Stocks on Bursa Malaysia closed slightly higher last Friday, supported by bargain hunting in selected finance stocks. Regionally, most Asian stocks traded higher as investor confidence over the US employment data being positive had grown and amid the European Central Bank’s growth forecast upgrade. At close, the benchmark FBM KLCI ended 0.87 point or 0.05% better at 1,806.96, after fluctuating between 1,799.65 and 1,809.65 throughout the day. On a weekly basis, the FBM KLCI fell 14.25 points from 1,821.21 on previous Friday. Gainers outpaced losers by 456 to 361 with 310 counters unchanged. Total volume declined to 2 billion shares worth RM1.9 billion from 2.1 billion shares worth RM2.4 billion transacted on Thursday. Weekly turnover increased to 11.34 billion units worth RM11 billion from 10.45 billion units worth RM10.62 billion on previous week.
The FBM KLCI was in consolidation mode last week where it opened last Monday 1.7 points higher at 1,822.91 but ended 4.08 points lower at 1,817.13. However, most of the Asian stock markets were traded higher, as investors reacted positively to the People’s Bank of China’s move to lower the one-year deposit rate by 25 basis points to 2.5% and the one-year lending rate to 5.35%. Taking cue from the record close of the Dow overnight, the FBM KLCI rebounded on Tuesday to close 4.12 points higher at 1,821.25. Wednesday saw the FBM KLCI rising another 4.29 points to 1,825.54 on last minute bargain hunting in selected finance counters as the broader market consolidates after hitting an intra-week high of 1,826.05. The FBM KLCI plunged 19.45 points to close Thursday at 1,806.09, in tandem with Asian markets which traded mostly lower, affected by China’s announcement to cut its economic growth target, and Friday saw the key index stabilizes after hitting an intra-week low of 1,799.80.
On the weekly chart, the FBM KLCI formed a bearish engulfing candlestick pattern, a top reversal candlestick pattern which indicates selling pressure were dominant, and hence, the key index is likely to further correct downward or consolidate in the coming week. Weekly resistance zone is at 1,826 to 1,831, and the weekly support zone is at 1,800 to 1,780. On the daily chart, the FBM KLCI formed a white spinning-top candlestick which indicates uncertainty of market direction amid consolidation after the previous day’s fall. Hence, the FBM KLCI is likely to further consolidate today. Immediate overhead resistance zone is at 1,809 to 1,826, while the downside support zone is at 1,800 to 1,790.
Weekly MACD was higher but its histogram contracted slightly downward, indicating a reduction in the upward momentum or consolidation. Daily MACD, however, continued to slide lower and its histogram also extended downward, indicating an increased in bearish momentum on the daily perspective. Hence, the FBM KLCI is likely to further consolidate. Weekly RSI (14) hooked downward to 50.9 from 53.7, indicating a pullback correction and the FBM KLCI is back to the neutral state from a mildly bullish state. Daily RSI (14) hooked upward slightly to 52.5 from 52.1, indicating a mild rebound and consolidation. Weekly Stochastic was higher at 82.9 from 79.4, indicating the weekly up cycle is still intact but the index is entering the overbought zone, and a pullback correction is expected ahead. Daily Stochastic, however, was lower at 68.9 from 81.8, indicating further weakening of the FBM KLCI and continuation of the daily down cycle. In short, readings from the weekly indicators showed that the FBM KLCI is still maintaining its uptrend posture but with sign of consolidation or correction. However, readings from the daily indicators showed that the FBM KLCI is losing its momentum and undergoing a correction, and hence, is likely to further consolidate.
The short term trend of the FBM KLCI has turned down or bearish as the key index is now closing below the 5, 10, 15 and 20-day simple moving averages (SMA), and the 5-day SMA has also made a dead-cross over the 10-day SMA, confirming the short term downtrend. Nevertheless, the medium term uptrend is still intact, while the long term trend is turning sideways range-bound. From Elliott wave analysis, the FBM KLCI has completed its impulse wave-1 starting on December 17th and ended on March 4th, and now is likely to go into a corrective phase with a downside target of 1,790, follow by 1,783 and 1,767 on extension. The general market is likely to go into consolidation mode as the reporting season has come to an end, and the market direction of Bursa Malaysia is likely to track the development of external market.
Last Friday, the Dow fell 278.94 points or -1.54% to close at 17,856.78. This week, the FBMKLCI is likely to trade within a range of 1,769 to 1,852, and today, the FBMKLCI is likely to trade within a range of 1,791 to 1,819.
This week's expected range: 1769 – 1852
Today’s expected range: 1791 – 1819
Resistance: 1811, 1815, 1819
Support: 1791, 1795, 1801
Stocks to watch: BDB, BRIGHT, CAB, CAMRES, CLIQ, EDUSPEC, ESCERAM, ETITECH, EVERGRN, GHLSYS, HIL, HOMERIZ, HOVID, IFCAMSC, KRONO, KSL, MULPHA, OWG, PASDEC, PTGTIN, PRIVA, SUNSURIA, XOX, YEELEE, YTLE
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