Stocks on Bursa Malaysia ended lower last Friday as investors were cautiously sidelined on renewed speculation that the general election will be held soon. The speculation arose due to the upcoming UMNO general assembly, which will be held this week, and the market was expecting the Parliament to be dissolved anytime soon. The benchmark FBM KLCI slipped 4.23 points or 0.26% to 1,614.32, after hovering between 1,611.09 and 1,618.73. Losers led gainers by 436 to 215, while 335 counters were unchanged. Volume rose to one billion shares worth RM1.49 billion from Thursday's 892.34 million shares worth RM1.57 billion.
The FBM KLCI was basically in a corrective mode the whole of last week despite positive performance of regional bourses. The FBM KLCI opened lower with a down gap of 5.1 points at 1,624.18 on Monday and ended the day 5.97 points lower at 1,623.31 in quiet trading. The key index edged up 0.89 point to close at 1,624.20 on Tuesday but eased 1.23 points to 1,622.97 on Wednesday after hovering between 1,624.42 and 1,619.39. The FBM KLCI fell 4.42 points on Thursday to close at its lowest level of 1,618.55, after opening 1.75 points lower at 1,621.22, and Friday saw continuous selling pressure which sent the key index to the intra-week low of 1,611.09 before rebounding to close off low.
On the weekly chart, the FBM KLCI formed a bearish black spinning-top candlestick with a downside runaway gap which indicates selling down on fear and the key index is likely to further correct downward in the coming week, moreover, it has also closed below the 30-week SMA which indicates medium term bearishness, and the FBM KLCI is likely to fall to the 50-week SMA support area which is currently at 1,594. On the daily chart, the FBM KLCI formed a black hammer-like candlestick which also indicates selling pressure on the key index but some late buying activities on selected blue-chips managed to lift the key index off low. The key index hit the immediate support at 1,611 and rebounded off it but the rebound was not strong enough to reverse the down trend, hence, the FBM KLCI is likely to continue its consolidation with a downside target zone of 1,607 to 1,595, where 1,607 is the 200-day SMA support and 1,595 was the pivot low support formed on 24th September. A close below this critical support zone would officially spell bear for the FBM KLCI.
Weekly MACD and its histogram continued to slide lower, indicating a pickup in the weekly bearish momentum. Daily MACD also slide lower, but its histogram continued to contract upward, indicating a continued reduction in the speed of the daily downward momentum. Weekly RSI (14) was lower at 46.9 from 50.9, indicating the weekly relative strength of the FBM KLCI has turned mildly bearish. The daily RSI (14) continued to slip lower to 23.7 from 25.7, indicating a further weakening of the daily relative strength to a very bearish or oversold state. Weekly Stochastic plunged to 38.8 from 55.4, indicating a big drop in the weekly market strength, and the daily stochastic was lower at 3.7 from 4.1, indicating a continuation of the down cycle and the FBM KLCI is deeply oversold. Readings from the weekly and daily indicators showed that the FBM KLCI is currently in a very weak and bearish state and is likely to continue to consolidate, while a rebound rally maybe expected on technical oversold situation.
The trend of the FBM KLCI is currently down and bearish as the key index is closing below the short, medium and long term moving averages. However, the FBM KLCI is still above the long term 200-day and 240-day SMA at the moment. The 200-day SMA support is currently at 1,607-point, while the other longer term 240-day SMA support is at 1,590-point, and technically a close below the 200-day SMA or 240-day SMA would indicate the beginning of a long term bear trend. On the flip side, for the FBM KLCI to resume its bullish uptrend, it will have to move above the 30-day SMA resistance at 1,650-point level, which looks quite difficult at the moment. As the general election is just about to be called anytime soon from now, one should sell into strength on any rebound rally.
Last Friday, the Dow rose 172.79 points or +1.35% to close at 13,009.68. This week, the FBM KLCI is likely to trade within a range of 1,590 to 1,645, and today, the FBM KLCI is likely to trade within a range of 1,603 to 1,626.
This week's expected range: 1590 – 1645
Today’s expected range: 1603 – 1626
Resistance: 1618, 1622, 1626
Support: 1603, 1607, 1611