Stocks on Bursa Malaysia ended mixed on last Thursday for a half-day trading session with the benchmark index marginally lower on lack of catalyst and ahead of the long weekend. At close, the FBM KLCI finished at 1,726.73, down 0.53 of-a-point, after fluctuating between 1,720.7 and 1,727.5. On a weekly basis, the benchmark index gained 11.15 points from previous Friday’s 1,715.58. Losers edged gainers by 330 to 314 with 269 counters unchanged. Total volume fell to 841.03 million units valued at RM1.03 million from 1.31 billion units valued at RM1.70 billion, on Wednesday. Weekly turnover fell to 5.13 billion units worth RM5.87 billion from previous Friday’s 8.73 billion units worth RM8.89 billion.
The FBM KLCI was basically in a consolidation mode last week where it opened last Monday 4.83 points lower at 1,710.75 and slipped lower to hit the intra-week low of 1,707 following the brawls in Plaza Low Yat area, Kuala Lumpur. However, the key index managed to rebound and made a marginal gain of 0.53 point to close Monday at 1,716.11 as sentiment turned positive after Eurozone leaders agreed to a deal that would pave for negotiations for a third bailout for Greece. Tuesday saw the FBM KLCI finished up 4.99 points higher at 1,721.10, prompted by active buying momentum for heavyweights despite a weaker regional market. The FBM KLCI continued its upward move on Wednesday to close 6.16 points higher at the intra-day high level of 1,727.26 on last minute buying support for heavyweights amid cautious sentiments, and the key index closed marginally lower on Thursday ahead of the long Hari Raya weekend.
On the weekly chart, the FBM KLCI formed a bullish white piercing-line candlestick pattern, a bottom reversal candlestick pattern, which indicates a fight back of the bulls after opening lower at the initial part of the week, and as the key index was closing near the high of the week it is likely that it will move higher in the coming week. On the daily chart, the FBM KLCI formed a bullish white candlestick after opening 5.22 points lower but the bulls managed to lift the key index to close almost unchanged at the end of the day. Hence, the FBM KLCI is likely to continue its upward momentum to move higher today. Immediate overhead resistance zone is at 1,727 to 1,738, while the downside support zone is at 1,720 to 1,707.
Weekly MACD was marginally lower and showed sign of tapering, while its histogram continued to contract upward for the third consecutive bar, indicating further reduction in the bearish momentum and entering into a state of consolidation after the recent downtrend. Daily MACD and its histogram continued to climb higher, indicating further increased in the daily momentum to the upside. Weekly RSI (14) hooked upward to 39.5 from 36.5, indicating an improvement in the index’s weekly relative strength to the mildly bearish state from a bearish state. Daily RSI (14) hooked downward slightly to 50 from 50.3, indicating a mild pullback correction. Weekly Stochastic was higher at 21.7 from 14.8, indicating an improvement in the index’s weekly strength and continuation of the consolidation with an upward bias. Daily Stochastic was higher at 74.6 from 68, indicating the index’s daily strength has further improved and continuation of the short term up cycle. In short, readings from the weekly indicators showed that the FBM KLCI is in a consolidation mode with an upward bias on the weekly timeframe, while the daily indicators showed that the FBM KLCI is turning stronger for the short term. Hence, the key index is likely to move higher in the coming week.
The medium to long term trend of the FBM KLCI still remained down as the key index continued to stay below the medium and long term moving averages. However, the short term trend of the FBM KLCI has turned sideways to up as the key index was moving range-bound within a range of 1,685 to 1,738 and has closed above the short term moving averages of 5, 10, 15, 20 and 30-day. In addition, the FBM KLCI has also closed above the upper resistance trend-line of the downtrend channel, measuring from the pivot high of 1,867 to the recent low of 1,685, and hence is likely to move higher in the short term to test the immediate overhead resistance of 1,738, and a breakthrough will see the FBM KLCI moving higher to test the next resistance zone of 1,744 to 1,752. For the coming week, the FBM KLCI is likely to continue its uptrend to move higher but gains are likely to be limited on lack of major domestic catalyst, and the uptrend is expected to be supported by positive global sentiment such as Greece’s bailout deal and Iran’s nuclear deal.
Last Friday, the Dow fell 33.80 points or -0.19% to close at 18,086.45. This week, the FBMKLCI is likely to trade within a range of 1,692 to 1,748, and today, the FBMKLCI is likely to trade within a range of 1,715 to 1,734.
This week's expected range: 1692 – 1748
Today’s expected range: 1715 – 1734
Resistance: 1729, 1731, 1734
Support: 1715, 1718, 1722
Stocks to watch: CYBERT, DENKO, DNONCE, DUFU, ELSOFT, EVERGRN, GKENT, HEXZA, INIX, JAKS, LANDMRK, LCTH, LIONDIV, LONBISC, MIECO, MINHO, NAIM, NCB, PENTA, RUBEREX, SYCAL
Stock pick highlight: ELSOFT (0090)
Last Price: RM1.87 +0.09
Support Level: RM1.80, RM1.70
Resistance Level: RM1.90, RM1.93, RM1.98, RM2.00, RM2.05, RM2.08, RM2.11, RM2.15, RM2.19, RM2.25, RM2.30
Entry Level: RM1.86 – RM1.88
ELSOFT (0090) rebounded from its intra-day low of 1.80 to close higher at 1.87 after hitting the intra-day high of 1.90. Technically, the chart of ELSOFT formed a bullish white candlestick with increasing volume indicating strong buying interest came into the stock on Thursday. It breaks out from the consolidation with an upside breakaway gap forming a Flag pattern breakout. MACD climbed higher and made a golden-cross over the signal-line and is just below the zero-line, its histogram also extended upward strongly, indicating an increased in momentum to the upside and a buy signal. RSI (14) rose to 58.3 from 49.1, indicating the stock is turning bullish from mildly bearish. Stochastic rose to 59.3 from 35.8 and is staying above the slow stochastic line, indicating the stock is turning stronger after recent correction. The medium term trend of KHEESAN is sideways while the and long term trend is up, and the short term trend is also up with the 5-day SMA crossing over the 10-day SMA and both are just below the 30-day SMA, and a confirmed breakout above RM1.90 will see an upside target of RM1.93, follow by RM1.98, RM2.00 RM2.05, RM2.08, RM2.11, RM2.15, RM2.19, RM2.25, and RM2.30.
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 (RM1.90). Those with lower risk appetite should wait at the side-line and buy on the dip.
Short Term – target price at (RM1.93, RM1.98, RM2.00 RM2.05, RM2.08), stop loss (RM1.79)
Mid Term – target price at (RM2.11, RM2.15, RM2.19, RM2.25, RM2.30), stop loss (RM1.69)
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