Stocks on Bursa Malaysia ended mixed last Friday as the benchmark FBM KLCI was dragged down by profit taking on telecommunication stocks, Axiata, DiGi and Telekom Malaysia as their valuations were seen to be very expensive. The pullback of the three Telco stocks erased 12.04 points off the 30-stock KLCI. The FBM KLCI fell 19.56 points or 1.17% to 1,656.13, the lowest level of the day after touching an intra-day high of 1,676.48. On a weekly basis. the benchmark index lost 15.76 points from 1,671.89. Losers led gainers by 398 to 322, while 338 counters were unchanged. Turnover was lower at 1.37bil shares valued at RM1.70bil compared with Thursday's 1.69 billion shares worth at RM1.64 billion. Weekly turnover rose to 7.038 billion shares valued at RM7.591 billion from 4.859 billion shares valued at RM5.562 billion the previous week.
Last week was a record high making week for the FBM KLCI where the benchmark index opened last Monday with an up gap of 6.41 points at 1,678.30 and surged to the all-time intra-day high of 1,679.37 within the first ten minutes of trading. The key index slid from the all-time intra-day high into the negative territory but manage to closed with a gain of 0.67 point at an all-time high of 1,672.56. Tuesday saw the FBM KLCI opened 1.74 points lower at 1,670.82 but managed to rebound and rally to the intra-day high of 1,677.50 before closing the day 2.11 points higher at a new high of 1,674.67. The key index was in a profit-taking mode on Wednesday where it closed 1.6 points lower at 1,673.07, and Thursday also saw continued profit-taking throughout the day before a last minute buying on selected blue chips which helped push the benchmark index to a new record high closing of 1,675.69. However, the FBM KLCI finally succumbed to heavy selling pressure on Friday which saw it losing 19.56 points to end at the lowest point for the week at 1,656.13.
On the weekly chart, the FBM KLCI formed a bearish engulfing candlestick pattern, a top reversal candle pattern which indicates heavy profit-taking activity after the benchmark index hit a record intra-day high of 1,679.37 over the week, and the FBM KLCI is likely to continue to correct or consolidate in this coming week with a possible downside target of 1,624.
On the daily chart, the FBM KLCI formed a bearish long black candlestick which indicates heavy sell pressure happening on last Friday, and today the key index is likely to continue its downward momentum to fall further. Immediate downside support zone is at 1,649 to 1,640, with 1,647 being a critical support level provided by the 50 and 60-day SMA, and a break below this support level is likely to see the key index sliding further southward.
Both Weekly and daily MACD has made a dead-cross over their respective signal-line, flashing out sell signal on both the weekly and daily MACD, indicating a correction is beginning. Weekly RSI (14) fell to 59.1 from 65.5, indicating the weekly relative strength of the key index has turned from bullish to mildly bullish; daily RSI (14) plunged from a bullish reading of 67.5 to a reading of 47.8, indicating the daily short term relative strength of the FBM KLCI has turned mildly bearish. Weekly Stochastic hooked downward to 88.4 from 91.6 but is still above the weekly slow stochastic line, reflecting a mild pullback on the weekly chart. Daily Stochastic, however, fell drastically to 63.3 from 83.8, indicating a serious pullback on the daily chart, and the beginning of a short term down cycle. Readings from the weekly indicators showed that the FBM KLCI is undergoing a mild pullback correction, while the daily indicators showed that the key index is experiencing a strong correction which is likely to further extend.
The medium and longer term uptrend of the FBM KLCI remained intact, but the short term trend has turn bearish as the index has closed below the short term 5, 10 and 20-day SMA on last Friday. Immediate support level is at 1,653 provided by the 30-day SMA, follows by the critical 1,647-point support level provided by the 50 and 60-day SMA which coincided with the 38.2% Fibonacci retracement level measuring from the low of 1,595 to the high of 1,679. A close below the 1,647-point critical support level is likely to see the FBM KLCI going into a deeper correction with possible downside targets of 1,637, 1,627 and 1,615, the respective 50%, 61.8% and 76.4% Fibonacci retracement levels.
Last Friday, the Dow fell 139.46 points or -1.05% to close at 13,093.16. This week, the FBM KLCI is likely to trade within a range of 1,625 to 1,702, and today, the FBM KLCI is likely to trade within a range of 1,629 to 1,697.
This week's expected range: 1625 – 1702
Today’s expected range: 1629 – 1697
Resistance: 1670, 1683, 1697
Support: 1629, 1642, 1649