate itself at current level with immediate downside support levels pegged at 1,619, 1,613 and 1,601.
Weekly MACD continued to slide lower and made a dead-cross over its signal-line, flashing out a sell signal on the weekly chart. Daily MACD and its histogram continued to slip southward, indicating an increased in the bearish momentum. Weekly RSI (14) was lower at 55.1 from 61.1, indicating the weekly relative strength has weaken to a mildly bullish state from a bullish state before. Daily RSI (14) slipped lower to 43.7 from 44.6, indicating a further weakening of the daily relative strength and the index is into a mildly bearish state now. Weekly Stochastic was lower at 71 from a reading of 82.2, indicating a bearish continuation of the weekly cycle. Daily stochastic slipped lower to 56.3 from 66.5, and has crossed below its slow stochastic line, indicating a further weakening of the market strength and continuation of the down cycle on the daily chart. Readings from both the weekly and daily indicators showed that the FBM KLCI is in a bearish correction mode and is likely to further consolidate itself.
The short and medium term trend of the FBM KLCI has again turned bearish as the key index is now closing below the short and medium term moving averages. However, the long term trend is still up at the moment. Key support lies at 1,605, provided by the 120-day SMA, while the critical support is at 1,601, the pivot low formed on Sep 11th, and a break of this critical support will see the FBM KLCI turning bearish with a downside target of 1,597 follow by 1,585 and 1,564. For this coming week, the FBM KLCI is likely to trade range-bound with a bearish bias.
Last Friday, the Dow fell 17.46 points or -0.13% to close at 13,579.47. This week, the FBM KLCI is likely to trade within a range of 1,578 to 1,685. Today, the FBM KLCI is likely to trade within a range of 1,602 to 1,648.
This week's expected range: 1578 – 1685
Today’s expected range: 1602 – 1648
Resistance: 1632, 1640, 1648
Support: 1602, 1610, 1617