Stocks on Bursa Malaysia closed lower yesterday on profit taking by late fund selling of key index stocks after Monday’s strong rebound, despite the bullish performance in most Asian markets. Sentiment on the local bourse remained wary over issues relating to 1MDB and the potential Fitch Ratings downgrade by end-June. The FBM KLCI was 5.9 points or 0.34% lower at 1,726.86, after moving between 1,726.86 and 1,734.97 throughout the day. Losers led gainers 407 to 395, with 327 counters unchanged. Total volume increased to 1.73 billion units worth RM1.68 billion, from Monday’s 1.54 billion units worth RM1.82 billion.
Taking cue from the strong performance on Wall Street overnight, the FBM KLCI opened 1.8 points higher at 1,734.56 and surged to the intra-day high of 1,734.97 briefly after opening. However, the upward move found no follow through and the key index pulled back on profit taking to move sideways range-bound within a tight range for a major part of the day, and a last minute sell down on selected blue-chips by fund sent the FBM KLCI to close at the lowest point of the day. Chart-wise, the FBM KLCI formed a bearish black candlestick in dark-cloud-cover position, indicating profit taking correction, and hence, the key index is likely to further consolidate today. Immediate downside support zone is at 1,720 to 1,714, while the overhead resistance zone is at 1,734 to 1,744.
MACD continued to climb higher but is still below the zero-line, and its histogram also extended higher, indicating an increased in momentum to the upside. RSI (14) hooked downward to 36 from 38.6, indicating a mild pullback correction, and the relative strength is still in the bearish zone. Stochastic was higher at 35.9 from 27.1, indicating further strengthening of the index. Mixed readings from the indicators showed that the FBM KLCI is in a state of consolidation.
The general trend of the FBM KLCI still remained down, and with yesterday’s pullback correction, the FBM KLCI has again closed below the 10 and 15-day simple moving average (SMA) after breaking through them a day earlier but is still staying above the 5-day SMA which is currently at 1,724, and a break of this immediate near term support will see the FBM KLCI falling back to the consolidation zone of 1,714 to 1,726. Nonetheless, as the month of June is coming to a close, the key index may find some support from the mid-year window dressing activity by funds.
Overnight, the Dow rose 24.29 points or 0.13% to close at 18,144.07. Today, the FBMKLCI is likely to trade within a range of 1,716 to 1,743.
This week's expected range: 1692 – 1754
Today’s expected range: 1716 – 1743
Resistance: 1732, 1737, 1743
Support: 1716, 1721, 1724
Stocks to watch: AWC, COCOLND, CONNECT, DNONCE, ENRA, GLBHD, HANDAL, HUPSENG, IRCB, KELADI, KIMHIN, KKB, KNM, KOBAY, MITRA, NOTION, OMEDIA, PANSAR, PARAMON, SENDAI, SKPRES, SMTRACK, TALIWRK, TOMYPAK
Stock pick highlight: KKB (9466)
Last Price: RM1.84 +0.05
Support Level: RM1.78, RM1.75
Resistance Level: RM1.86, RM1.90, RM1.93, RM1.99, RM2.11, RM2.20, RM2.29, RM2.34, RM2.40, RM2.50, RM2.63
Entry Level: RM1.83 – RM1.85
Technical Analysis
KKB (9466) rebounded from its intra-day low of 1.78 to close higher at 1.84 after hitting the intra-day high of 1.86. Technically, the chart of KKB formed a bullish white candlestick with increasing volume indicating strong buying interest came into the stock yesterday. It breaks out from the consolidation forming a small Rectangle pattern breakout. MACD climbed higher but is still below the signal-line and zero-line, and its histogram also contracted upward strongly, indicating an increased in momentum to the upside and a buy signal. RSI (14) rose to 54.8 from 51, indicating the stock is turning bullish from a neutral state. Stochastic was higher 64.7 from 56.9 and is staying above the slow stochastic line, indicating the stock is turning stronger after recent correction. The long term trend of KKB is sideways while the medium term trend is up, and the short term trend is up with the 5-day SMA making a golden-cross over the 10-day SMA but both are still below the 30-day SMA, and a confirmed breakout above RM1.86 will see an upside target of RM1.90, follow by RM1.93, RM1.99, RM2.11, RM2.20, RM2.29, RM2.34, RM2.40, RM2.50 and RM2.63.
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 (RM1.86). Those with lower risk appetite should wait at the side-line and buy on the dip.
Price Objective
Short Term – target price at (RM1.90, RM1.93, RM1.99 RM2.11, RM2.20), stop loss (RM1.77)
Mid Term – target price at (RM2.29, RM2.34, RM2.40, RM2.50, RM2.63), stop loss (RM1.74)
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