Stocks on Bursa Malaysia closed lower last Friday on persistent selling pressure ahead of the weekend amid lack of positive market leads, and weaker-than-expected economic data from China and the Ukraine tension continue to cloud local sentiment. The FBMKLCI declined 13.74 points or 0.76% to close at 1,805.12 after moving between 1,817.08 and 1,805.12. On a weekly basis, the benchmark index slumped 27.14 points, or 1.48% from previous Friday’s 1,832.26. Market breadth was bearish with losers outpacing gainers by 543 to 210, with 331 counters unchanged. Volume fell to 1.37 billion shares worth RM2.08 billion from Thursday’s 1.70 billion shares worth RM2.15 billion. Weekly turnover fell to 8.45 billion shares worth RM10.34 billion from previous week’s 10.55 billion shares worth RM10.57 billion.
The FBMKLCI fell into correction mode last week sparked by external events from Ukraine tension and weak data from China. It opened last Monday lower with a downside gap of 5.88 points at 1,826.38 and slipped lower to hit the intra-day low of 1,817.20, losing 15.06 points at its worst before rebounding to close 10.2 points lower at 1,822.06. The FBMKLCI rebounded on Tuesday with a gain of 6.49 points to end at 1,828.55. However, selling pressure continued to appear on Wednesday with the benchmark index falling 9.95 points to close at 1,818.6 after hitting an intra-day low of 1,813.49. The benchmark index staged a weak rebound on Thursday with a mild gain of 0.26 of a point to close at 1,818.86 after moving between a narrow range of 1,816.76 and 1,821.57 points throughout the day, and heavy selling pressure appeared on Friday which saw the key index closing at the lowest point of the week.
On the weekly chart, the FBMKLCI formed a bearish black candlestick which served to confirm the top reversal signals issued by the previous two week’s candlestick of a hanging-man followed by a Doji with long lower shadow, and the downside breakaway gap also indicated selling on fear. Hence, the FBMKLCI is likely to further consolidate or correct downward in the coming week. On the daily chart, the FBMKLCI formed a bearish long black Marubozu candlestick which indicated heavy selling pressure on Friday, and a break of the immediate support at 1,813 also indicated the bulls have given up and the bears have taken over. Hence, the FBMKLCI is expected to slip lower this week towards the 1,800 to 1,770 support zone with 1,800-point being the critical psychological support level.
Weekly MACD slipped lower, and its histogram extended southward, indicating an increase in the weekly bearish momentum. Daily MACD slipped lower and made a dead-cross over the zero-line, indicating the FBMKLCI has turned bearish for the medium term. Weekly RSI (14) plunged lower to 49.5 from 58.6, indicating the weekly relative strength of the FBMKLCI has turned neutral with a bearish bias. Daily RSI (14) was lower at 40.4 from 47, indicating the daily relative strength of the key index has turned bearish from a mildly bearish state. Weekly Stochastic hooked downward to 48.5 from 56.1 and has made a dead-cross over weekly the slow stochastic line, issuing a sell signal, and indicated the up cycle is over and a down cycle has just started on the weekly perspective. Daily Stochastic plunged lower to 12.5 from 33.7, indicating a very weak state of the FBMKLCI and continuation of the daily down cycle; it has also just entered the short term oversold zone and a rebound might be expected. In short, readings from both the weekly and daily indicators showed that the FBMKLCI has turned bearish and further downward correction is expected ahead.
With the bearish downward move of the FBMKLCI last Friday, the key index has staged a bearish breakout from the sideways range of 1,813 to 1,838, and the short term trend has turned down. Immediate downside support zone is at 1,800 to 1,770 with immediate key support level pegged at 1,800, 1,796, and 1,785. The downward move of the FBMKLCI has re-ignite the possible formation of the A-B-C corrective wave which started from 1,882 point, and completed it’s A-wave at 1,769.80 and B-wave at 1,838.69, and now the C-wave is unfolding with a possible downside targets of 1,769, follow by 1,728 and 1,658. The long term trend is still up at the moment, and the critical long term 200-day SMA support is at 1,793, follow by the 240-day SMA support at 1,781 and the 360-day SMA support at 1,736 at the moment.
Last Friday, the Dow fell 43.22 points or 0.27% to close at 16,065.67. This week, the FBM KLCI is likely to trade within a range of 1,773 to 1,852, and today, the FBM KLCI is likely to trade within a range of 1,789 to 1,829.
This week's expected range: 1773 – 1852
Today’s expected range: 1789 – 1829
Resistance: 1813, 1821, 1829
Support: 1789, 1797, 1801
Stocks to watch: CYMAO, KNM, MMSV, SCOPE, SOLID, TUNEINS
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