Stocks on Bursa Malaysia ended lower last Friday on continuous selling activities in key blue-chips and heavyweights as the market reacted to the rising geopolitical tensions sparked by the downing of Malaysia Airlines Flight MH17 over Ukraine and Israel’s ground offensive in Gaza. The benchmark FBMKLCI fell 10.17 points or 0.54% to 1,872.97, after moving between 1,871.4 and 1,877.34 throughout the day. On a weekly basis, the key index lost 10.18 points from 1,883.15 on previous Friday. Losers trounced gainers by 550 to 303 with 307 counters unchanged. Total volume fell to 2.38 billion units valued at RM2.182 billion from 2.12 billion units valued at RM2.21 billion. Weekly turnover for the holiday-shortened week declined to 6.92 billion shares valued at RM9.005 billion from 8.89 billion shares valued at RM10.88 billion recorded the previous week.
The FBMKLCI opened last Monday 0.62 of a point higher at 1,883.77 and fluctuated in a narrow range of between 1,882.22 and 1,886.87 throughout the day before ending 1.72 points higher at 1,884.87, ahead of the Nuzul Al-Quran holiday on Tuesday. Wednesday saw the key index rebounded strongly to do a catch-up to opened 6.72 points higher at 1,891.59 and surged to hit the intra-week high of 1,895.02 before profit-taking activity trimmed gains to close just 1.84 points higher at 1,886.71. Thursday saw continued profit-taking which dragged the key index 3.57 points lower at 1,883.14 and follow by another 10.17 loss on Friday.
On the weekly chart, the FBMKLCI formed a bearish black inverted hammer candlestick, a top reversal candlestick pattern which indicates heavy profit-taking or distribution activity after the key index hit an intra-week high of 1,895.02, and hence, the FBMKLCI is likely to slide lower into a deeper correction after registering a fresh record high of 1,892.65 on July 8th. On the daily chart, the FBMKLCI formed a black spinning-top candlestick with a bearish downside breakaway gap of 8.53 points which indicated some panic selling on market open last Friday due to the MAS flight MH17 incident, and the possible beginning of a short term downtrend. Hence, the FBMKLCI is likely to stage further correction or consolidation in the coming week with immediate downside support zone pegged at 1,870 to 1,860, while the overhead resistance zone is at 1,890 to 1,896.
Weekly MACD turned downward and made a bearish dead-cross over the signal-line, issuing a sell signal on the weekly chart. Daily MACD slipped lower with its histogram extended southward, indicating a strong increased in the bearish downward momentum. Weekly RSI (14) was lower at 57.6 from 62.4, indicating a loss in the weekly relative strength to a mildly bullish state from a bullish state before. Daily RSI (14) fell sharply to 41.7 from 50, indicating the key index has turned short term bearish on the daily perspective. Weekly Stochastic was lower at 71.8 from 81.8, indicating weakening of the index’s strength and continuation of the weekly down cycle. Daily Stochastic plunged lower to 28.4 from 42.3, indicating a bearish down move and continuation of the daily down cycle. In short, the weekly indicators showed that the FBMKLCI has just started its weekly correction cycle, while the daily indicators showed that more downside correction is expected ahead.
With the bearish gap down on last Friday, the FBMKLCI has opened and closed below the medium term 60-day simple moving average (SMA), and the short term trend of the FBMKLCI has turned down and bearish. This could mark the beginning of a short term downtrend with immediate downside zone at the 100 to 120-day SMA support zone of 1,861 to 1,852. Nevertheless, the long term trend of the FBMKLCI is still up, and the current downtrend is expected to be shallow as it is a panic triggered event which the market is expected to digest the negative impact of the incident over time and resume its uptrend later with a year-end target of 1,900. In fact, the current downtrend actually posted an opportunity to buy into weakness on quality shares for longer term gain.
Last Friday, the Dow rose 123.37 points or 0.73% to close at 17,100.18. This week, the FBM KLCI is likely to trade within a range of 1,840 to 1,918, and today, the FBM KLCI is likely to trade within a range of 1,864 to 1,883.
This week's expected range: 1840 – 1918
Today’s expected range: 1864 – 1883
Resistance: 1876, 1879, 1883
Support: 1864, 1867, 1870
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