Stocks on Bursa Malaysia closed lower yesterday for a second day after Monday’s selloff, in tandem with regional peers, triggering talks of an overdone selloff in risk assets after Greece’s rejection of austerity. The FBM KLCI ended yesterday at 1,712.3, down 4.75 points, or 0.28%, after moving between 1,708.64 and 1,718.03 throughout the day. Losers thumped gainers by 465 to 315 with 300 counters unchanged. Total volume rose to 1.69 billion units valued at RM1.72 billion from 1.54 billion units valued at RM1.41 billion on Monday.
Continuing the selloff from Monday, the FBM KLCI opened 2.78 points lower at 1,714.27 but rebounded to hit the intra-day high of 1,718.03 twenty minutes after opening. However, the rebound found no follow through, and the key index slipped lower on continued selling pressure for the rest of the day to hit the intra-day low of 1,708.64 just before closing, but a last minute buying on selected blue-chips managed to close the index off low. Chart-wise, the FBM KLCI formed a black spinning-top candlestick which indicates uncertainty of market direction, reduction of the bearish momentum, and consolidation. Hence, the FBM KLCI is likely to stay in consolidation or stage a technical rebound. Immediate downside support zone is at 1,708 to 1,700, while the overhead resistance zone is at 1,718 to 1,728.
MACD slipped lower marginally, while its histogram contracted southward for a second bar, indicating further pullback correction and consolidation. RSI (14) slid lower to 40.5 from 42.1, indicating further loss in the short term relative strength to the bearish zone from a mildly bearish state. Stochastic was lower at 65.2 from 79.5 and made a dead-cross over the slow stochastic line, issuing a stochastic sell signal and continuation of the down cycle. Readings from the indicators showed that the FBM KLCI is in a state of consolidation with a bearish bias.
The trend of the FBM KLCI still remained down as the key index continued to stay below the short, medium and long term moving averages. Nonetheless, price action of the FBM KLCI yesterday showed that the key index is consolidating at current level as a higher low was formed after the key index hit the low of 1,706.60 on Monday and it is noteworthy to take note that the FBM KLCI rebounded strongly from the 960-day simple moving average (SMA). The last time the FBM KLCI rebounded strongly from the 960-day SMA was when the key index hit the low of 1,671.82 on December 17th, 2014, which was followed by a rally which push the FBM KLCI to a high of 1,867.53 on April 27th. Hence, the current support by the 960-day SMA at around 1,706 to 1,708 is critically important as a break of this immediate very long term support would see the FBM KLCI plunging lower to test the next pivot low of 1,688.44.
Overnight, the Dow rebounded 93.33 points or 0.53% to close at 17,776.91. Today, the FBMKLCI is likely to trade within a range of 1,698 to 1,727.
This week's expected range: 1652 – 1788
Today’s expected range: 1698 – 1727
Resistance: 1717, 1722, 1727
Support: 1698, 1703, 1707
Stocks to watch: ASIAPLY, COMCORP, EATECH, EVERGRN, FBMKLCI-HH, FBMKLCI-HI, FBMKLCI-HM, FLBHD, HBGLOB, JERASIA, MAGNA, OMEDIA, PWROOT, SAM, SASBADI, TALIWRK, XDL, YSPSAH
Stock pick highlight: FLBHD (5197)
Last Price: RM1.42 +0.06
Support Level: RM1.36, RM1.28
Resistance Level: RM1.44, RM1.46, RM1.50, RM1.53, RM1.55, RM1.58, RM1.61, RM1.64, RM1.69, RM1.74, RM1.78, RM1.87
Entry Level: RM1.41 – RM1.43
FLBHD (5197) rebounded from its intra-day low of 1.36 to close higher at 1.42 after hitting the intra-day high of 1.44. Technically, the chart of FLBHD 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 W-pattern breakout. MACD surged higher and is above the signal-line but still below 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 58.8 from 49.1, indicating the stock is turning bullish. Stochastic hooked upward to 73.3 from 70 and is staying above the slow stochastic line, indicating the stock is turning stronger after recent correction. The long term trend of FLBHD is up, while the medium term trend is sideways, 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 RM1.44 will see an upside target of RM1.46, follow by RM1.50, RM1.53, RM1.55, RM1.58, RM1.61, RM1.64, RM1.69, RM1.74, RM1.78 and RM1.87.
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 (RM1.40). Those with lower risk appetite should wait at the side-line and buy on the dip.
Short Term – target price at (RM1.46, RM1.50, RM1.53 RM1.55, RM1.58, RM1.61), stop loss (RM1.35)
Mid Term – target price at (RM1.64, RM1.69, RM1.74, RM1.78, RM1.87), stop loss (RM1.27)
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