Stocks on Bursa Malaysia ended last Friday on a bearish note with losses in heavyweights continuing to weigh on market sentiment. The local market was tracking the sluggish regional markets amid concerns of a potential Greece debt default and the country exiting the European Union after days of talks in Brussels failed to yield a breakthrough, the 7% plunge in China markets while the ringgit continued to weaken against the US dollar. At close, the FBM KLCI was down 6.34 points or 0.37% to 1,710.47, the lowest since Jan 7, after fluctuating between 1,709.87 and 1,716.64 throughout the day. On a weekly basis, the benchmark index eased 11.3 points or 0.65% from 1,721.77. Losers thumped gainers by 441 to 345, with 320 counters unchanged. Total volume decreased to 1.35 billion units, worth RM1.43 billion, from Thursday’s 1.65 billion units worth RM2.08 billion. Weekly turnover decreased to 7.35 billion units worth RM8.19 billion from 7.72 billion units worth RM9.18 billion previously.
Following the weak close on Wall Street the previous Friday, the FBM KLCI opened last Monday 0.15 of a point lower at 1,721.62 but rebounded to close 10.99 points better at 1,732.76, after hitting an intra-week high of 1,735.90 amid hopes about Greece’s debt deal after it came out with a last minute proposal to appease creditors. Tuesday saw the FBM KLCI fell 5.9 points lower to 1,726.86 on profit taking by late fund selling of key index stocks after Monday’s strong rebound. The FBM KLCI rebounded 4.82 points higher on Wednesday to close at 1,731.68 on last-minute buying interests amid choppy trading, tracking the regional bourses. Stocks on Bursa Malaysia closed broadly lower on Thursday with the FBM KLCI falling 14.87 points to 1,716.81 on continued selling pressure in most heavyweight counters, in line with most regional bourses with market sentiments dampened by investor worries over the Greek debt talks. And the FBM KLCI continued its downtrend on Friday to close another 6.34 points lower at 1,710.47 after hitting an intra-week low of 1,709.87.
On the weekly chart, the FBM KLCI formed a bearish black inverted hammer-like candlestick, a bottom reversal candlestick pattern with a bearish bias which indicates initial pushed up by the bulls, but the effort was later overcome by the bears to close near the lowest point of the week. Hence, the FBM KLCI is likely to continue with its downtrend to slide lower in the coming week towards the 1,700-point psychological support level. On the daily chart, the FBM KLCI formed a bearish black candlestick which continued the bearish downward move from Thursday, and hence, is likely to slip lower today on continued downward momentum. Immediate downside support zone is at 1,706 to 1,700, while the overhead resistance zone is at 1,714 to 1,728.
Weekly MACD was lower below the zero-line, and its histogram also extended downward, indicating an increased in the bearish downward momentum. Daily MACD is below the zero-line, has turned downward, and its histogram also contracted downward for a second bar, indicating further pullback correction in a bearish state. Weekly RSI (14) slipped lower to 33.1 from 34.7, indicating further weakening of the FBM KLCI on the weekly timeframe. Daily RSI (14) was lower at 31.2 from 33.4, indicating the key index is getting more bearish. Weekly Stochastic re-hooked downward to 3.4 after turning upward to 6.5 on the previous week, indicating a resumption of the bearish downward move after a brief technical rebound. Daily Stochastic slipped lower to 21.3 from 33.5, indicating further weakening of the FBM KLCI and continuation of the down cycle. Readings from both the weekly and daily indicators painted a bearish outlook for the FBM KLCI, and hence the key index is likely to further correct downward.
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. The bearish downward move on Friday has broken the immediate pivot low support at 1,714-point, and hence, it is likely that the FBM KLCI will slide lower in the coming week to test the immediate support zone of 1,706 to 1,700, and a breach of the 1,700-point psychological support will see more bearish move toward the next lower critical support level of 1,671-point. A point to note is that the 960-day simple moving average (SMA) which provided the support to the FBM KLCI at 1,671-point is now at 1,707-point, and a break of this very long term moving average would see the FBM KLCI moving into a long term bear phase with a potential downward targets of 1,678, follows by 1,634 and even 1,516 based on Fibonacci Projection for the impulse C-wave which is currently unfolding.
Last Friday, the Dow rose 56.32 points or 0.31% to close at 17,946.68. This week, the FBMKLCI is likely to trade within a range of 1,675 to 1,761, and today, the FBMKLCI is likely to trade within a range of 1,701 to 1,723.
This week's expected range: 1675 – 1761
Today’s expected range: 1701 – 1723
Resistance: 1714, 1719, 1723
Support: 1701, 1705, 1708
Stocks to watch: ASIAPLY, CMSB, CENTURY, FBMKLCI-HG, FBMKLCI-HH, FBMKLCI-HI, FBMKLCI-HN, MINHO, MYEG, PREMIER, SUPERMX, XDL
Stock pick highlight: CENTURY (7117)
Last Price: RM0.945 +0.04
Support Level: RM0.905, RM0.82
Resistance Level: RM0.945, RM0.965, RM0.99, RM1.01, RM1.03, RM1.06, RM1.10, RM1.12, RM1.15, RM1.18, RM1.22
Entry Level: RM0.94 – RM0.95
CENTURY (7117) rebounded from its intra-day low of 0.905 to close higher at the intra-day high of 0.945. Technically, the chart of CENTURY formed a bullish white Marubozu candlestick with increasing volume indicating strong buying interest came into the stock on Friday. It breaks out from the consolidation forming a Rectangle pattern breakout. MACD surged upward and is above the signal-line and also 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 66.1 from 57.9, indicating the stock is turning bullish from a mildly bullish state. Stochastic was higher at 89.2 from 81.7 and is staying above the slow stochastic line, indicating the stock is turning stronger after recent correction. The medium and long term trend of CENTURY 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 RM0.945 will see an upside target of RM0.945, follow by RM0.99, RM1.01, RM1.03, RM1.06, RM1.10, RM1.12, RM1.15, RM1.18, and RM1.22.
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 (RM0.945). Those with lower risk appetite should wait at the side-line and buy on the dip.
Short Term – target price at (RM0.965, RM0.99, RM1.01 RM1.06, RM1.10), stop loss (RM0.90)
Mid Term – target price at (RM1.12, RM1.15, RM1.18, RM1.22), stop loss (RM1.99)
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