Stocks on Bursa Malaysia ended slightly lower yesterday in lacklustre trading amid the absence of clear market drivers and as foreign funds continued to reduce their shareholdings in Malaysian equities. The market was trading sideways throughout the day, dampened by resurgence in concerns over weak global and China’s economic growth. The FBM KLCI slipped 0.71 point or 0.04% to 1,698.98, after fluctuating between 1,696.72 and 1,702.36 throughout the day. Gainers beat losers by 444 to 371 with 313 counters unchanged. Total volume fell to 1.36 billion units valued at RM1.73 billion from 2.14 billion units valued at RM2.25 billion on Tuesday.
Following the strong rebound on Wall Street overnight, the FBM KLCI opened 0.1 of a point lower at 1,699.60 and moved range-bound in a narrow range in and out of the positive and negative zone throughout the day. It hit the intra-day low of 1,696.72 at mid-morning and the intra-day high of 1,702.36 just before closing but last minute selling on selected blue-chips dragged it lower. Chart-wise, the FBM KLCI formed a small black spinning-top candlestick which indicates consolidation and uncertainty of market direction with a bearish bias. Hence, the FBM KLCI is likely to further consolidate today. Immediate downside support zone is at 1,696 to 1,690, while the overhead resistance zone is at 1,702 to 1,707.
MACD continued to slide lower and made a dead-cross over the signal-line, issuing a bearish sell signal. RSI (14) was marginally lower at 37.7 from 37.9, indicating mild loss in the relative strength of the key index to the bearish side. Stochastic was lower at 34.7 from 48.9, indicating further weakening of the key index and continuation of the short term down cycle. Readings from the indicators showed that the FBM KLCI is bearish for the short term, and hence is likely to further consolidate.
The technical picture of the FBM KLCI still remained very much unchanged in that the medium and long term trend is down, while the short term trend is sideways range-bound with a downward bias, and the near term trend still remained down. However, the price action of the FBM KLCI yesterday showed that the selling pressure is waning and the key index is going into a consolidation mode. Hence, the FBM KLCI may stage an oversold technical rebound today on bargain hunting.
Overnight, the Dow rose 121.12 points or 0.69% to close at 17,751.39. Today, the FBMKLCI is likely to trade within a range of 1,690 to 1,708.
This week's expected range: 1686 – 1759
Today’s expected range: 1690 – 1708
Resistance: 1701, 1705, 1708
Support: 1690, 1693, 1696
Stocks to watch: ABRIC, AWC, CENTURY, COCOLND, COMCORP, ECOFIRS, EKOWOOD, SENDAI, GKENT, HLIND, JAYCORP, LCTH, LEESK, MBL, OPENSYS, PMCORP, PELIKAN, PESONA, PWROOT, QL, SYCAL, 3A, WZSATU
Stock pick highlight: AWC (7579)
Last Price: RM0.425 +0.035
Support Level: RM0.385, RM0.365
Resistance Level: RM0.44, RM0.455, RM0.475, RM0.485, RM0.495, RM0.515, RM0.525, RM0.54, RM0.56, RM0.58, RM0.63
Entry Level: RM0.42 – RM0.43
Technical Analysis
AWC (7579) rebounded from its intra-day low of 0.39 to close higher at 0.425 after hitting the intra-day high of 0.44. Technically, the chart of AWC formed a bullish long white candlestick with increasing volume indicating strong buying interest came into the stock yseterday. It breaks out from the consolidation forming a Cup-with-Handle pattern breakout. MACD swung upward and is above the signal-line, and its histogram also extended upward strongly, indicating an increased in momentum to the upside and a buy signal. RSI (14) rose to 65 from 54.1, indicating the stock is turning bullish from mildly bullish. Stochastic was marginally lower to 70.6 from 70.8 and is still below the slow stochastic line, indicating consolidation. The medium and long term trend of AWC 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 RM0.44 will see an upside target of RM0.455, follow by RM0.475, RM0.485, RM0.495, RM0.515, RM0.525, RM0.54, RM0.56, RM0.58, and RM0.63.
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 (RM0.44). Those with lower risk appetite should wait at the side-line and buy on the dip.
Price Objective
Short Term – target price at (RM0.455, RM0.475, RM0.485, RM0.495, RM0.515), stop loss (RM0.38)
Mid Term – target price at (RM0.525, RM0.54, RM0.56, RM0.58, RM0.63), stop loss (RM0.36)
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