Stocks on Bursa Malaysia closed lower last Friday as investors trimmed their positions ahead of the weekend amid bearish external sentiment. The local market performance was in line with the weakening global equity market on expectation of an early move by the US Federal Reserve to slow its support in the world's largest economy, and renewed concerns came after the release of data that showed a strengthening labour market and higher inflation. The FBM KLCI fell 3.97 points or 0.22% to close at 1,788.24 after moving between 1,786.76 and 1,791.26 throughout the day, while on a weekly basis, the key index gained 8.92 points from previous Wednesday's close of 1,779.32. Losers led gainers by 422 to 379 with 303 counters unchanged. Total turnover fell to 2.13 billion shares worth RM1.61 billion from Thursday's 2.41 billion shares worth RM2.07 billion. Weekly turnover almost tripled to 10.33 billion shares valued at RM8.97 billion from previous week's 3.85 billion shares valued at RM4.25 billion.
After a long Hari Raya break, the FBM KLCI opened last Monday 0.43 point higher at 1,779.75 and slipped to the intra-week low of 1,777.87 before rebounding to close 5.25 points higher at 1,784.57. Tuesday saw stocks on Bursa Malaysia closed broadly higher with the FBM KLCI rising 10.52 points to a two-week high to close at 1,795.09. Taking cue from the rebound of the Dow overnight, the FBM KLCI opened Wednesday higher with an upside gap of 4.86 points at 1,799.95 and surged to the intra-week high of 1,801.26 before closing 1.36 points lower at 1,793.73. The market continued its correction into Thursday with a loss of 1.52 points at 1,792.21, and another 3.97 points on Friday to end the week at 1,788.24.
On the weekly chart, the FBM KLCI formed a white inverted hammer candlestick, a bottom reversal candlestick pattern which indicates the appearance of buying interest after two weeks of profit taking correction, however, selling pressure which appeared later pushed the key index to close the week off high. On the daily chart, the FBM KLCI formed a black spinning-top candlestick which indicates indecision of market direction but with a bearish bias. Hence, the FBM KLCI is likely to continue to consolidate in the coming week with an immediate downside support zone at 1,777 to 1,766, while the overhead resistance zone is pegged at 1,801 to 1,811.
Weekly MACD has made a dead-crossed below the signal-line, issuing a sell signal and indicating more consolidation is to be expected ahead. Daily MACD has turned downward after four sessions of continuous rise, signifying the technical rebound was over, and the key index is likely to further consolidate. Weekly RSI (14) hooked upward to 64.3 from 62.5, indicating the FBM KLCI is still in the bullish state on the weekly perspective. Daily RSI (14), however, slipped lower to 51.6 from 54.6, indicating the key index is losing its relative strength and has turned neutral from a mildly bullish state. Weekly Stochastic continued to slide lower to 65.6 from 71.6, indicating the index is losing is weekly strength and continuation of the weekly down cycle. Daily stochastic has hooked downward to 54.9 from 60, reflecting a pullback correction. Readings from the weekly indicators showed that the FBM KLCI is losing its weekly momentum, likewise, readings from the daily indicators also point to the same thing, indicating more consolidation or correction is to be expected for the FBM KLCI.
The immediate short term trend of the FBM KLCI remained sideways range-bound within an immediate range of 1,766 to 1,811. Nevertheless, the long term trend still remained up. The FBM KLCI has now closed below the 5 and 20-day SMA but is still staying above the 10 and 30-day SMA, indicating a state of range-bound consolidation, and a break of the lower support of 1,786 provided by the 10 and 30-day SMA will see the key index slipping lower to the next support level of 1,777 provided by the 60-day SMA, and a further break of the critical support at 1,766 will see the key index turning very bearish with a downside target or support of 1,752 and 1,734 provided by the 100 and 120-day SMA.
Last Friday, the Dow fell 30.72 points or -0.20% to close at 15,081.47. This week, the FBM KLCI is likely to trade within a range of 1,753 to 1,824, and today, the FBM KLCI is likely to trade within a range of 1,781 to 1,795.
This week's expected range: 1753 – 1824
Today’s expected range: 1781 – 1795
Resistance: 1790, 1793, 1795
Support: 1781, 1784, 1786
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