Stocks on Bursa Malaysia closed lower last Friday amid heightened tensions in Ukraine which pushed world shares lower. The FBMKLCI continued its downtrend to end 4.3 points or 0.23% lower at 1,860.98 points after hovering between 1,859.95 and 1,868.29 points throughout the trading day. On a weekly basis, the benchmark index gained 8.29 points or 0.57% from previous Friday’s 1,852.69. Market breadth was negative as losers led gainers by 463 to 382 while 301 counters were unchanged. Turnover was lower at 1.93 billion shares worth RM1.89 billion from 2.02 billion shares worth RM1.96 billion recorded on Thursday. Average daily traded volume and value decreased mildly to 2.28 billion shares and RM2.16 billion, compared with the 2.35 billion shares and RM2.12 billion average, respectively, the previous week.
Small caps and penny stocks continued to dominate trading in Bursa Malaysia last week on the back of positive news flow and hot money flowing back into Malaysian equities amid tensions in Ukraine. The FBMKLCI rose on Monday, with banking stocks lifting the index on earnings optimism while rotational trading interest on lower liners stayed robust. The key index ended up 10.24 points on Monday at 1,862.93 after hitting an intra-week low of 1,849.68. Tuesday saw the FBMKLCI making another advancement of 3.49 points to 1,866.42. The key index hit an intra-week high of 1,870.89 on Wednesday before pulling back to close with a small gain of 0.93 points at 1,867.35. Heavy profit-taking appeared on Thursday will dragged the FBMKLCI 2.07 points lower to 1,865.28 and the correction continued into Friday with another loss of 4.3 points to close the week at 1,860.98.
On the weekly chart, the FBMKLCI formed a white candlestick with a long upper shadow which closed at the mid-range of the week, indicating heavy profit-taking activities which eroded much of the earlier gains. However, the bullish white candlestick still confirms the reversal signal issued by the white hammer-like candlestick formed the previous week. Hence, the FBMKLCI is likely to stay in a range-bound consolidation mode this week with a mild upward bias. On the daily chart, the FBMKLCI, however, formed a bearish engulfing candlestick pattern last Friday, indicating heavy profit-taking activity ahead of the weekend, and the selling pressure may continue into today which will see further correction on the benchmark index. Immediate downside support is anticipated at 1,855, follow by the psychological support level of 1,850 and 1,845, while the overhead resistance is at 1,870, follows by 1,872 and 1,882.
Weekly MACD and its histogram continued to climb higher, indicating further improvement on the weekly momentum. Daily MACD and its histogram, however, have turned downward, indicating loss of momentum on the daily perspective. Weekly RSI (14) hooked upward to 62.8 from 60.8, indicating a further improvement on the weekly relative strength to the bullish side. Daily RSI (14), however, continue to slide lower to 58.5 from 62.7, indicating the key index has turned mildly bullish from a bullish state. Weekly Stochastic was higher at 85.7 from 81.2, indicating continuation in the weekly up cycle and further strengthening of the index’s strength. Daily Stochastic, however, slipped lower to 75.1 from 84.2, and has made a dead-cross over the slow stochastic line, indicating the possible beginning of a short term down cycle and further consolidation of the FBMKLCI in the short term. In short, readings from the weekly indicators showed that the FBMKLCI is still bullish on the weekly perspective, while it is going into a correction on the daily horizon.
The overall technical picture of the FBMKLCI is still up and bullish as the key index is staying just 21.22 points or 1.13% from its all-time high level of 1,882.20. Nonetheless, with the bearish down move on last Friday the FBMKLCI has closed below the 5-day SMA, and hence, is likely to further consolidate in the immediate near term. Immediate downside support is provided by the 10, 15 and 20-day SMA at 1,857 to 1,855; and a breach of this short term moving averages support zone may see the FBMKLCI staging a deeper correction. Nevertheless, as the medium and long term uptrend of the FBMKLCI is still intact, current short term weakness may be viewed as an opportunity to accumulate quality blue-chips for medium to longer term gains. Rotational play on the small-cap and penny stock is likely to continue while the heavyweight blue-chips further consolidate.
Last Friday, the Dow fell 140.19 points or -0.85% to close at 16,361.46. This week, the FBM KLCI is likely to trade within a range of 1,828 to 1,892, and today, the FBM KLCI is likely to trade within a range of 1,849 to 1,876.
This week's expected range: 1828 – 1892
Today’s expected range: 1849 – 1876
Resistance: 1866, 1871 1876
Support: 1849, 1854, 1857
Stocks to watch: ARANK, CENSOF, CHOOBEE, COMCORP, DUTALND, FFHB, GLOMAC, HALEX, JAKS, KNM, MMODE, NYLEX, PRESTAR, SILKHLD, WELLCAL
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