Stocks on Bursa Malaysia closed broadly lower yesterday as continued selling pressure in most heavyweight counters dragged the benchmark index to close sharply lower. Southeast Asian stock markets also trimmed previous gains, with market sentiments dampened by investor worries over the Greek debt talks. At close, the FBM KLCI was 14.87 points or 0.86% lower at 1,716.81 after moving between 1,716.81 and 1,729.64 throughout the day. Losers thumped gainers by 552 to 292, with 254 counters unchanged. Total volume decreased to 1.65 billion units worth RM2.08 billion from Wednesday’s 1.79 billion units worth RM1.89 billion.
Following the weak close on Wall Street overnight, the FBM KLCI opened 2.1 points lower at 1,729.58 and rebounded to hit the intra-day high of 1,729.64 briefly after opening. The key index came under continuous selling pressure and slipped lower throughout the day with weak intermittent rebound. It ended the day at the lowest point on last minute sell down on selected blue-chips. Chart-wise, the FBM KLCI formed a bearish long black Marubozu candlestick which indicates the bears were in full control for the day, and hence, the key index is likely to slide lower today on continuous selling pressure. Immediate downside support zone is at 1,714 to 1,706, while the overhead resistance zone is at 1,725 to 1,735.
MACD turned flat, while its histogram contracted downward for the first time after expanding upward for four consecutive bars, indicating a reduction in the upward momentum and a turning point is developing. RSI (14) slipped lower sharply to 33.4 from 39, indicating a changed in the relative strength to the bearish side. Stochastic hooked downward to 33.5 from 47, and made a dead-cross over the slow stochastic line, issuing a stochastic sell signal, and indicated the earlier technical rebound has ended and the possible beginning of another down-leg. Readings from the indicators showed that the FBM KLCI has again turned weak and bearish, and is likely to slide lower.
The trend of the FBM KLCI remained down, and with the bearish downward move yesterday, the strong technical rebound that happened on Monday is considered over and the key index is likely to continue with its downtrend to test the immediate lower support zone of 1,714 to 1,706, follow by the psychological support level of 1,700-point soon. A further break of the 1,700-point psychological support will see the FBM KLCI revisiting the pivot low of 1,671-point.
Overnight, the Dow fell 75.71 points or -0.42% to close at 17,890.36. Today, the FBMKLCI is likely to trade within a range of 1,699 to 1,742.
This week's expected range: 1692 – 1754
Today’s expected range: 1699 – 1742
Resistance: 1725, 1733, 1742
Support: 1699, 1708, 1712
Stocks to watch: ASIAPLY, ENGTEX, FBMKLCI-HF, FBMKLCI-HI, FBMKLCI-HL, HEVEA, JERASIA, KINSTEL, MAA, MAGNA, MINHO, MYEG, OMEDIA, PERWAJA, PLABS, PWROOT, PRESBHD, SAM, SCGM, TCHONG, UZMA
Stock pick highlight: PWROOT (7237)
Last Price: RM2.14 +0.08
Support Level: RM2.06, RM2.00
Resistance Level: RM2.19, RM2.22, RM2.27, RM2.31, RM2.36, RM2.40, RM2.44, RM2.50, RM2.60, RM2.73, RM2.85
Entry Level: RM2.13 – RM2.15
PWROOT (7237) rebounded from its intra-day low of 2.06 to close higher at 2.14 after hitting the intra-day high of 2.19. Technically, the chart of PWROOT 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 hooked upward and is still below the signal-line but above the 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 59.8 from 54.8, indicating the stock is turning bullish from a mildly bullish state. Stochastic was higher at 56.3 from 50 and is staying above the slow stochastic line, indicating the stock is turning stronger after recent correction. The medium and long term trend of PWROOT 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 RM2.19 will see an upside target of RM2.22, follow by RM2.27, RM2.31, RM2.36, RM2.40, RM2.44, RM2.50, RM2.60, RM2.73 and RM2.85.
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 (RM2.19). Those with lower risk appetite should wait at the side-line and buy on the dip.
Short Term – target price at (RM2.22, RM2.27, RM2.31 RM2.36, RM2.40), stop loss (RM2.05)
Mid Term – target price at (RM2.44, RM2.50, RM2.60, RM2.73, RM2.85), stop loss (RM1.99)
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