Stocks on Bursa Malaysia closed lower last Friday, in contrast to the overnight US market, which rose following positive retail sales data. The benchmark FBMKLCI fell 11.58 points or 0.66% to 1,732.99, after opening 0.47 point higher at 1,745.04. Week-on-week, the FBMKLCI declined 16.38 points from previous Friday’s 1,749.37. Losers led gainers by 689 to 177, while 252 counters were unchanged. Total volume advanced to 1.46 billion units worth RM1.78 billion from 1.23 billion units worth RM1.50 billion on Thursday. Weekly turnover decreased to 6.58 billion shares, worth RM8.12 billion from 9.76 billion shares, worth RM11.16 billion on previous week.
The benchmark FBMKLCI opened last Monday 0.99 of a point lower at 1,748.38 and rebounded to hit the intra-day high of 1,750.42 before losing 8.53 points to close at 1,740.84. Tuesday saw the key index closing 2.74 points lower at 1,738.10 after hitting an intra-week low of 1,730.77. The FBMKLCI staged a strong technical rebound on Wednesday to close 27.42 points or 1.58% higher to 1,765.52. However, the rebound found no follow through and the key index fell 20.95 points or 1.19% to 1,744.57, and Friday saw another loss of 11.58 point to close the week at 1,732.99.
On the weekly chart, the FBMKLCI formed a bearish black inverted hammer-like candlestick, a weak bottom reversal candlestick pattern which indicates the bulls tried to fight back, but its effort was hampered by bigger selling pressure. Hence, the FBMKLCI is likely to slip lower in the coming week to test the lower support zone of 1,730 to 1,700. On the daily chart, the FBMKLCI formed a bearish black candlestick which indicates heavy selling pressure on Friday, and hence, the FBMKLCI is likely to slide lower today. Immediate downside support zone is at 1,730 to 1,718, while the immediate overhead resistance zone is at 1,748 to 1,765.
Weekly MACD and its histogram continued to slide lower, indicating an increased in the bearish momentum. Daily MACD re-hooked downward after hooking up for one session, but its histogram further contracted upward, indicating a state of consolidation on the daily perspective. Weekly RSI (14) was lower at 30.6 from 32.7, indicating further weakness is developing and the weekly relative strength of the key index is bearish. Daily RSI (14) slipped lower to 32.8 from 35.2, indicating further weakening of the FBMKLCI and the key index is in a bearish state. Weekly Stochastic slipped lower to 16.6 from 29.4, and has entered the oversold zone, indicating a very weak state and continuation of the weekly down cycle. Daily Stochastic hooked downward to 14.7 from 16.2, indicating the key index has again turned weak after staging a technical rebound mid-week, and hence, is likely to further consolidate. In short, both weekly and daily indicators showed that the FBMKLCI is weak and bearish, and hence, is likely to further consolidate in the coming week. Nonetheless, as stochastic indicator showed an oversold situation, a technical rebound might be expected ahead.
The trend of the FBMKLCI remained down and bearish as the key index continued to stay below the short, medium and long term moving averages. On the weekly chart, the FBMKLCI has closed below the long term uptrend channel measuring from the pivot low of 801.27 on October 28, 2008 to the latest, indicating the long term uptrend is over and a new downtrend has formed. Hence, the outlook of the FBMKLCI is bearish and more downside can be expected ahead. For the coming week, the FBMKLCI is likely to continue its downtrend to test the lower support zone of 1,730 to 1,700, with some support and rebound expected at the 1,723 to 1,716 level, where 1,716 is the 76.4% Fibonacci retracement support level for the range measuring from the pivot low of 1660 to the historical high of 1,896. If the psychological support at 1,700-point failed, and based on Elliott wave projection study, the current C-impulse wave has downside targets of 1,693, follows by 1679 and 1,648.
Last Friday, the Dow fell 315.51 or -1.79% to close at 17,280.83. This week, the FBMKLCI is likely to trade within a range of 1,685 to 1,800, and today, the FBMKLCI is likely to trade within a range of 1,711 to 1,764.
This week's expected range: 1685 – 1800
Today’s expected range: 1711 – 1764
Resistance: 1743, 1754, 1764
Support: 1711, 1722, 1727
Stocks to watch: AIRASIA, ANCOMLB, HOMERIZ, MAA, MYEG, PRDUREN, PUC
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