Stocks on Bursa Malaysia ended lower last Friday due to the lack of buying interest and profit taking in lower liners ahead of the weekend. The FBM KLCI ended 2.96 points or 0.18% lower at 1,627.93, after opening at 1,628.30, and hovered between 1,624 and 1,632.56 for the day. Week-on-week, the benchmark index was up 4.13 points to 1,627.93 from previous Friday's 1,623.8. Losers led gainers slightly by 288 to 281, with 346 counters unchanged. Volume rose to 749.82 million units worth RM1.19 billion from yesterday’s 666.637 million units worth RM1.290 billion. Weekly turnover declined to 2.18 billion units worth RM3.73 billion from previous week's 4.902 billion units worth RM8.048 billion.
Bursa Malaysia was closed on last Monday and Tuesday for the Chinese New Year holidays, and the FBM KLCI was basically in a range-bound consolidation mode last week as most investors were still away. The FBM KLCI opened last Wednesday, the first trading day of the lunar year of Water Snake, with an upside gap of 4.38 points at 1,627.46, and moved higher gradually for the rest of the day to hit the intra-day high of 1,633.71 before pulling back on profit-taking to close 7.36 points higher at 1,631.16. The benchmark index ended 0.27 of a point lower at 1,630.89 on Thursday after opening 4.11 points higher at 1,635.27 and hit the intra-week high of 1,635.55, and the market barometer continued its consolidation mode into Friday to hit the intra-week low of 1,624 before rebounding to close off low at 1,627.93.
On the weekly chart, the FBM KLCI formed a small black inverted hammer which indicates the bulls were trying to push up the index initially but were later beaten by the bears, and the key index is likely to stay in range-bound consolidation mode with a downward bias in the coming week. On the daily chart, the FBM KLCI formed a bearish black hammer-like candlestick which closed slightly below the mid-range of the day which showed the sellers were slightly more dominant, and the index is likely to further consolidate with a downside support zone at 1,624 to 1,613, while the overhead resistance zone is at 1,633 to 1,646.
Weekly MACD and its histogram continued to slide lower, indicating a continued loss in the weekly momentum. Daily MACD, however, continued to rise after making a u-turn, and its histogram also further contracted upward. Nevertheless, the daily MACD is still below both the signal-line and the zero-line, indicating the improvement in the momentum could well be just a technical rebound. Weekly RSI (14) hooked upward to 46.9 from 45.4, reflecting a weak rebound on the weekly chart. Daily RSI (14) however, hooked downward to 40.1 from 41.6, indicating the FBM KLCI is still in a mildly bearish state. Weekly Stochastic slipped lower to 32.6 from 35.4, indicating a further loss in the weekly market strength and continuation of the weekly down cycle. Daily Stochastic, however, rose to 45.9 from 36.8. Mixed readings from the weekly and daily indicators showed that the FBM KLCI is in a consolidation mode with a downward bias.
The immediate short term trend of the FBM KLCI has turned sideways, and the medium term trend is down, while the long term trend still remained up as the key index managed to stay above the long term 200 and 240-day SMA. However, the 200 and 240-day SMA which are currently at 1,626 and 1,619 look fragile, and a break of these two important long term moving average support levels will likely see the FBM KLCI slipping lower to test the support of the 300-day SMA which is currently at 1,597. On chart pattern, the FBM KLCI is likely to be forming the right shoulder of the bearish Head-and-Shoulder pattern with a neckline at around 1,600-point, and a break of this neckline will likely see a downside target of 1,500-point in the medium term.
Last Friday, the Dow rose 8.37 points or +0.06% to close at 13,981.76. This week, the FBM KLCI is likely to trade within a range of 1,611 to 1,647, and today, the FBM KLCI is likely to trade within a range of 1,615 to 1,641.
This week's expected range: 1611 – 1647
Today’s expected range: 1615 – 1641
Resistance: 1632, 1636, 1641
Support: 1615, 1619, 1623