Stocks on Bursa Malaysia ended mixed last Friday on continuous selling pressure in line with regional peers. The FBM KLCI fell 5.7 points or 0.32% to 1,769.22 after opening 1.78 points higher at 1,776.7. The benchmark index hovered between 1,769.22 and 1,780.98 throughout the day. On a weekly basis, the FBM KLCI ended 3.84 points lower from 1,773.06. Market breadth was positive with gainers led losers by 436 to 422, while 265 counters were unchanged. Daily turnover stood at 2.22 billion shares valued at RM3.45 billion from 1.17 billion shares worth RM2.07 billion on Thursday, while weekly turnover dipped to 10.862 billion shares valued at RM13.287 billion from 10.942 billion shares worth RM11.765 billion.
The FBM KLCI was basically trading sideways range-bound last week. Continuing the downtrend from previous week, the FBM KLCI opened last Monday 2.94 points lower at 1770.12 and slipped to the intra-week low of 1,764.97 before rebounding to close 5.93 points lower at 1,767.13. The FBM KLCI opened Tuesday 0.68 of a point lower at 1,766.45 and slipped to the intra-day low of 1,765.94. before rebounding to move higher for the rest of the day to hit the intra-day high of 1,779.64 before pulling back on last minute profit-taking activity to close 9.03 points higher at 1,776.16. Taking cue from the strong close on Wall Street overnight which saw the DJIA closing 0.69 percent to an all-time high of 15,409.39, the FBM KLCI rose 7.31 points on Wednesday to close at 1,783.47 on follow through buying of blue-chips stocks. Nevertheless, profit-taking activity starts to set in on Thursday which pulled the key index 8.55 points lower at 1,774.92, and the selling pressure continued into Friday which saw the FBM KLCI losing another 5.7 points to close the week at 1,769.22.
On the weekly chart, the FBM KLCI formed another Doji candlestick with a longer upper shadow which indicates uncertainty of market direction with a downward bias. Over the last four weeks, the FBM KLCI formed three Doji candlesticks with long upper shadow and one black spinning-top candlestick, indicating selling activity or distribution was dominant, and the immediate support was seen at 1,765 while the immediate overhead resistance is at 1,795. Hence, for the coming week, the FBM KLCI is likely to stay range-bound with a downward bias.
On the daily chart, the FBM KLCI formed a bearish black candlestick which closed at the lowest point on Friday on last minute selling activity, indicating investors were having a bearish outlook, and hence, the key index is likely to continue its southward slide today. Immediate downside support is at 1,765. A break of the 1,765 support level will see the key index sliding lower to the test the psychological support level of 1,750, follow by the gap support of 1,743. If the critical support at 1,743 could not hold, then the FBM KLCI will dip further to close the gap at 1,718.
Weekly MACD continued to rise, but its histogram was shorter for the first time after expanding consecutively for three bars, indicating a slowdown in the weekly upward momentum. Daily MACD and its histogram, however, continued to slide lower, indicating a further loss in the daily momentum. Weekly RSI (14) hooked downward slightly to 70.2 from 71.4, indicating the FBM KLCI is still in a very bullish state. Daily RSI (14) slipped lower to 56.3 from 59.1, indicating a further loss in the FBM KLCI's daily relative strength to a mildly bullish state. Weekly Stochastic continued sliding lower to 74.8 from 75.9 and is staying below the weekly slow stochastic line, indicating a further loss in the weekly strength and continuation of the weekly down cycle, and daily stochastic was lower at 49.5 from 59.8, and has crossed below the daily slow stochastic line, indicating the FBM KLCI has turned weak for the short term, and the down cycle is likely to continue. Readings from the weekly indicators showed that the FBM KLCI is still bullish but is losing its momentum, while the daily indicators showed that the key index has already gone into a consolidation mode and is likely to further correct or consolidate.
The overall medium and long term trend of the FBM KLCI still remained up. Nevertheless, the short term trend has turned sideways with a downward bias as the 5-day SMA has crossed below the 10-day SMA. Immediate downside critical support is at 1,750 provided by the 30-day SMA, and a break of this support will see the FBM KLCI turning bearish for the short term with a possible downside target of 1,721 to 1,708 provided by the 50 and 60-day SMA. The FBM KLCI has also formed a round-top chart pattern, indicating a gradual loss in momentum and distribution of shares at current level. Hence, for the coming week, the FBM KLCI is likely to further correct itself after the recent upsurge. Nevertheless, from a longer term perspective, the short term correction is needed to neutralise the grossly overbought situation of the FBM KLCI, and the correction actually provides an opportunity to buy into weakness when the index comes to its key support level.
Last Friday, the Dow fell -208.96 points or -1.36% to close at 15,115.57. This week, the FBM KLCI is likely to trade within a range of 1,739 to 1,808, and today, the FBM KLCI is likely to trade within a range of 1,753 to 1,792.
This week's expected range: 1739 – 1808
Today’s expected range: 1753 – 1792
Resistance: 1777, 1784, 1792
Support: 1753, 1761, 1765
Stocks to watch: BJCORP, DIGISTA, FITTERS, LBS, PENERGY, REDTONE, SENDAI