Stocks on Bursa Malaysia ended the holiday-shortened week easier, in tandem with the weakening ringgit on further foreign liquidation. The FBMKLCI fell 11.02 points, or 0.6%, to close at 1,813.01 on last Thursday, after opening at 1,824.60 and moved between 1,811.18 and 1,831.33 throughout the day. On a weekly basis, the FBMKLCI declined 13.6 points or 0.74% from 1,826.61 on previous Friday. Losers outnumbered gainers by 571 to 245, while 306 counters were unchanged. Volume eased to 1.711 billion shares valued at RM2.184 billion from 2.36 billion shares worth RM2.703 billion on Wednesday. Weekly turnover declined to 6.139 billion shares worth RM6.627 billion from the 9.14 billion shares valued at RM9.66 billion, recorded the previous week.
The FBMKLCI was basically in a correction mode in the three trading day’s holiday-shortened week. The benchmark index opened last Monday 1.19 points lower at 1,825.42 but rebounded strongly to close the day 8.36 points higher at 1,834.97 after hitting an intra-week high of 1,837.35. Bursa Malaysia was closed on Tuesday to celebrate Prophet Muhammad’s birthday. The FBMKLCI saw heavy selling pressure when market resumed on Wednesday to finish 10.94 points lower at 1,824.03, and the selling pressure continued into Thursday which saw the FBMKLCI losing another 11.02 points to end the week on Thursday at 1,813.01 after hitting an intra-week low of 1,811.18.
On the weekly chart, the FBMKLCI formed a bearish black inverted hammer candlestick which indicates sellers dominated the market after an initial rebound attempt on Monday. The black candlestick also continued the downtrend from the previous two weeks. On the daily chart, the FBMKLCI formed a bearish black candlestick with a longer upper shadow which indicates an initial rebound but selling pressure dominated the floor at latter part of the day which sent the key index to close in the negative territory. Hence, the FBMKLCI is likely to further consolidate in the coming week with a bearish bias. Immediate downside support zone is at 1,811 to 1,780 with 1,800 being the critical psychological support level, while the overhead resistance zone is at 1,822 to 1,838.
Weekly MACD continued to slide lower and has made a dead-cross over the signal-line, issuing a sell signal, and it also indicated the key index is going into a consolidation phase on the on the weekly perspective. Daily MACD also continued to slip lower and has crossed below the zero-line, issuing a sell signal and indicated the FBMKLCI has turned bearish for the medium term. Weekly RSI (14) was lower at 54.1 from 57.9, indicating the weekly relative strength of the FBMKLCI is turning mildly bullish from a more bullish reading. Daily RSI (14) was lower at 40.1 from 44.9, indicating the key index is turning bearish for the short term on the daily perspective. Weekly Stochastic slipped lower to 49.8 from 69.1, indicating the key index has further weakened, and has gone into a bearish weekly down cycle. Daily Stochastic has again hooked downward to 10.1 from 12.1, and has made a dead-cross over the slow stochastic line, indicating a second down leg has just started. In short, both the weekly and daily indicators showed that the FBMKLCI is turning bearish and is likely to further correct downward.
The short term trend of the FBMKLCI is down and bearish, and the medium term trend has also just turned bearish as the key index has closed below the 50 and 60-day SMA on Thursday, and hence, more short term weakness is expected on the FBMKLCI which may see the key index sliding lower to the 1,800 to 1,780 critical support zone. Based on Elliott waves study, the FBMKLCI has gone into the A-B-C corrective wave after completing its five wave impulse waves which started on August 28, 2013, and completed on December 31st, 2013. The current A-B-C corrective wave sees downside targets of 1,801, 1,792 and 1,779, and a further break of the 1,779 support level will see the c-leg extending to 1,742. Based on the Fibonacci retracement study, the FBMKLCI has closed below the 23.6% retracement support level and is now heading towards the 38.2% Fibonacci support level at 1,798. Nevertheless, the long term trend is still up.
Last Friday, the Dow rose 41.55 points or +0.25% to close at 16,458.56. This week, the FBM KLCI is likely to trade within a range of 1,777 to 1,863, and today, the FBM KLCI is likely to trade within a range of 1,785 to 1,851.
This week's expected range: 1777 – 1863
Today’s expected range: 1785 – 1851
Resistance: 1825, 1838, 1851
Support: 1785, 1798, 1805
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