Stocks on Bursa Malaysia ended mixed last Friday, on mild profit-taking activities in the absence of stronger supportive buying interest. Interest was seen in plantation stock pick-up after the government announced changes to the palm oil policy to better reflect movements in international prices. Malaysia will cut crude palm oil export taxes and discontinue a tax-free shipment quota for the grade from Jan 1 next year. The FBM KLCI lost 2.11 points or 0.13% to 1,653.36, after moving between 1,657.72 and 1,650.77 throughout the day, while week-on-week, the benchmark index lost 6.87 points compared with 1,660.23 the previous Friday. Gainers beat losers by 359 to 334, while 363 counters were unchanged. Turnover decreased to 780.94 million shares valued at RM1.21 billion from Thursday's 800.27 million shares worth RM1.11 billion. weekly volume in turnover increased to 4.477 billion shares valued at RM6.601 billion from 4.430 billion shares worth RM7.047 the previous week.
The local bourse slipped into profit-taking correction mode last week after the FBM KLCI recorded new all-time intra-day high of 1,668.32 the previous Friday. The FBM KLCI closed almost unchanged on Monday easing 0.01 points to 1,660.22 after hitting intra-day low of 1,653.63. The key index rebounded on Tuesday to register a new record high closing of 1,663.32, but it slipped into profit-taking correction mode for the rest of the week to hit the intra-week low of 1,650.77 on Friday before recouping slightly to close off low.
On the weekly chart, the FBM KLCI formed a small black spinning-top candlestick with a lower high compared with the previous candlestick indicating mild profit-taking correction last week, and the key index is likely to continued its consolidation into this week with immediate downside support expected at 1,643-point level provided by the 5 and 10-week SMA. On the daily chart, the FBM KLCI formed a third black spinning-top candlestick with a downside runaway gap, indicating uncertainty of market direction amid continuation of the short term profit-taking correction. Immediate downside support is at the psychological support level of 1,650, and a violation of this level would see the FBM KLCI sliding lower towards the next lower support zone at 1,643 to 1,638.
Weekly MACD was marginally lower but its histogram expanded upward slightly, and the weekly MACD line is still below the weekly signal-line, indicating consolidation on the weekly perspective. Daily MACD continued to slide lower with its histogram further contracted, indicating a further loss in the index's momentum. Nonetheless, as the daily MACD is still above the daily signal-line, the current weakness may be viewed as just a pullback correction. Weekly RSI (14) hooked downward to 60.7 from 62.9, reflecting the correction, and the weekly relative has weakened to the borderline of the bullish zone. Daily RSI (14) continued to slip lower to 56.6, indicating the short term relative strength of the FBM KLCI has weaken and is in the mildly bullish state now. Weekly Stochastic has turned upward and crossed over the weekly slow stochastic line, indicating an improvement in the weekly market strength. However, the daily Stochastic continued to slide lower to 82.5 from 87.7, indicating a further loss in the daily market strength and continuation of the short term down cycle. Mixed readings from the weekly and a generally bearish bias readings on the daily indicators showed that the FBM KLCI is likely to further consolidate.
The broader trend of the FBM KLCI remained up as the key index continued to stay above most of the moving averages. However, the immediate short term trend of the FBM KLCI has turned mildly bearish as the index has closed below the immediate short term 5 and 10-day SMA, and one can expect more downward move ahead with immediate crucial support at 1,638-point level provided by the 30-day SMA, and a further violation of this crucial support level would likely see the FBM KLCI turning short term bearish and would slide toward the 1,618 to 1,610 longer term support zone.
Last Friday, the Dow rose 2.46 points or +0.02% to close at 13,328.85. This week, the FBM KLCI is likely to trade within a range of 1,633 to 1,679, and today, the FBM KLCI is likely to trade within a range of 1,643 to 1,665.
This week's expected range: 1633 – 1679
Today’s expected range: 1643 – 1665
Resistance: 1657, 1661, 1665
Support: 1643, 1647, 1650
Stocks to watch: ALAM, BENALEC, SCOMIMR, PERISAI, TAKASO, LBS, REDTONE