Stocks on Bursa Malaysia closed lower last Friday as equity market sentiment showed a short-term downturn as a confluence of negative news had impacted the market sentiment, including the weak crude palm oil prices, mostly disappointing corporate results for the quarter ended June 30, 2014, weakness in Europe and growing geopolitical risks from the Ukraine-Russia conflict. The FBMKLCI shed 9.57 points or 0.51% to 1,866.11, its lowest level of the day, after moving between 1,866.11 and 1,879.53 throughout the day. On a weekly basis, the key index fell 4.88 points from previous Friday’s 1,870.99. Losers outpaced gainers 660 to 251 while 262 counters remain unchanged. Total volume rose to 3.22 billion shares worth RM2.85 billion from 3.01 billion shares worth RM2.2 billion on Thursday. Weekly turnover fell to 15.18 billion shares, valued at RM11.57 billion, from 22.67 billion shares, worth RM13.40 billion, recorded the previous week.
The FBMKLCI opened last Monday 1.93 points higher at 1,872.92, but fell 8.68 points to 1,862.31 after hitting intra-week low of 1,859.58 on lack of domestic catalysts and uninspiring earnings season. The key index went into consolidation on Tuesday to close 0.49 of a point lower at 1,861.82 after moving between 1,859.75 and 1,866.57 throughout the day. The FBMKLCI staged a strong rebound on Wednesday with a gain of 10.56 points to 1,872.38, propped up by gains on blue-chips especially Hong Leong-related counters. The benchmark index was mostly in red throughout Thursday, but managed to gain 3.3 points to 1,875.68 on last minute buying of selected blue-chips. Friday saw heavy profit-taking activity ahead of the long Merdaka Day holiday weekend after opening at the intra-week high of 1,879.53 but ended 9.57 points lower at 1,866.11.
On the weekly chart, the FBMKLCI formed a bearish black spinning-top candlestick in dark-cloud-cover position, indicating heavy profit-taking activity amid uncertainty of market direction with a bearish bias. Hence, the FBMKLCI is likely to further correct in the coming week with immediate downside support at 1,859, 1,850 and 1,837. On the daily chart, the FBMKLCI formed a bearish Marubozu candlestick in engulfing pattern, indicating heavy selling pressure on last Friday where the index opened at the highest point of the day and ended at the lowest point. Hence, the FBMKLCI is likely to continue sliding lower today if the selling pressure continues. Immediate downside support zone is at 1,859 to 1,850, while the immediate overhead resistance zone is at 1,870 to 1,879.
Weekly MACD continued to slide lower but its histogram contracted upward slightly, indicating a state of consolidation on the weekly chart. Daily MACD hooked downward slightly, but its histogram contracted downward, indicating a loss in daily momentum. Weekly RSI (14) hooked downward to 53 from 54.8, indicating a mild pullback correction on the weekly perspective, while daily RSI (14) fell to 48 from 54.3, indicating the short term relative strength of the FBMKLCI has again turned mildly bearish from a mildly bullish state. Weekly Stochastic was higher at 50.6 from 35.8, indicating further strengthening of the key index and continuation of the up cycle. Daily Stochastic was higher at 79.4 from 77.9 and showed sign of tapering, indicating a reduction in upward momentum. Mixed readings on both the weekly and daily indicators showed that the FBMKLCI is likely to further consolidate in the coming week.
The short term trend of the FBMKLCI has again turned down or bearish with the bearish closing on last Friday as the key index has again closed below the 5 and 10-day simple moving average (SMA). Hence, the FBMKLCI is likely to slip lower to find support from the 15 and 20-day SMA at 1,865-point level, and the 120-day SMA is also currently at the same level, making it an immediate critical support, and a break of the moving average support level at 1,865, which is quite likely to happen, will see the FBMKLCI sliding lower to find support at 1,859, follow by 1,855 and 1,850. Nonetheless, the long term trend is still up. Hence, for the coming holiday-shortened week the FBMKLCI is likely to stay in correction and consolidation mode within a range of 1,879 to 1,839. Rotational play on small caps and penny stocks is also likely to slow down.
Overnight, US market was closed for Labour Day holiday, and over in Europe, the DAX rose 8.86 points or 0.09 % to close at 9479.03. This week, the FBM KLCI is likely to trade within a range of 1,837 to 1,899, and today, the FBM KLCI is likely to trade within a range of 1,848 to 1,892.
This week's expected range: 1837 – 1899
Today’s expected range: 1848 – 1892
Resistance: 1875, 1884, 1892
Support: 1848, 1857, 1861
Stocks to watch: ABRIC, CAREPLS, CENSOF, EFFICEN, INCKEN, KPS, MBSB, PFCE, SIGN, TONGHER, YTLE
Disclaimer: The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. The Stocks to watch is not a recommendation to buy or sell the particular stock, as it is only meant for graduates of the "Share Trading the Pro Way" course as case study. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.