Stocks on Bursa Malaysia ended lower last Friday on late selling ahead of the weekend, dragged down by losses in selected heavyweights. The benchmark FBMKLCI fell 3.24 points or 0.17% to close at the intra-day low level of 1,873.38 points, after touching an intra-day high of 1,880.44. On a weekly basis, the key index gained 4.16 points from previous Friday’s 1,869.22. Losers edged gainers by 442 to 370, with 310 counters unchanged. Volume increased to 1.91 billion shares worth RM6.01 billion from 1.24 billion shares worth RM2.08 billion on Thursday. Weekly turnover fell to 7.56 billion shares worth RM13.62 billion, from previous week's 9.6 billion shares worth RM10.5 billion.
The FBMKLCI was basically in a technical rebound mode last week, where it opened last Monday 0.99 of a point lower at 1,868.23 and ended the day 6.42 points lower at 1,862.80, after touching an intra-day high of 1,871.14 points and an intra-week low of 1,862.27 during the day. The key index staged a rebound on Tuesday to close 4.77 points higher at 1,867.57, and the rebound momentum continued into Wednesday and Thursday which saw the FBMKLCI making further gains of 4.09 points and 4.96 points respectively over the two trading days. The FBMKLCI hit an intra-week high of 1,880.84 on Friday morning but the gains was off-set by heavy profit-taking due to month-end portfolio re-balancing activity by fund managers which dragged the key index to end in the negative territory.
On the weekly chart, the FBMKLCI formed a white spinning-top candlestick in a piercing-line position, which indicates uncertainty of market direction amid a technical rebound which reversed some of the losses suffered in the previous week. Hence, the FBMKLCI is likely to continue to consolidate in the coming week with a mild upward bias. On the daily chart, the FBMKLCI formed a bearish black inverted hammer candlestick, a top reversal candlestick pattern, which indicates heavy profit-taking activity after the index hit an intra-week high in the morning, and hence, the FBMKLCI is likely to further consolidate today. Immediate overhead resistance zone is at 1,880 to 1,889, while the immediate downside support zone is at 1,869 to 1,862.
Weekly MACD was almost flat, but its histogram contracted downward for a second bar, indicating further loss in momentum on the weekly chart. Daily MACD has turned slightly southward, while the daily histogram continued to contract upward, indicating a state of consolidation. Weekly RSI (14) hooked upward to 62.6 from 61.6, indicating a mild rebound on the weekly chart, and the weekly relative strength is still in the bullish state. Daily RSI (14) hooked downward to 54.6 from 57.6, indicating a strong pullback in the index to the mildly bullish zone. Weekly Stochastic slipped lower to 85.7 from 90.6 after making a dead-cross the previous week, indicating further correction might be expected ahead. Daily Stochastic was marginally higher at 46.9 from 45.5, indicating weakening of the daily upward momentum. In short, both the weekly and daily indicators are showing signs of conflicting signals which indicates that the FBMKLCI is likely to stay in a consolidation mode in the coming week.
The general trend of the FBMKLCI still remained up. However, with last Friday’s strong pullback, the key index has closed below the 10 and 15-day simple moving average (SMA), indicating likely further correction of the FBMKLCI in the coming week. Nonetheless, immediate downside support is expected at the 1,871, 1,870 and 1,868-point level provided by the 20, 5 and 30-day SMA, and stronger support is expected at 1,859 and 1,853 provided by the 50 and 60-day SMA. The overall market is likely to go into a sideways consolidation mode as there is no new catalyst after the end of the reporting season last week, and retail players are likely to stay sideline during the school holiday season and ahead of the FIFA World-cup next week. However, Invest Malaysia 2014 which will be held on June 9th and 10th may provide some catalyst to the market in running up to the event.
Last Friday, the Dow rose 18.43 points or 0.11% to close at 16,717.17. This week, the FBM KLCI is likely to trade within a range of 1,844 to 1,899, and today, the FBM KLCI is likely to trade within a range of 1,863 to 1,888.
This week's expected range: 1844 – 1899
Today’s expected range: 1863 – 1888
Resistance: 1878, 1883 1888
Support: 1863, 1868, 1870
Stocks to watch: ABRIC, EG, ELSOFT, GDEX, GHLSYS, KIMLUN, MASTER, MPHBCAP, OKA, PENTA, PENERGY, POS, SCOMIES, SEALINK, SOLID, TUNEINS
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