Stocks on Bursa Malaysia closed lower last Friday, pressured by pre-weekend selling and in line with regional markets, amid a major overnight sell-off on Wall Street. The FBMKLCI was 6.86 points or 0.37% lower at 1,852.66 after fluctuating between 1,848.19 and 1,854.89. On a weekly basis, the key index fell 3.95 points from previous Friday’s 1,856.61. Losers led gainers by 522 to 312, while 301 counters were unchanged. Volume rose to 2.22 billion shares worth RM1.97 billion from 2.08 billion shares worth RM2.32 billion on Thursday. Weekly turnover rose to 10.53 billion shares worth RM11.03 billion from previous week’s 10.44 billion shares valued at RM12.7 billion.
The FBMKLCI was basically in a consolidation mode last week. Despite the heavy losses on Wall Street due to sell-off in the technology and bio-technology sectors the previous Friday, the FBMKLCI rose 6.29 points to close Monday at 1,862.90 after opening 0.09 of a point lower at 1,856.52. However, Tuesday saw heavy profit-taking which dragged the benchmark FBMKLCI 10.59 points or 0.57% lower to 1,852.31. The key index rebounded on Wednesday to close 3.44 points or 0.19% higher at 1,855.75 after moving between a tight range of 1,851.41 and 1,856.03. Thursday saw the FBMKLCI moving in line with the regional markets, which rose 3.77 points to close at 1,859.52 after the US Federal Reserve's (Fed) March meeting revealed a more dovish stance than what investors expected. However, the market went into a pre-weekend selling mode on Friday to close 6.86 points lower at 1,852.66 after hitting an intra-week low of 1,848.19.
On the weekly chart, the FBMKLCI formed a bearish black spinning-top candlestick which indicates uncertainty of market direction with a downward bias, coupled with another spinning-top candlestick formed the previous week the FBMKLCI is likely to further consolidate in the coming week with a downward bias. On the daily chart, The FBMKLCI formed a black hammer candlestick after hitting an intra-week low of 1,848.1, a bottom reversal candlestick pattern which indicated buying support appearing after the key index breached the psychological support of 1,850. Hence, the FBMKLCI may continue to consolidate today until a confirmation of reversal is seen. Immediate downside support zone is at 1,848 to 1,839, while the overhead resistance zone is at 1,855 to 1,869.
Weekly MACD and its histogram were higher after making a golden-cross last week, indicating the bullish momentum is still intact on the weekly perspective. However, daily MACD and its histogram continued to slide lower, indicating a loss in momentum on the daily chart. Nonetheless, MACD is still above the signal-line, indicating current weakness is just a short term correction. Weekly RSI (14) hooked down to 60.8 from 62.2, indicating a mild correction and the weekly relative strength is still in the bullish state. However, daily RSI (14) fell lower to 57.8 from 63.7, indicating a weakness is developing as the daily relative strength of the FBMKLCI has turned mildly bullish from a bullish state. Weekly Stochastic continued to rise to 77.3 from 64.8, indicating the index’s strength is still strong on the weekly chart and continuation of the weekly up cycle. However, daily stochastic continued to slide lower to 72.8 from 74.9, indicating persistent weakness and continuation of the short term down cycle on the daily perspective. In short, readings from the weekly indicators showed that the FBMKLCI is still in a bullish state. On the contrary, readings from the daily indicators showed a state of consolidation which may persist.
The overall trend of the FBMKLCI still remained up. However, the immediate near term trend of the FBMKLCI has turned down or bearish as the key index has closed below the 5 and 10-day SMA last Friday. Hence, the FBMKLCI is likely to continue to correct downward in the coming week with a downside range of 1,846 to 1,831. The important downside support zone is at 1,836 to 1,822 provided by a cluster of medium term simple moving averages. However, as the index-linked stocks continue to consolidate, the small-cap and penny stocks are likely to continue with their rotational play.
Last Friday, the Dow fell 143.47 points or -0.89% to close at 16,026.75. This week, the FBM KLCI is likely to trade within a range of 1,831 to 1,877, and today, the FBM KLCI is likely to trade within a range of 1,842 to 1,861.
This week's expected range: 1831 – 1877
Today’s expected range: 1842 – 1861
Resistance: 1855, 1858 1861
Support: 1842, 1845, 1848
Stocks to watch: ANNJOO, ASIAPAC, BJAUTO, EG, GUOCO, ILB, KIMLUN, MERGE, MUIPROP, SCICOM, SYMPHNY, TALAMT, TEBRAU, TROP
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