Stocks on Bursa Malaysia ended last Friday on a bullish note with the benchmark FBM KLCI 3.65 points or 0.21% higher at 1,721.77, after moving between 1,715.83 and 1,726.98 throughout the day, lifted by heavyweights led by Tenaga and finance counters. On a weekly basis, the benchmark index shed 12.6 points or 0.7% from 1,734.37 previously. Gainers led losers by 489 to 299, with 329 counters unchanged. Total volume increased to 1.72 billion units worth RM2.42 billion from Thursday’s 1.45 billion units worth RM1.97 billion. Weekly turnover increased to 7.72 billion units worth RM9.18 billion from 6.36 billion units worth RM7.29 billion previously.
Taking cue from the weak close on Wall Street the previous Friday, the FBM KLCI opened last Monday 1.09 points lower at 1,733.28 but rebounded to hit the intra-day high which is also the intra-week high of 1,734.40, before ending the day 12.21 points lower at 1,722.16, in tandem with regional markets’ bearish sentiment amid concerns over Greece’s debt repayment talks. Tuesday saw the benchmark index closed almost flat with a marginal gain of 0.08 point to 1,722.24 after hitting an intra-day low of 1,718.44. The FBM KLCI rebounded 4.62 points to 1,726.86 on Wednesday, in line with other Southeast Asian stock markets, as investors awaits the Federal Reserve’s (Fed) view on interest rate later of the day. Thursday saw the FBM KLCI fell 8.74 points to 1,718.12, in tandem with regional peers, weighed down by renewed selling in selected heavyweights, and Friday saw the key index recouping 3.65 points to close the week at 1,721.77 on technical rebound.
On the weekly chart, the FBM KLCI formed a bearish black candlestick which indicates sellers were dominant for the week and continuation of the current downtrend with mild technical rebound. Hence, the FBM KLCI is likely to continue its current downtrend to slide lower or consolidate at current level. On the daily chart, the FBM KLCI formed a white spinning-top candlestick which indicates indecision of market direction with mild bullish bias. Hence, the FBM KLCI may further consolidate itself today within a range of 1,714 to 1,728. Immediate downside support zone is at 1,714 to 1,706, while the overhead resistance zone is at 1,728 to 1,745.
Weekly MACD and its histogram continued to slide lower, indicating an increased in the bearish momentum on the weekly perspective. Daily MACD, however, swung upward and so is the histogram, indicating an increased in the momentum to the bullish side on the daily timeframe. Weekly RSI (14) was lower at 34.7 from 36.6, indicating further deterioration of the index’s weekly relative strength. Daily RSI (14) hooked upward to 30.1 from 26.9, indicating a mild technical rebound. Weekly Stochastic hooked upward slightly to 6.5 from 5.5, indicating mild oversold rebound on the weekly timeframe, while daily Stochastic was higher at 17.8 from 13.9, indicating a mild a technical rebound and small increased in the daily index strength. In short, readings from the indicators showed that the FBM KLCI is weak and bearish on the weekly timeframe, while on the daily timeframe, mild technical rebound has taken place. Hence, the FBM KLCI is likely to further consolidate and move range-bound until solid breakout is seen.
The trend of the FBM KLCI still remained down and bearish as the key index continued to stay below the short, medium and long term moving averages. Nevertheless, the price movement of the FBM KLCI over the last four sessions showed that the key index found support around the 1,718-point level, which coincided with the 76.4% Fibonacci Retracement (FR) support level for the range measuring from the pivot low of 1,671 to the pivot high of 1,867. Hence, the FBM KLCI is likely to stage further technical rebound in the coming week as signs of oversold rebound were seen in the daily indicators. Moreover, the coming week may see more mid-year window dressing activity by the funds to support the index-linked blue-chips. Nonetheless, a further break of the immediate downside support of 1,718 and 1,714 will see the FBM KLCI plunging lower towards the 1,706 to 1,700 support zone.
Last Friday, the Dow fell 99.89 points or -0.55% to close at 18,015.95. This week, the FBMKLCI is likely to trade within a range of 1,692 to 1,754, and today, the FBMKLCI is likely to trade within a range of 1,704 to 1,738.
This week's expected range: 1692 – 1754
Today’s expected range: 1704 – 1738
Resistance: 1727, 1732, 1738
Support: 1704, 1710, 1716
Stocks to watch: BPLANT, BTM, CAREPLS, CENTURY, DESTINI, EATECH, ECONBHD, EVERGRN, GESHEN, IDIMENSN, IRCB, JERASIA, MICROLN, MMSV, OMESTI, PARAMON, PENTA, PESONA, SCABLE, SASBADI, SIGN, SYMPHNY, 3A, VS, WINTONI
Stock pick highlight: 3A (0012)
Last Price: RM1.12 +0.06
Support Level: RM1.06, RM1.00
Resistance Level: RM1.13, RM1.15, RM1.18, RM1.22, RM1.26, RM1.29, RM1.32, RM1.35, RM1.38, RM1.41, RM1.44
Entry Level: RM1.11 – RM1.13
Technical Analysis
3A (0012) rebounded from its intra-day low of 1.06 to close higher at the intra-day high of 1.12. Technically, the chart of 3A formed a bullish white Marubozu candlestick with increasing volume indicating strong buying interest came into the stock on Friday. It reversed up from the consolidation forming a Flag pattern breakout. MACD surged upward and is above the signal-line and also above the zero-line, and its histogram also extended upward, indicating an increased in momentum to the upside and a buy signal. RSI (14) rose to 68.3 from 61.7, indicating the stock is getting more bullish. Stochastic swung upward to 75.2 from 66.2 and made a golden-cross over the slow stochastic line, issuing a stochastic buy signal and indicated that the stock is turning strong after recent consolidation. The medium and long term trend of 3A is up, and the short term trend is also up with the 5-day SMA staying below the 10-day SMA but both are above the 30-day SMA, and a confirmed breakout above RM1.13 will see an upside target of RM1.15, follow by RM1.18, RM1.22, RM1.26, RM1.29, RM1.32, RM1.35, RM1.38, RM1.41 and RM1.44.
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 (RM1.13). Those with lower risk appetite should wait at the side-line and buy on the dip.
Price Objective
Short Term – target price at (RM1.15, RM1.18, RM1.22 RM1.26, RM1.29), stop loss (RM1.05)
Mid Term – target price at (RM1.32, RM1.35, RM1.38, RM1.41, RM1.44), stop loss (RM0.99)
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