Stocks on Bursa Malaysia ended marginally lower yesterday with the benchmark FBM KLCI down 0.87 point or 0.05% to 1,734.76 on selling pressure in telecommunication heavyweights. Losers outpaced gainers by 468 to 290, with 340 counters unchanged. Total volume rose to 1.42 billion units worth RM1.71 billion from 1.22 billion units worth RM1.55 billion yesterday.
Following the strong gain on Wall Street overnight, the FBM KLCI opened 9.14 points higher at 1,744.77, the intra-day high level, but fell on profit taking activity throughout the day. The key index hit the intra-day low of 1,733.17 at mid-afternoon before rebounding slightly in the last hour to close off low. Chart-wise, the FBM KLCI formed a bearish black candlestick in dark-cloud-cover position which indicates heavy profit taking activity. Hence, the FBM KLCI is likely to further consolidate today. Immediate downside support zone is at 1,733 to 1,727, while the overhead resistance zone is at 1,744 to 1,752.
MACD was marginally higher, but is still below the signal-line as well as the zero-line, and its histogram further contracted upward, indicating further reduction in the bearish momentum and a state of consolidation. RSI (14) was marginally lower at 29.8 from 30.1, indicating consolidation. Stochastic was lower at 8.5 from 9.6, indicating consolidation. Readings from the indicators showed that the FBM KLCI is in a state of consolidation and is likely to further consolidate.
The trend of the FBM KLCI still remained down. However, the price action of the key index over the last few sessions showed that the FBM KLCI is finding support at around the 1,730-point support level and is currently is a consolidation mode. Hence, the FBM KLCI is likely to move sideways range-bound within a range of 1,727 to 1,750.
Overnight, the Dow rose 38.97 points or 0.22% to close at 18,039.37. Today, the FBMKLCI is likely to trade within a range of 1,718 to 1,756.
This week's expected range: 1714 – 1771
Today’s expected range: 1718 – 1756
Resistance: 1741, 1749, 1756
Support: 1718, 1725, 1730
Stocks to watch: APFT, HANDAL, HOVID, MNRB, OCNCASH, OLDTOWN, PANSAR, PARAMON, SCICOM, SENDAI, SGB, TGOFFS, VSOLAR
Stock pick highlight: SENDAI (5205)
Last Price: RM0.83 +0.045
Support Level: RM0.80, RM0.74
Resistance Level: RM0.835, RM0.85, RM0.88, RM0.915, RM0.945, RM0.97, RM1.00, RM1.04, RM1.07, RM1.10, RM1.15
Entry Level: RM0.825 – RM0.835
Technical Analysis
SENDAI (5205) rebounded from its intra-day low of 0.80 to close higher at 0.83 after hitting the intra-day high of 0.835. Technically, the chart of SENDAI formed a bullish white candlestick with increasing volume indicating strong buying interest came into the stock yesterday. It breaks out from the consolidation range forming a Double-bottom and M-pattern breakout. MACD climbed higher and is above the signal-line as well as the zero-line, and its histogram also extended upward strongly, indicating an increased in momentum to the upside and a buy signal. RSI (14) rose to 70.5 from 61.8, indicating the stock is turning very bullish. Stochastic was higher at 87.3 from 64.5 and is above the slow stochastic line, indicating the stock is turning strong after recent consolidation. The long term trend of SENDAI is sideways while the medium term trend is up, and the short term trend is 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 RM0.835 will see an upside target of RM0.85, follow by RM0.88, RM0.915, RM0.945, RM0.97, RM1.00, RM1.04, RM1.07, RM1.10 and RM1.15.
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 (RM0.835). Those with lower risk appetite should wait at the side-line and buy on the dip.
Price Objective
Short Term – target price at (RM0.85, RM0.88, RM0.915 RM0.945, RM0.97), stop loss (RM0.79)
Mid Term – target price at (RM1.00, RM1.04, RM1.07, RM1.10, RM1.15), stop loss (RM0.73)
Disclaimer: The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. The Stocks to watch is not a recommendation to buy or sell the particular stock, as it is only meant for graduates of the "Share Trading the Pro Way" course as case study. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.