Stocks on Bursa Malaysia ended lower last Friday on continued sell down by foreign funds as concerns over the weaker ringgit against the US dollar and declining oil prices continued to weigh down the benchmark index. Ay close, the FBM KLCI fell 11.99 points, or 0.7%, to 1,682.65 after fluctuating between 1,677.22 and 1,695.18 throughout the day. On a weekly basis, the benchmark index fell 40.49 points from previous Friday’s 1,723.14. Decliners outnumbered gainers by 722 to 187 with 257 counters unchanged. Total volume rose to 1.86 billion units valued at RM1.79 billion from 1.65 billion units valued at RM2.02 billion on Thursday. Weekly turnover declined to 7.38 billion units worth RM7.99 billion from last week’s 9.01 billion units worth RM9.36 billion.
Following the weak performance on Wall Street the previous Friday, the FBM KLCI opened last Monday 6.15 points lower at 1,716.99 but rebounded strongly to close 21.05 points or 1.22% higher at 1,744.19 on last-minute buying of index-linked telco stocks. However, the FBM KLCI gave back 20.46 points to 1,723.73 on Tuesday dragged down by heavy profit taking on some of the same blue chips that lifted the index on Monday. The FBM KLCI rebounded slightly on Wednesday to close 1.83 points higher at 1,725.56. However, selling pressure re-emerged on Thursday which saw the FBM KLCI plunging 30.92 points or 1.79% to 1,694.64 on major sell-down by foreign funds, fueled by the weakening ringgit which fell to a new 17-year low of 3.9005/9035 against the greenback. And Friday saw the continuation of selling pressure which dragged the FBM KLCI to the intra-week low of 1,677.22 before rebounding slightly to close off low at 1,682.65.
On the weekly chart, the FBM KLCI formed a bearish black candlestick with a long upper shadow, indicating heavy selling pressure at latter part of the week after an initial pushup, and hence, the key index is likely to fall further in the coming week to test the immediate downside support zone of 1,677 to 1,671. On the daily chart, the FBM KLCI formed a black spinning-top-like candlestick which indicates uncertainty of market direction but with a bearish bias. Hence, the FBM KLCI is likely to further correct downward or consolidate today. Immediate downside support zone is at 1,677 to 1,671, while the overhead resistance zone is at 1,695 to 1,707
Weekly MACD hooked downward and its histogram also extended southward after contracting upward for five consecutive bars, indicating a resumption of the downward momentum after five weeks of consolidation. Daily MACD slipped lower and made a dead-cross over the signal-line, issuing a bearish sell signal and indicated an increased in the bearish momentum. Weekly RSI (14) hooked sharply downward to 32.6 from 39.1, indicating a strong surge in the bearish momentum that dragged the key index towards the very bearish zone. Daily RSI (14) slipped lower to 37.4 from 40.6, indicating the FBM KLCI has turned bearish from a mildly bearish state on the daily timeframe. Weekly Stochastic hooked downward to 15.3 from 21.1 and made a dead-cross over the slow stochastic line, issuing a stochastic sell signal on the weekly timeframe, and indicating the FBM KLCI has again weaken after the recent consolidation. Daily Stochastic slipped lower to 21.4 from 39.5, indicating further weakening of the key index and continuation of the short term down cycle. In short, readings from both the weekly and daily indicators showed that the FBM KLCI has again turned weak and bearish after recent consolidation, and is expected to weaken further.
The trend of the FBM KLCI has again turned bearish after five weeks of sideways consolidation within a range of 1,685 to 1,744. The bearish move of the key index last week has broken the lower support of the sideways range at 1,685, and hence has started a new downtrend with immediate support at 1,671-point, where 1,671-point is a critical support level as it is also the neckline level for the Head-and-Shoulder chart pattern, and a break of this neckline support level would see a potential downside target of 1,448-point. Based on Elliott wave study, impulse wave-3 of the bigger wave-C has just been unfolded and the downside targets based on Fibonacci projection (FP) are 1,652 (50% FP), follow by 1,631 (61.8% FP), 1,604 (76.4% FP), 1,561 (100% FP) and 1,448 (161.8% FP). For the coming week, FBM KLCI is expected to continue its downtrend on weak factors as crude palm oil, gold and the West Texas Intermediate (WTI) crude oil will be under pressure, as all these commodities had fallen below their psychological levels of RM2,100 for crude palm oil, US$1,100 for gold and US$50 for WTI crude oil, and the weak ringgit is also going to add pressure to the market.
Last Friday, the Dow fell 46.37 points or -0.27% to close at 17,373.38. This week, the FBMKLCI is likely to trade within a range of 1,634 to 1,768, and today, the FBMKLCI is likely to trade within a range of 1,656 to 1,713.
This week's expected range: 1591 – 1768
Today’s expected range: 1656 – 1713
Resistance: 1692, 1702, 1713
Support: 1656, 1667, 1674
Stocks to watch: BORHOIL, BTM, D&O, DESTINI, FBMKLCI-H, HUNZPTY, LIONDIV, NTPM, OCNCASH, POHUAT, RCECAP, TAKASO, XDL
Stock pick highlight: NTPM (5066)
Last Price: RM0.795 +0.055
Support Level: RM0.73, RM0.68
Resistance Level: RM0.81, RM0.83, RM0.845, RM0.855, RM0.87, RM0.89, RM0.90, RM0.93, RM0.95, RM0.97, RM1.00
Entry Level: RM0.79 – RM0.80
NTPM (5066) rebounded from its intra-day low of 0.73 to close higher at 0.795 after hitting the intra-day high of 0.81. Technically, the chart of NTPM formed a bullish white candlestick with increasing volume indicating strong buying interest came into the stock on Friday. It breaks out from the consolidation forming a sideways range breakout. MACD climbed sharply upward and is above the signal-line, and its histogram also extended upward strongly, indicating an increase in momentum to the upside and a buy signal. RSI (14) rose to 76.6 from 65.6, indicating the stock is turning very bullish. Stochastic hooked upward to 86 from 83.3 and is above the slow stochastic line, indicating the stock is getting very strong and continuation of the short term up cycle. The medium and long term trend of NTPM is sideways to up, and the short term trend is 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 RM0.81 will see an upside target of RM0.83, follow by RM0.845, RM0.855, RM0.87, RM0.89, RM0.90, RM0.93, RM0.95, RM0.97 and RM1.00.
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 (RM0.81). Those with lower risk appetite should wait at the side-line and buy on the dip.
Short Term – target price at (RM0.83, RM0.845, RM0.855, RM0.87, RM0.89), stop loss (RM0.725)
Mid Term – target price at (RM0.90, RM0.93, RM0.95, RM0.97, RM1.00), stop loss (RM0.675)
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