Stocks on Bursa Malaysia rebounded from recent losses to close on a firm note last Friday on the back of last-minute buying interest from selected counters like finance, mining and technology, but gains were capped by losses in the plantation sector. Most local investors preferred to stay on the sidelines ahead of the weekend and the Deepavali and Awal Muharam holidays this week which falls on Tuesday and Thursday. The FBM KLCI inched up 0.01 of a point to 1,641.08, after hovering between 1,632.36 and 1,643.22. On a weekly basis, the benchmark index lost 15.05 points from previous Friday's 1,656.13. Losers led gainers by 355 to 288, while 360 counters were unchanged. Volume fell to 777.107 million shares valued at RM1.32 billion from 999.664 million shares worth RM1.492 billion on Thursday, and weekly turnover fell to 5.375 billion shares valued at RM7.632 billion from previous week's 7.038 billion shares worth RM7.591 billion.
Bursa Malaysia saw a week of bearish market last week as major weaknesses on Wall Street and regional stock markets sent share prices on the local bourse broadly lower over the week. The FBM KLCI opened last Monday 2.45 points higher at the intra-week high of 1,658.58 and slipped lower for the rest of the day to close 2.09 points lower at 1,654.04 after hitting an intra-day low of 1,650.24. The benchmark index continued to decline over the week to its intra-week low of 1,632.04 on Thursday before rebounding to close at 1,641.07. The FBM KLCI continued to stay weak on most of Friday's trading session before a last minute buying which lifted the key index to close with a marginal gain of 0.01 point at 1,641.08.
On the weekly chart, the FBM KLCI formed another bearish black candlestick which indicated continued selling pressure on the benchmark index, and hence, the key index is likely to continue its consolidation into this week. On the daily chart, the FBM KLCI formed a second black hammer candlestick which indicates early selling pressure was well absorbed by the market and the key index has seen an immediate support at 1,632-point level, and may stage a mild rebound today. Immediate overhead resistance zone is at 1,645 to 1,650.
Weekly MACD and its histogram has slipped lower, while the daily MACD has crossed below the zero-line, issuing a bearish sell signal. Weekly RSI (14) slipped lower to 54.4 from 59.1, indicating the index's weekly relative strength has turned weaker to a mildly bullish state. Daily RSI (14) was flat at 37.6, indicating the daily relative strength is still bearish. Weekly Stochastic slid to 74.7 from 88.4, indicating continued weakness and confirmation of the weekly down cycle. Daily stochastic, however, was higher at 18.7 from 18.4, indicating a technical rebound was taking place after the key index slipped into the short term oversold zone. Readings from the weekly indicators showed that the FBM KLCI has just started to turn weak on the weekly perspective. However, it is short term oversold on the daily, and a technical rebound might be expected but could be short lived.
The short and medium term trend of the FBM KLCI is currently down as the key index is closing below the short and medium term moving averages. The FBM KLCI also tested the long term 100-day SMA support twice and rebounded off it, indicating there are some long term buying support around the 100-day SMA which is currently at 1,637-point. Hence, the FBM KLCI is likely to consolidate around current level. However, if the selling pressure is strong enough to break the pivot low of 1,632-point, then the key index is likely to slide lower to the 61.8% and 76.4% Fibonacci retracement support level of 1,627 to 1,615. The critical long term 120-day SMA support is currently at 1,625 point. Having said so, the longer term outlook of 1,700-point for the FBM KLCI still remain unchanged as the current weakness is being viewed as just a natural pullback correction after the key index made new record high. As this week is a very short trading week with two public holidays falling on Tuesday, the Deepavali, and Thursday, the Awal Muharam, the market is likely to remain quiet.
Last Friday, the Dow rose a marginal 4.07 points or +0.03% to close at 12,815.39. This week, the FBM KLCI is likely to trade within a range of 1,602 to 1,685, and today, the FBM KLCI is likely to trade within a range of 1,623 to 1,654.
This week's expected range: 1602 – 1685
Today’s expected range: 1623 – 1654
Resistance: 1645, 1649, 1654
Support: 1623, 1628, 1634
Stocks to watch: COASTAL, EASTLND, HOVID, REDTONE, OSK, PRESBHD, TOPGLOV