Stocks on Bursa Malaysia closed mixed last Friday with the benchmark FBMKLCI finished marginally lower on lacklustre trading. The FBMKLCI eased 0.75 of a point to 1,868.46 after moving between 1,866.28 and 1,869.84 throughout the day. Week-on week, the key index gained 2.35 points from 1,866.11 on previous Friday. Market breadth, however, was positive with gainers outpacing losers by 506 to 304 while 334 counters remained unchanged. Total volume rose to 2.71 billion shares worth RM2.27 billion from 2.51 billion shares worth RM2.11 billion on Thursday. Weekly turnover fell to 11.03 billion shares valued at RM8.65 billion for the holiday-shortened week, from 15.18 billion shares valued at RM11.57 billion recorded the previous week.
The FBMKLCI was basically moving in a sideways range-bound mode last week where the key index opened last week on Tuesday after the Merdeka Day holiday 0.65 of a point lower at 1,865.46 and slipped lower to hit the intra-day low of 1,860.67 before recovering to gain 1.58 points at 1,867.69 on last minute buying of selected blue-chips. Wednesday saw the benchmark index opened 4.57 points higher at 1,872.26 and surged to hit the intra-week high of 1,872.45 rights after opening. However, the rise could not sustain and the key index plunged on heavy profit-taking activity to hit the intra-week low of 1,853.48 before rebound to close 2.82 points lower at 1,864.87. Thursday saw the benchmark FBMKLCI finished higher, helped by buying interests in selected heavyweights to close 4.34 points higher at 1,869.21, and the key index lost 0.75 of a point on Friday to 1,868.46 after fluctuating in a narrow range.
On the weekly chart, the FBMKLCI formed a white hammer candlestick, a bottom reversal candlestick which indicates the appearance of buying support after the key index was being pushed lower initially. Hence, the FBMKLCI is likely to stay in consolidation in the coming week with a downward bias as the key index registered lower high and lower low last week, and is likely to move within a range of 1,840 to 1,880. On the daily chart, the FBMKLCI formed a small white spinning-top candlestick in Harami position which indicates indecision of market direction amid consolidation. Hence, the FBMKLCI is likely to continue to consolidate today. Immediate downside support zone is at 1,866 to 1,860, while the immediate overhead resistance zone is at 1,869 to 1,872.
Weekly MACD continued to slide lower but its histogram further contracted upward for the fourth consecutive bars, indicating a state of consolidation on the weekly perspective. Daily MACD climbed higher marginally but its histogram contracted downward, indicating consolidation on the daily chart. Weekly RSI (14) hooked upward slightly to 53.8 from 53, indicating a mild rebound and the index’s weekly relative strength is still mildly bullish. Daily RSI (14) was marginally lower at 49.7 from 50.3, indicating a mild pullback correction and the daily short term relative strength of the key index is in a neutral state with mild bearish bias. Weekly Stochastic was higher at 53 from 50.6, indicating a mild improvement of the index’s weekly strength and continuation of the weekly up cycle. Daily Stochastic was lower at 53.9 from 54.9, indicating a mild loss in the index strength and continuation of the weekly down cycle. In short, mixed signals from both the weekly and daily indicators showed that the FBMKLCI is in a state of consolidation.
The short and medium term trend of the FBMKLCI has turned sideways as the key index continued to move within a range of 1,850 to 1,880 over the last two weeks, and the key index is also trapped within a cluster of short and medium term moving averages. Hence, for the coming week, the FBMKLCI is likely to continue its sideways range-bound mode with a bearish bias, and a downside breakout of the psychological support of 1,850-point will see the FBMKLCI revisiting the recent low of 1,837. Nevertheless, the long term uptrend is still intact, and hence any short term weakness should be viewed as an opportunity to collect quality shares for longer term gains. On the broader market, rotational play of the small caps and penny stock is likely to continue while blue-chips go into consolidation with the recently concluded second-quarter results underperforming consensus expectations.
Last Friday, the Dow rose 67.78 points or 0.40% % to close at 17,137.36. This week, the FBM KLCI is likely to trade within a range of 1,838 to 1,891, and today, the FBM KLCI is likely to trade within a range of 1,862 to 1,873.
This week's expected range: 1838 – 1891
Today’s expected range: 1862 – 1873
Resistance: 1870, 1871, 1873
Support: 1862, 1864, 1866
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