Stocks on Bursa Malaysia closed broadly lower last Friday with the benchmark FBMKLCI sharply lower in tandem with Asian equity markets as overall sentiment remained weak due to global growth concerns. The FBMKLCI fell 20.85 points or 1.14% to close at 1,808.88 after moving between 1,808.09 and 1,822.92 throughout the day. On a weekly basis, the key index lost 31.94 points from 1,840.82 on previous Friday. Decliners trounced advancers by 747 to 152 while 254 counters were unchanged. Total volume rose to 2.22 billion shares worth RM2.34 billion compared with 1.81 billion shares worth RM1.85 billion on Thursday. Weekly turnover decreased to 8.80 billion shares valued at RM8.77 billion, from 11.39 billion shares valued at RM9.43 billion the previous week.
The FBMKLCI was in a correction mode last week where it opened last Tuesday 5.75 points higher at 1,846.57, after a three-day extended weekend break, and surged to hit the intra-week high of 1,849.47. However, the rise found no follow through and the key index fell on heavy profit-taking pressure to close 7.28 points lower at its intra-day low of 1,833.54 points. Following the bearish performance of Wall Street overnight, the FBMKLCI fell another 9.22 points on Wednesday to close at 1,824.32. Thursday saw the benchmark index rebounding 5.41 points to close at 1,829.73, taking cue from the strong rebound on Wall Street overnight after the US Federal Reserve said it would not rush into raising interest rates. However, the bears returned on Friday and sent the FBMKLCI 20.85 points lower to close at 1,808.88 after hitting an intra-week low of 1,808.09.
On the weekly chart, the FBMKLCI formed a bearish black candlestick which indicates the bears were in control last week, and the key index is likely to fall further in the coming week. On the daily chart, the FBMKLCI formed a bearish long black candlestick with a downside runaway gap which indicates the market was being sold down in a panic situation, and hence, the downward momentum is likely to drag the key index lower to test the psychological support level of 1,800-point. Immediate downside support zone is at 1,805 to 1,800, while the overhead resistance zone is at 1,813 to 1,822.
Weekly MACD continued to slide southward and has crossed below the zero-line for the first time since it crossed above it on January 6th 2012, issuing an MACD sell signal based on the weekly chart and indicating the FBMKLCI has turned bearish for the long term. Daily MACD continued to slide lower and its histogram extended southward substantially after contracting upward for one bar, indicating a strong increased in the bearish momentum which is likely to drag the key index lower. Weekly RSI (14) plunged to 34.7 from 43.96, indicating the FBMKLCI has turned bearish from a mildly bearish state. Daily RSI (14) hooked downward to 26.3 from 35.4, indicating the key index has turned very bearish from a bearish state, and hence, is likely to fall further. Weekly Stochastic plunged lower to 10.6 from 18.5, is going deeper into the stochastic oversold zone, indicating very weak index strength and a technical rebound might be expected. Daily Stochastic fell to 5.8 from 11.4, indicating very weak index strength but is short term oversold. Hence, a rebound might be expected soon. Readings from both the weekly and daily indicators showed that the FBMKLCI is currently weak and bearish, and the key index is likely to further consolidate. However, oversold signals indicate that the FBMKLCI might stage a technical rebound soon.
The trend of the FBMKLCI is down and bearish as the key index is closing below the short, medium and long term simple moving averages (SMA). It is important to note that the FBMKLCI has closed below the critical long term 360-day SMA on last Friday, indicating the FBMKLCI has moved into a bearish phase, and more downside is expected in the near term. On the weekly chart, the FBMKLCI has closed below the 80-week SMA which is currently at 1,813 and is likely to head towards the 100-week SMA currently at 1,779.80. On the daily chart, the 400-day SMA support is currently at 1,804 and a break of this immediate support will see the FBMKLCI sliding lower toward the 420-day SMA support at 1,795, and the longer term 480-day SMA at 1,778 should give good cushion to the key index. From Elliott wave study, the FBMKLCI is currently in the impulse wave-C with downside targets of 1,805, 1,799 and 1,785, being the 127.2%, 138.2% and 161.8% projection targets after the key breached the 100% target of 1,821 last Friday. From Fibonacci retracement support level study, the FBMKLCI has retraced more that 23.6% for the impulse wave measuring from the pivot low of 1,660.39 on August 28th 2013 to the pivot high of 1,896.23 on July 8th 2014, and is heading towards the 38.2% Fibonacci retracement support level of 1,805 and the 50% retracement support level is at 1,778. The FBMKLCI is likely to test the immediate support zone of 1,805 to 1,799 support zone today. However, a stronger support is expected at the 1,778 to 1,785 levels.
Last Friday, the Dow fell 115.15 points or -0.69% to close at 16,544.10. This week, the FBM KLCI is likely to trade within a range of 1,753 to 1,890, and today, the FBM KLCI is likely to trade within a range of 1,788 to 1,837.
This week's expected range: 1753 – 1890
Today’s expected range: 1788 – 1837
Resistance: 1818, 1828, 1837
Support: 1788, 1798, 1803
Stocks to watch: ASIABIO, BORNOIL, CAREPLS, EURO, IOIPG, JIANKUN, LIIHEN, MBSB, PANTECH, SUPERMX
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