Stocks on Bursa Malaysia closed mixed last Friday as buying in selected heavyweights helped limit losses. Most Asian markets fell, after Greece held back its debt repayment to the International Monetary Fund (IMF). The benchmark FBM KLCI rose 3.85 points or 0.22% to 1,745.33 after hovering between 1,737.88 and 1,746.28 throughout the day. On a weekly basis, the FBM KLCI shed 2.19 points or 0.12% from 1,747.52 previously. Losers outpaced gainers 413 to 344, while 345 counters were unchanged. Total volume slipped to 1.18 billion units worth RM1.32 billion from 1.36 billion units worth RM1.68 billion on Thursday. Weekly turnover declined to 7.37 billion units worth RM8.94 billion from 9.07 billion units worth RM11.63 billion previously.
The FBM KLCI was basically in a range-bound consolidation last week after continuing the slide from the previous week at the initial part of the week. The key index opened last Monday 4.3 points higher at 1,751.82 and surged to hit the intra-week high of 1,752.08 briefly after opening. However, heavy selling pressure sent the key index to the intra-week low of 1,732.27, losing 15.25 points at its worst, before recovering some lost ground to close 4.11 points lower at 1,743.41. Tuesday saw the FBM KLCI losing 2.04 points to 1,741.37 as CIMB came under selling pressure but market sentiment firmed up for the first time in recent days with interest seen in smaller capitalised stocks. The FBM KLCI rose 7.8 points to 1,749.17 on Wednesday supported by consistent buying activities in selected heavyweights, while regional bourses were traded on a mixed note as investors remained cautious over the economic uncertainty in Greece. Thursday saw the FBM KLCI shed 7.69 points to 1,741.48 on continued profit taking in most heavyweight blue-chips in line with lower crude oil prices and weaker ringgit ahead of the Organization of Petroleum Exporting Countries (OPEC) meeting on Friday, and the key index rebounded slightly on Friday to close 3.85 points higher at 1,745.33.
On the weekly chart, the FBM KLCI formed a black hammer candlestick, a bottom reversal signal with a mild bearish bias, which indicates sellers were initially dominant in the early part of the week, but buyers surfaced later to lift up the index. Nevertheless, a confirmation of reversal will require the key index to close above 1,767-point, the mid-range of previous week’s candlestick. Otherwise, the key index may stay in range-bound consolidation. On the daily chart, the FBM KLCI formed a white hammer candlestick which is a bottom reversal candlestick pattern with a bullish bias, and hence, the FBM KLCI is likely to stage further rebound today if the buying momentum can sustain. Immediate overhead resistance zone is at 1,750 to 1,759, while the downside support zone is at 1,737 to 1,732.
Weekly MACD continued to slide lower below the zero-line, and its histogram also extended southward, indicating an increased in the bearish momentum on the weekly timeframe. Daily MACD, however, hooked upward but is still below the signal-line, as well as the zero-line, and its histogram contracted upward, indicating a state of consolidation with an upward bias. Weekly RSI (14) was marginally lower at 38.2 from 38.5, indicating a reduction in the downward momentum and the weekly relative strength is still bearish. Daily RSI (14) hooked upward to 29.9 from 27, reflecting a weak rebound, and the daily relative strength of FBM KLCI is still very bearish. Weekly Stochastic dipped lower to 7.9 from 17, indicating a very weak state of the FBM KLCI on the weekly timeframe, and is deeply oversold, and a technical rebound might be expected ahead. Daily Stochastic hooked upward to 14.5 from 12.9 and is staying above the slow stochastic line, indicating a rebound and possible continuation of the short term up cycle. In short, readings from the weekly indicators showed that the FBM KLCI is bearish and oversold based on stochastic reading, and a technical rebound can be expected ahead. On the other hand, readings from the indicators showed that the FBM KLCI is in sideways consolidation with an upward bias.
The trend of the FBM KLCI still remained down as the key index continued to stay below the short, medium and long term moving averages. Nevertheless, the price action of the FBM KLCI last week has seen the key index closing slightly above the 5-day simple moving average (SMA), but is still below the 10-day SMA, implying the key index has turned sideways range-bound for the near term. In order for the FBM KLCI to move higher, it will at least have to close above the immediate overhead resistance posted by the 10-day SMA at 1,751-point. From a longer term perspective, the FBM KLCI has rebounded off the long term uptrend line drawn from the pivot low of 836.51 on March 13th, 2009 on the weekly chart to the pivot low of 1,671.82 on the week ended December 19th, 2015, and a further break of the pivot low of 1,732.27 will likely see the FBM KLCI plunging lower to test the 76.4% Fibonacci Retracement (FR) support level of 1,718, follow by the 1,700-point psychological support level. And a break of the critical 1700-point psychological support will see the key index descending lower to the 100% FR support level of 1,671.82. For the coming week, the FBM KLCI is likely to move sideways range-bound within a range of 1,714 to 1,771.
Last Friday, the Dow fell 56.12 points or -0.31% to close at 17,849.46. This week, the FBMKLCI is likely to trade within a range of 1,714 to 1,771, and today, the FBMKLCI is likely to trade within a range of 1,731 to 1,754.
This week's expected range: 1714 – 1771
Today’s expected range: 1731 – 1754
Resistance: 1748, 1751, 1754
Support: 1731, 1734, 1740
Stocks to watch: APFT, CAREPLS, COCOLND, GLBHD, GOPENG, HUPSENG, IRCB, JERASIA, KIMHIN, KPJ, JETSON, MULPHAL, OMESTI, PWROOT, RUBEREX, SASBADI, ULICORP, WILLOW, XIANLNG, XDL
Stock pick highlight: OMESTI (9008)
Last Price: RM0.70 +0.02
Support Level: RM0.645, RM0.58
Resistance Level: RM0.71, RM0.75, RM0.78, RM0.81, RM0.83, RM0.855, RM0.88, RM0.91, RM0.94, RM0.98, RM1.03
Entry Level: RM0.695 – RM0.705
Technical Analysis
OMESTI (9008) rebounded from its intra-day low of 0.665 to close higher at 0.70 after hitting the intra-day high of 0.71. Technically, the chart of OMESTI formed a bullish white candlestick with increasing volume indicating buying interest came into the stock on Friday. It breaks out from the consolidation range forming a small Saucer pattern breakout. MACD swung upward and is above the signal-line, but its histogram contracted downward slightly, indicating a mild increased in momentum to the upside and a buy signal. RSI (14) rose to 65.2 from 63.2, indicating the stock is turning more bullish. Stochastic hooked upward to 65.5 from 63.2 and is about to cross the slow stochastic line, indicating the stock is turning up after recent consolidation. The medium and long term trend of OMESTI is up, and the short term trend is also up with the 5-day SMA staying above the 10-day SMA and both are above the 30-day SMA, and a confirmed breakout above RM0.71 will see an upside target of RM0.75, follow by RM0.78, RM0.81, RM0.83, RM0.855, RM0.88, RM0.91, RM0.94, RM0.98 and RM1.03.
Since the short term trend is bullish, day traders with shorter time frame perspective may ride on the short term bullishness and buy on breakout level (RM0.71). Those with lower risk appetite should wait at the side-line and buy on the dip.
Price Objective
Short Term – target price at (RM0.75, RM0.78, RM0.81 RM0.83, RM0.855), stop loss (RM0.64)
Mid Term – target price at (RM0.88, RM0.91, RM0.94, RM0.98, RM1.03), stop loss (RM0.575)
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