Stocks on Bursa Malaysia closed broadly lower last Friday on a bearish note as negative regional sentiment continued to weigh on the market. The FBMKLCI was down 2.61 points or 0.14% to close at its intra-day high of 1,840.5, after hitting an intra-day low of 1,829.24 points earlier in the day. Week-on-week, the key index fell by 8.99 points from 1,849.49 on previous Friday. Market breadth was negative with losers edging gainers by 475 to 322 while 327 counters remained unchanged. Total volume increased to 2.49 billion shares worth RM1.79 billion from 2.39 billion shares worth RM1.84 billion on Thursday. Weekly turnover increased to 12.53 billion shares valued at RM10.11 billion from previous week’s 8.84 billion shares valued at RM8.16 billion.
The FBMKLCI corrected for a third straight week last week following regional weakness after the global central bankers cautioned that the Eurozone’s extended slowdown could stall global economic recovery. The FBMKLCI opened last Monday 2.16 points higher at 1,851.65 following the positive close of the Dow on previous Friday. The key index surged to hit the intra-week high of 1,851.91 briefly after opening but selling pressure which emerged sent the index to close 3.44 points lower at 1,846.05 after hitting an intra-day low of 1,843.85. Tuesday saw the benchmark index declined by 5.86 points to 1,840.19 after hitting an intra-day low of 1,832.54 earlier of the day, despite regional bourses' bullish performances after positive data for China's factory activity. The FBMKLCI closed almost unchanged on Wednesday at 1,840.08 easing 0.11 point after rebounding to an intra-day high of 1,844.77. Thursday saw the benchmark FBMKLCI rebounded to close 3.03 points higher at its intra-day high at 1,843.11, after opening at its intra-day low of 1,835.64 points. However, the rebound on Thursday saw no follow through on Friday and the key index fell to hit a fresh intra-week low of 1,829.24 in early trade but manage to crawl back some of the losses to close at the highest point of the day at 1,840.50 points.
On the weekly chart, the FBMKLCI formed a bearish black hammer-like candlestick which closed slightly below the mid-range of the week, and the key index also registered a new low of 1,829.24 compared with the previous week’s low of 1,836.50, indicating the bears were in control for the week. Hence, the FBMKLCI is likely to stay in consolidation in the coming week. On the daily chart, the FBMKLCI formed a bullish white hammer candlestick which closed at the highest point for the day after hitting a fresh low, indicating the bears were initially in control but later the bulls took over and recover most of the losses. Hence, the FBMKLCI is likely to stage a technical rebound today. Immediate overhead resistance zone is at 1,845 to 1,851, while the immediate downside support zone is at 1,836 to 1,829.
Weekly MACD and its histogram continued to slide lower, indicating further loss in momentum on the weekly perspective. Daily MACD was marginally lower but its histogram further contracted upward for the third bar, indicating a reduction in the bearish momentum on the daily perspective. Weekly RSI (14) was lower at 43.8 from 46.9, indicating the key index is getting more bearish in the mildly bearish zone. Daily RSI (14) hooked downward to 35.8 from 37.4, indicating a mild pullback after a technical rebound on Thursday, and the FBMKLCI is still in a bearish state. Weekly Stochastic was lower at 22.9 from 35.2, indicating further weakening of the key index on the weekly timeframe. Daily Stochastic, however, hook upward to 21.8 from 19.7 and has made a golden-cross over the slow stochastic line, issuing a stochastic buy signal. Hence, the FBMKLCI may stage a technical rebound after hitting the stochastic oversold zone. In short, readings from the weekly indicators showed a bearish outlook of the FBMKLCI. However, signs are there on the daily indicators that the FBMKLCI may stage a rebound as the downward momentum is reducing and a bullish crossover was seen on the stochastic oscillator.
The trend of the FBMKLCI still remained down and bearish as the key index continued to stay below the 200 and 240-day simple moving average (SMA). However, the bullish signal issued by the white hammer candlestick last Friday showed that the FBMKLCI is ready for a technical rebound. On top of that, the month of September and the third quarter is coming to a close on Tuesday, hence, some active window dressing activity by the fund manager is likely to push the key index higher ahead of the Budget 2015 which is scheduled on 10th October. On the broader market, speculative rotational play on the small caps and penny stocks is likely to continue to keep the market alive.
Last Friday, the Dow rose 167.35 points or 0.99% to close at 17,113.15. This week, the FBM KLCI is likely to trade within a range of 1,806 to 1,874, and today, the FBM KLCI is likely to trade within a range of 1,821 to 1,851.
This week's expected range: 1806 – 1874
Today’s expected range: 1821 – 1851
Resistance: 1844, 1848, 1851
Support: 1821, 1825, 1832
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