Stocks on Bursa Malaysia ended broadly lower last Friday with persistent selling in heavyweights, led by Maybank, dragged down the FBM KLCI to its lowest intra-day level of 1,627.64. The local bourse was also dampened by the wait-and-see investors’ attitude and traders’ caution ahead of the 13th general election. The barometer index lost 13.1 points or 0.80%, after opening at 1,641.35. On a weekly basis, it lost 26.32 points or 1.6% from previous Friday's 1,653.96. Decliners led advancers by 355 to 314, with 320 counters unchanged. Total volume rose to 972.34 million shares worth RM2.46 billion from Thursday's 788.2 million shares valued at RM1.6 billion. Weekly turnover amounted to 4.317 billion units worth RM9.142 billion, compared with previous week's 4.530 billion shares valued at RM8.327 billion.
The FBM KLCI was basically in a corrective mode last week where it opened last Monday 1.64 points lower at 1,652.32 and slipped lower to consolidate for most part of the day, but rebounded to close higher at 1,657.96 on late buying of selected blue-chips. Tuesday saw the key index opened with an upside gap of 3.74 points at 1,661.70 and surged to the intra-week high of 1,664.39 before plunging to close 1.42 points lower at 1,656.54 on heavy profit-taking. Selling pressure continued into Wednesday where the barometer index opened with a downside gap of 3.07 points at 1,653.47 and slipped lower for the rest of the day and ended 10.32 points at 1,646.22. The FBM KLCI continued its downtrend into Thursday and Friday to end last week at the lowest point of 1,627.64.
On the weekly chart, the FBM KLCI formed a bearish black candlestick with short upper shadow which indicates selling activity was dominant over the week and the bears were in control. On the daily chart, the FBM KLCI formed a bearish long black candlestick, the fourth consecutive black candlesticks after hitting the intra-week high of 1,664.39, and a last minutes sell down on some key blue-chip stocks last Friday also indicated some funds were getting out of the market ahead of the soon to be called general election. Hence, the FBM KLCI is likely to further correct downward in the coming week to the immediate support zone of 1,622 to 1,597.
Weekly MACD hooked downward again after hooking up the previous week, and the histogram also extended downward, indicating an increased in the weekly bearish downward momentum. Daily MACD and its histogram continued to slide southward, also indicating an increased in the daily bearish momentum. Weekly RSI (14) pulled back to 47.2 from 54.5, indicating the weekly relative strength has again turned mildly bearish from mildly bullish. Daily RSI (14) was lower at 41.4 from 49.8, indicating the key index is turning more bearish. Weekly Stochastic was marginally higher at 42.7 from 42.1, indicating a lack of upward strength, while the daily Stochastic has plunged below the 50-level to 43.5 from 69.2, indicating further weakening of the index's strength and continuation of the short term down cycle. In short, both weekly and daily indicators showed that the FBM KLCI is again turning bearish and weak, and hence, is likely to continue its correction into this week.
The trend of the FBM KLCI has again turned down and bearish as the key index has again closed below the short, medium and long term moving averages, but is still above the 240-day SMA which is currently at 1,624. A breach of the 240-day SMA will likely see the FBM KLCI plunging lower to test the support of the 300-day SMA currently at 1,608. With the bearish downward move last week, the threat of the right shoulder of a Head-and-Shoulder formation has again surface. The neckline of the Head-and-Shoulder is at 1,599-point level, and a break of the neckline will likely see the FBM KLCI falling lower with a target of 1,549 and 1,499.
Last Friday, the Dow fell 25.03 points or -0.17% to close at 14,514.11. This week, the FBM KLCI is likely to trade within a range of 1,578 to 1,676, and today, the FBM KLCI is likely to trade within a range of 1,608 to 1,656.
This week's expected range: 1578 – 1676
Today’s expected range: 1608 – 1656
Resistance: 1637, 1647, 1656
Support: 1608, 1617, 1622