Stocks on Bursa Malaysia closed lower last Wednesday on the lack of buying momentum ahead of an extended Hari Raya Aidilfitri holiday, dampened by weak regional tone as two more United States Federal Reserve (Fed) officials hinted on potential for reduction in stimulus this year, sparked by stronger-than-expected US economic data. Bursa Malaysia was closed for the Wednesday afternoon session through last Friday. The FBM KLCI fell 5.32 points or 0.3% to end at 1,779.32 after moving between 1,776.99 and 1,784.76 throughout the trading session. On a Friday-to-Wednesday basis, the key index lost 3.19 points from previous Friday's 1,782.51. Market breadth was positive with gainers led losers by 344 to 269, and 309 counters were unchanged. Total half day volume eased to 981.03 million shares worth RM1.05 billion from the 1.28 billion shares valued at RM1.64 billion on Tuesday. Average daily traded volume and value decreased to 1.28 billion shares and RM1.42 billion, compared with 1.59 billion shares and RM2.17 billion the previous week.
The FBM KLCI was in a consolidation mode last week as it was a holiday-shortened week with only two-and-a-half days of trading, it opened last Monday 3.51 points higher at 1,786.02 but ended the day 2.63 points higher at 1,785.14 after hitting an intra-week high of 1,788.93. Taking cue from a weak performance of the Dow overnight, the FBM KLCI opened Tuesday 4.65 points lower at 1,780.49 but rebounded to close 0.5 of a point lower at 1,784.64 after hitting an intra-day low of 1,779.47. Wednesday basically saw heavy profit-taking activity ahead of the long holiday which pushed the key index to close 5.32 points lower at 1,779.32 after hitting an intra-week low of 1,776.99.
On the weekly chart, the FBM KLCI formed a small black spinning-top candlestick which indicates consolidation with a downward bias. Hence, the FBM KLCI may continues its correction cum consolidation in the coming week. On the daily chart, the FBM KLCI formed a bearish black candlestick which almost engulf the white candlestick formed on Tuesday, signifying selling pressure ahead of the long holiday, and hence, the key index is likely to continue its downward trend to further consolidate today. Immediate downside support zone is at 1,776 to 1,766 while the overhead resistance zone is at 1,784 to 1,791.
Weekly MACD continued to slide lower, and has just made a dead-cross over the weekly signal-line, issuing a sell signal and indicating a deeper correction is expected ahead for the FBM KLCI. Daily MACD continued to slip lower, and its histogram extended downward after two sessions of contraction, indicating a resumption of the downward momentum. Weekly RSI (14) was lower at 62.5 from 63.6, indicating a further loss in the weekly relative strength, but is in the bullish zone. Daily RSI (14) was lower at 46.8 from 50.3, indicating the daily relative strength of the FBM KLCI has turned mildly bearish. Weekly Stochastic was lower at 71.6 from 78.5, and has crossed below the slow stochastic line, issuing a sell signal on the weekly chart. Daily stochastic hooked downward to 36.3 from 38.7, and is about to cross over the slow stochastic line, indicating weakness is developing. Readings from both the weekly and daily indicators showed that weakness is developing, and the FBM KLCI is likely to further consolidate or correct downward.
The short term trend of the FBM KLCI is sideways range-bound as the key index is closing below all the short term 5 to 30-day SMA but is staying just above the medium term 50 and 60-day SMA which are currently at 1,776.10, and a break of this critical support level will likely see the key index sliding lower to the 1766-point level, which happened to be the 50% retracement level for the range from the pivot low of 1,723.74 on June 25 to the pivot high of 1,811.65 on July 26. A further break of this critical 50% Fibonacci retracement level will see the FBM KLCI retracing to the 61.8% level at 1,757. For the coming week, the index-link blue-chips are likely to further consolidate as technical weakness has surfaced. However, lower liners, especially small caps and SPACs in the O&G sector, should stay active to attract keen rotational speculative retail interest.
Last Friday, the Dow fell 72.81 points or -0.47% to close at 15,425.51. This week, the FBM KLCI is likely to trade within a range of 1,744 to 1,827, and today, the FBM KLCI is likely to trade within a range of 1,768 to 1,792.
This week's expected range: 1744 – 1827
Today’s expected range: 1768 – 1792
Resistance: 1783, 1788, 1792
Support: 1768, 1772, 1775
Stocks to watch: DAYA, Faber, HOHUP, HOMERITZ, INSTACO, KARYON, SERSOL, SONA, SONA-WA