Stocks on Bursa Malaysia ended lower Monday with selling spree as predicted by analysts based on spiking geopolitical risk and China growth worries, was extended after Chinese factory and retails sales data released yesterday indicated the economy was slowing. The benchmark FBMKLCI closed 8.34 points or 0.45% easier at 1,847.30, dampened by losses in index-linked heavyweights. Losers outpaced gainers by 636 to 214, with 296 counters unchanged. Total volume contracted to 1.93 billion shares, worth RM1.75 billion, from 2.49 billion shares, worth RM2.23 billion, recorded on Friday.
Taking cue from the weak performance of Wall Street last Friday, the FBMKLCI opened 2.5 points lower at 1,853.14 and rebounded to hit the intra-day high of 1,856.16 within the first fifteen minutes after opening. However, the rebound could not last and the key index plunged on heavy selling pressure to hit the intra-day low of 1,836.50 within the next ten minutes, losing 19.14 points at its worst. Nonetheless, the FBMKLCI rebounded from the low and move higher gradually for the rest of the day to recover some of the lost ground. Chart-wise, the FBMKLCI formed a bearish black hammer candlestick, a bottom reversal candlestick pattern which indicates the appearance of buying support after being sold down initially. Hence, the FBMKLCI is likely to stay in consolidation with mild rebound possibility today. Immediate downside support zone is at 1,840 to 1,836, while the overhead resistance zone is at 1,850 to 1,856.
MACD and its histogram continued to slide lower substantially, indicating an increased in the bearish momentum. RSI (14) plunged lower to 35.8 from 40.4, indicating the FBMKLCI has turned bearish for the short term. Stochastic was lower at 26.9 from 41.1, indicating very weak market strength and continuation of the short term down cycle. Readings from the indicators showed that the FBMKLCI is weak and bearish, and hence, is likely to continue to consolidate.
The short and medium term trend of the FBMKLCI is down as the key index is now closing below all the short and medium term moving averages. The long term uptrend of the FBMKLCI is also under threat now as the key index has pierced through the long term 200-day SMA and is closing just below it, but the key index managed to rebound strongly from the 250-day SMA after hitting it, indicating there were good buying support near the long term support levels. Hence, the FBMKLCI is likely to stay in consolidation with a bearish bias at the moment until a confirmed reversal is seen. On the broader market, rotational play on the small caps and penny stock is likely to continue but with slower momentum as can be seen from the greatly reduced volume.
Overnight, the Dow rose 100.83 points or 0.59% % to close at 17,131.97. Today, the FBM KLCI is likely to trade within a range of 1,817 to 1,875.
This week's expected range: 1828 – 1896
Today’s expected range: 1817 – 1875
Resistance: 1856, 1866, 1875
Support: 1817, 1826, 1837
Stocks to watch: AIRASIA, CENSOF, CWORKS, DESTINI, DGB, DUTALND, GOCEAN, IDEAL, LBS, LEONFB, MUH, SYSTECH, YGL
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