Stocks on Bursa Malaysia ended last Friday on a negative note weighed by last-minute selling in selected index-linked stocks led by Petronas Chemicals. Market sentiments remained fragile as Asian stock markets tumbled further on mounting concerns over China’s slowing economy, sparking jitters across global markets. Meanwhile, uncertainties surrounding the timing of the Federal Reserve’s interest rate hike, as well as lower commodities prices also continued to dominate sentiments. At close, the benchmark FBM KLCI stood at 1,574.67 points, down by 2.74 points, or 0.17%, after hovering between 1,557.01 and 1,583.38 throughout the day. On a weekly basis, the FBM KLCI fell 22.15 points from previous Friday’s 1,596.82. Losers led gainers by 470 to 330 with 326 counters unchanged. Total volume was unchanged at 1.79 billion units, valued at RM2.13 billion compared with RM1.77 billion on Thursday. Weekly turnover fell to 9.79 billion units, worth RM9.74 billion, from last week’s 10.26 billion units worth RM10.76 billion.
The FBM KLCI opened last Monday 6.01 points lower at 1,590.81 but rebounded to hit the intra-day high of 1,594.46 shortly after opening. However, heavy selling pressure dragged the key index to close 24.28 points or 1.52% lower at 1,572.54, plagued by the weakening ringgit against the greenback, slowdown in China’s economy, devaluation of the Chinese yuan, weakening of oil prices, and nagging domestic concerns. Tuesday saw the FBM KLCI rebounded from the intra-day low of 1,562.88 to close 7.06 points or 0.45% better at 1,579.60, despite the weak performance of regional bourses. The local bourse stayed on a positive note throughout the trading session on Wednesday despite fragile investor sentiments over fear the rebound on Tuesday could be short-lived, and the FBM KLCI ended the day 2.84 points better at 1,582.44 after opening at the intra-day which is also the intra-week high of 1,594.68. Thursday saw the FBM KLCI retreating 5.03 points on profit taking to 1,577.41 points after hitting an intra-day low of 1,562.11, and on Friday, the FBM KLCI was down by 2.74 points to 1,574.67 points after touching an intra-week low of 1,557.01.
On the weekly chart, the FBM KLCI formed a bearish black hammer-like candlestick which closed at slightly below the mid-point of the candlestick, indicating the bears are in slight domination, and hence, the FBM KLCI is likely to further correct downward or consolidate in the coming week. On the daily chart, however, the FBM KLCI formed a bullish white piercing-line which opened lower but closed higher above the opening, a bottom reversal candlestick pattern which indicates a fight back of the bulls, and hence, the FBM KLCI is likely to further consolidate within the immediate range of 1,557 to 1,594. Immediate downside support zone is at 1,550 to 1,530, while the overhead resistance zone is at 1,594 to 1,600.
Weekly MACD and its histogram continued to slide southward, indicating an increased in the bearish momentum on the weekly timeframe. Daily MACD was marginally lower, while its histogram further contracted upward, indicating a reduction of the downward momentum and a state of consolidation on the daily timeframe. Weekly RSI (14) dipped lower to 21.9 from 23.6, indicating further weakening of the key index in the very bearish zone. Daily RSI (14) was marginally lower at 24.9 from 25.3, indicating a mild pullback and consolidation. Weekly Stochastic was lower at 4.5 from 8.7, indicating further weakening of the key index in the oversold zone. Daily Stochastic, however, was marginally higher at 9.8 from 9.5, indicating consolidation. In short, readings from the weekly indicators showed that the FBM KLCI is very weak and very bearish but is oversold. While readings from the daily indicators showed that the FBM KLCI was is a state of consolidation.
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 price action of the FBM KLCI last week showed that the key index had found some support at the 1,562-point level as it rebounded off it twice and closed above it on Friday after breaking below it. The 1,562-point is also the 100% Fibonacci projection (FP) level for the impulse wave starting from 1,867-point, making it an important support level. However, a break of this critical support will see and extension of the impulse wave with potential downside targets of 1,512 (127.2% FP), follow by 1,491 (138.2% FP), 1,470 (150% FP) and 1,448 (161.8% FP). And based on Fibonacci retracement (FR) support level for the range from 1,310 to 1,896, the support levels are 1,603 (50% FR), follows by 1,534 (61.8% FR), and 1,448 (76.4% FR), and 1,310 (100% FR). A projection of the trend-line support measuring from the pivot low of 1,234 on February 8th 2010 to the pivot low of 1,310 on September 1st 2011 gives a support at around 1,510-point.
Last Friday, the Dow plunged 530.94 points or -3.12% to close at 16,459.75. This week, the FBMKLCI is likely to trade within a range of 1,518 to 1,632, and today, the FBMKLCI is likely to trade within a range of 1,533 to 1,609.
This week's expected range: 1518 – 1632
Today’s expected range: 1533 – 1609
Resistance: 1586, 1598, 1609
Support: 1533, 1545, 1559
Stocks to watch: FBMKLCI-HG, FBMKLCI-HK, FBMKLCI-HM, FBMKLCI-HO, FBMKLCI-HU, FBMKLCI-HV, FBMKLCI-HW
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