Stocks on Bursa Malaysia closed lower last Friday following Wall Street's plunge on Thursday, and investor reluctance to take heavy positions ahead of the weekend. At close, the FBM KLCI fell 6.49 points or 0.37% to 1,755.85 after opening 15.60 points lower at 1,746.74, and hovered between 1,737.66 and 1,762.49 throughout the day. On a weekly basis, the barometer index lost 6.34 points from previous Friday's close of 1,762.19. Losers outnumbered gainers by 512 to 306 while 267 counters were unchanged. Total volume rose to 2.052 billion shares worth RM3.788 billion compared to 1.638 billion shares, worth RM2.017 billion on Thursday. Weekly turnover slipped to 8.724 billion shares, worth RM11.063 billion compared with previous week's 10.38 billion shares, valued at RM12.234 billion.
The FBM KLCI opened last Monday 1.79 points lower at 1,760.40 and rebounded to move higher for the rest of the day to touched the intra-day high of 1,773.65 before pulling back slightly to close 9.98 points higher at 1,772.17. Tuesday saw regional markets mostly in the red, but the FBM KLCI managed to gain 1.88 points to 1,774.05, after hitting an intra-day low of 1,765.38. The key index fell 1.17 points to 1,772.88 on Wednesday after hitting an intra-week high of 1,782.41 as most investors remained on the sidelines ahead of the outcome of the United States Federal Open Market Committee (FOMC) meeting later in the day and most regional bourses were in the red. Taking cue from the weak performance of Wall Street overnight, the FBM KLCI opened Thursday lower with a downside gap of 8.71 points at 1,764.17 and closed the day 10.54 points lower at 1,762.34, and Friday saw more fear-driven selling activity which sent the FBM KLCI to an intra-week low of 1,737.66 before bargain hunting activity sent the index higher to close off low.
On the weekly chart, the FBM KLCI formed a black spinning-top candlestick with long lower and upper shadow, indicating uncertainty of market direction amid a volatile week, and as the lower shadow of the candlestick has breached the previous week's low, hence, the key index is likely to further consolidate this week.
On the daily chart, the FBM KLCI formed a bullish white candlestick after opening with a huge downside gap of 15.6 points and slipped lower to the intra-day low of 1,737.66, losing 24.68 points at its worst, but manage to recover most of the lost ground when it rebounded to an intra-day high of 1,762.49, making a gain of 0.15 points before pulling back to close off high. Price action for the day showed that the bulls fought back strongly after being beaten down severely, and hence, the FBM KLCI might continue its rebound to move higher today. Immediate overhead resistance zone is at 1,762 to 1,766, while the downside support zone is at 1,743 to 1,737.
Weekly MACD continued to curve down, but is still above the weekly signal-line, while its histogram continued to contract, indicating a correction or consolidation on the weekly chart. Daily MACD and its histogram continued to slide lower, indicating a continued loss in the daily momentum. Weekly RSI (14) slipped lower to 64.4 from 66.5, indicating a further loss in the weekly relative strength, but the index is still in the bullish state on the weekly perspective. Daily RSI (14) was lower at 46.3 from 48.9, indicating a further move into the mildly bearish zone. Weekly Stochastic continued to slide lower to 70.9 from 73, indicating the weekly down cycle is still intact, and daily Stochastic was lower at 43.7 from 53.9, and has made a dead-cross below the slow stochastic line. Readings from both the weekly and daily indicators showed that the FBM KLCI is in a correction or consolidation mode, and is losing its momentum. Hence, the key index is likely to further consolidate.
The short term trend of the FBM KLCI has turned down or bearish as the key index is now closing below all the short term moving averages. Nevertheless, the medium and longer term uptrend is still intact. The FBM KLCI had on Friday hit into the 60-day SMA and rebounded strongly from there, indicating there is strong buying support from the medium term investors. However, if the key index breaks below the 60-day SMA support currently at 1,737, then FBM KLCI will slide lower to cover the gap formed on May 6. Strong support is expected at 1,700 level. As the overall volume is still healthy, the market is likely to see continued rotational play on the second and third liners while the heavyweight blue-chips consolidate.
Last Friday, the Dow rebounded 41.08 points or +0.28% to close at 14,799.40. This week, the FBM KLCI is likely to trade within a range of 1,690 to 1,827, and today, the FBM KLCI is likely to trade within a range of 1,716 to 1,787.
This week's expected range: 1690 – 1827
Today’s expected range: 1716 – 1787
Resistance: 1766, 1776, 1787
Support: 1716, 1727, 1741