Stocks on Bursa Malaysia ended higher yesterday on technical rebound after Monday’s steep decline, bolstered by gains in consumer and key finance counters on mid-year window dressing, in line with most regional bourses. At close, the benchmark FBM KLCI was up 14.72 points or 0.87% to 1,706.64 but year-to-date, it is down 3.1% and the second worst performer after Jakarta’s Composite Index which fell 6.05% since January. Market breadth was positive with gainers thumping losers by 495 to 309, while 309 counters were unchanged. Total volume increased to 1.75 billion units worth RM2.25 billion from Monday’s 1.67 billion units worth RM1.71 billion.
Despite Wall Street performing badly overnight, the FBM KLCI opened 3.44 points higher at 1,695.36 but slipped lower on profit taking activity to hit the intra-day low of 1,691.03 fifteen minutes after opening. The key index rebounded from the low and climbed higher for the rest of the day to touch the intra-day high of 1,708.38 before pulling back slightly to close off-high. Chart-wise, the FBM KLCI formed a bullish white candlestick in bullish Harami position, a bullish bottom reversal candlestick pattern, which indicates potential reversal ahead. Nonetheless, a confirmed reversal will require the key index to close at least above 1,714-point which is the immediate overhead resistance level. Hence, the FBM KLCI is likely to move higher today but within a range of 1,688 to 1,714.
MACD hooked upward gently, and its histogram also extended up slightly, indicating a mild change in momentum to the upside. RSI (14) swung upward to 35.4 from 25.9, indicating a technical rebound after the key index hit the RSI oversold zone. Stochastic also swung upward to 15.1 from 5.5, indicating a strong rebound but the FBM KLCI is still technically weak. Readings from the indicators showed that the FBM KLCI experienced an oversold technical rebound yesterday, and is likely to move higher on follow through buying momentum.
The trend of the FBM KLCI still remained down as the key index continued to stay within the downtrend channel measuring from the pivot high of 1,867 to the pivot low of 1,688. To breakout from this downtrend channel, the FBM KLCI must at least close above the 1,718-point level which is the immediate resistance level posted by the upper downtrend line of the downtrend channel. However, to fully reverse the longer term downtrend the FBM KLCI will have to close above the cluster of short, medium and long term moving averages with the highest resistance level at 1,820-point by the 360-day SMA.
Overnight, the Dow rebounded 23.16 points or 0.13% to close at 17,619.51. Today, the FBMKLCI is likely to trade within a range of 1,678 to 1,725.
This week's expected range: 1675 – 1761
Today’s expected range: 1678 – 1725
Resistance: 1713, 1719, 1725
Support: 1678, 1684, 1695
Stocks to watch: APFT, ASDION, BARAKAH, BTM, CONNECT, ENGTEX, GKENT, JAKS, JERASIA, KIMHIN, KEURO, MAGNA, MIECO, MINHO, TALIKWRK, ULICORP, WASEONG, YTLPOWR
Stock pick highlight: JAKS (4723)
Last Price: RM0.735 +0.01
Support Level: RM0.70, RM0.65
Resistance Level: RM0.745, RM0.775, RM0.80, RM0.815, RM0.85, RM0.87, RM0.90, RM0.925, RM0.95, RM0.97, RM1.01
Entry Level: RM0.73 – RM0.74
Technical Analysis
JAKS (4723) rebounded from its intra-day low of 0.72 to close higher at 0.735 after hitting the intra-day high of 0.745. Technically, the chart of JAKS formed a bullish white candlestick with increasing volume indicating strong buying interest came into the stock yesterday. It continued the rebound from the previous candlestick forming a potential Rectangle pattern breakout. MACD climbed higher and is above the signal-line and also 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 59.8 from 57.7, indicating the stock is turning more bullish. Stochastic was higher at 77.2 from 73.7 and is staying above the slow stochastic line, indicating the stock is getting stronger after recent correction. The medium and long term trend of JAKS is up, and the short term trend is also up with the 5-day SMA staying above the 10-day SMA and 30-day SMA, and a confirmed breakout above RM0.745 will see an upside target of RM0.775, follow by RM0.80, RM0.815, RM0.85, RM0.87, RM0.90, RM0.925, RM0.95, RM0.97, and RM1.01.
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 (RM0.745). Those with lower risk appetite should wait at the side-line and buy on the dip.
Price Objective
Short Term – target price at (RM0.775, RM0.80, RM0.815 RM0.85, RM0.87), stop loss (RM0.69)
Mid Term – target price at (RM0.90, RM0.925, RM0.95, RM0.97, RM1.01), stop loss (RM0.64)
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