Stocks on Bursa Malaysia closed lower last Friday, weighed down by losses in selected blue-chips and heavyweights amid Wall Street’s overnight losses with the Dow losing more than 300-points. The FBMKLCI fell 8.02 points or 0.43% to 1,863.34, after opening 5.25 points lower at 1,866.11 and moved between 1,861.6 and 1,868.01 throughout the day. On a Friday-to-Friday basis, the benchmark index lost 14 points from previous Friday’s 1,877.34. Losers thumped gainers by 603 to 285, with 296 counters unchanged. Total volume decreased to 2.1 billion units valued at RM1.9 billion compared with 2.5 billion units valued at RM2.5 billion on Thursday. Weekly turnover for the holiday-shortened three-day trading week fell to 6.71 billion shares valued at RM6.77 billion from 11.04 billion shares valued at RM9.9 billion the previous week.
The FBMKLCI opened last Wednesday 6.74 points higher at 1,884.08 after closing for Hari Raya Aidilfitri holiday on Monday and Tuesday. It surged to the intra-week high of 1,886.39 shortly after opening but the rise could not sustain and the key index fell on heavy profit-taking wiping out almost all earlier gain to end the day one point higher at 1,878.34. Thursday saw the FBMKLCI rebounded to open 3.34 points higher at 1,881.68 but heavy profit-taking on selected blue-chips continued to drag the key index lower to end 6.98 points lower to 1,871.36. The FBMKLCI continued its downtrend on Friday to lose another 8.02 points to 1,863.34 after Wall Street tumbled overnight.
On the weekly chart, the FBMKLCI formed a bearish engulfing candlestick pattern, a bearish reversal pattern which indicates heavy selling pressure on the index-linked stocks. Therefore, the FBMKLCI is likely to further correct downward in the coming week. On the daily chart, the FBMKLCI formed a black spinning-top candlestick which gap away from the previous candlestick, indicating uncertainty of market direction and consolidation, and hence, the FBMKLCI is likely to further consolidate today with immediate downside support zone at 1,860 to 1,850, while the immediate overhead resistance zone is at 1,870 to 1,886.
Weekly MACD and its histogram continued to slide southward, indicating an increased in the bearish momentum. Daily MACD and its histogram also extended southward, indicating an increased in the bearish momentum, and as MACD is below the zero-line, the FBMKLCI is bearish for the medium term. Weekly RSI (14) plunged lower to 52.8 from 59, indicating heavy correction and the weekly relative strength of the key index is turning neutral from a mildly bullish state. Daily RSI (14) fell to 36.5 from 42.3, indicating the daily relative strength of the FBMKLCI has turned bearish. Weekly Stochastic slipped lower to 46.9 from 62.7, indicating the key index has further weakened and continuation of the weekly down cycle. Daily Stochastic fell to 19.4 from 29.9, and has crossed below the slow stochastic line, issuing a sell signal and indicated the possible beginning of a fresh down cycle after the recent rebound. In short, readings from the weekly indicators showed that the FBMKLCI is starting to show signs of bearishness on the weekly perspective, and the daily indicators showed a more bearish scenario on the daily perspective. Hence, the FBMKLCI is likely to further consolidate in the coming week.
The short and medium term trend of the FBMKLCI has turned down as the key index is closing below the short and medium term moving averages. Now, the FBMKLCI has just breached the 100-day SMA at 1,864-point and it looks set to slide lower to test the support of the 120-day SMA currently at 1,858-point, and a break of the 120-day SMA will likely see the FBMKLCI plunging towards the 150-day SMA currently at 1,850-point, a critical psychological support level. From the angle of Elliott wave analysis, the breakdown of the FBMKLCI below 1,867-point support level last week has confirmed the formation of wave-C with a down side target of 1,850-point, a 100% wave-C projection, follow by the 161.8% downside projection target of 1,833. For the coming week, the FBMKLCI is likely to stay in consolidation mode with a bearish bias.
Last Friday, the Dow fell 69.93 points or -0.42% to close at 16,493.37. This week, the FBM KLCI is likely to trade within a range of 1,829 to 1,911, and today, the FBM KLCI is likely to trade within a range of 1,854 to 1,874.
This week's expected range: 1829 – 1911
Today’s expected range: 1854 – 1874
Resistance: 1867, 1870, 1874
Support: 1854, 1857, 1860
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