Stocks on Bursa Malaysia closed lower last Friday with the benchmark FBM KLCI settled the day lower on lack of catalysts to drive the market, and as investors took profit from earlier gains amid losses in neighboring bourses. At close, the FBM KLCI finished at 1,781.75, down 5.12 points or 0.29% after fluctuating between 1,781.75 and 1,789.36 throughout the day. Week-on-week, the FBM KLCI lost 25.21 points from 1,786.34 on previous Friday. Losers outpaced gainers by 471 to 372 with 308 counters unchanged. Total volume was slightly higher at 2.96 billion shares worth RM1.8 billion from 2.94 billion shares worth RM2.2 billion on Thursday. Weekly turnover increased to 13.09 billion units worth RM10.43 billion from 11.34 billion units worth RM11 billion on previous week.
The FBM KLCI was basically in a correction mode last week; where it opened last Monday 16.37 points lower with a downside runaway gap at 1,790.59 and slipped lower to hit the intra-day low of 1,778.99, losing 27.97 points at its worst before rebounding to close 15.22 points lower at 1,791.74, dragged by fund selling in heavyweights. The FBM KLCI rebounded on Tuesday to hit the intra-week high of 1,799.05 before last minute selling in selected heavyweights to lose 2.01 points to 1,789.73 as the ringgit weakened to 3.7040 against the US dollar. Wednesday saw another day of heavy selling pressure in blue-chips with the FBM KLCI falling 11.57 points to close at 1,778.16 after touching an intra-week low of 1,774.97. The FBM KLCI rebounded on Thursday to close 8.71 points higher at 1,786.87 spurred by persistent buying momentum in heavyweights, a rebound in the ringgit and moving in tandem with the uptrend in regional bourses following South Korea’s surprise move to cut interest rates. However, Friday saw profit-taking which dragged the index to close 5.12 points lower to 1,781.75.
On the weekly chart, the FBM KLCI formed a bearish black candlestick which continued the downtrend from the previous week with a downside breakaway gap, indicating the market was being sold down with foreign fund rushing out. Hence, the FBM KLCI is likely to further consolidate or correct downward in the coming week to test the lower support zone of 1,775 to 1,750. On the daily chart, the FBM KLCI formed a black inverted hammer candlestick in bullish Harami position which indicates consolidation. Hence, the FBM KLCI is likely to further consolidate today within a range of 1,775 to 1,780.
Weekly MACD hooked downward, and its histogram also contracted downward for a second bar, indicating an increased in the bearish momentum on the weekly perspective and a pause in the weekly uptrend. Daily MACD continued to slide lower and made a dead-cross over the zero-line, issuing a MACD sell signal and indicated that the FBM KLCI has again turned bearish for the medium term. Weekly RSI (14) slipped lower to 46.4 from 50.9, indicating the weekly relative strength of the FBM KLCI has turned mildly bearish from a neutral state on the previous week. Daily RSI (14) hooked downward to 41.7 from 43.9, indicating the key index is turning more bearish in the mildly bearish zone. Weekly Stochastic hooked downward to 79.99 from 82.9, indicating a pullback correction on the weekly perspective. Daily Stochastic slipped lower to 14.3 from 17.3, indicating the FBM KLCI is getting weaker and a continuation of the short term down cycle. In short, readings from the weekly momentum indicators showed that the FBM KLCI is undergoing a pullback correction and is turning mildly bearish, while readings from the daily momentum indicators showed that the FBM KLCI is in a bearish state and is likely to further consolidate or correct downward.
The short term trend of the FBM KLCI is down as the key index continued to stay below the short term moving averages. The medium term trend is also under threat now with the FBM KLCI closing below the 50-day simple moving average (SMA) on last Friday, but is still above the 60-day SMA which is currently at 1,772-point, and a further break of the 60-day SMA will see the FBM KLCI turning more bearish for the medium term. The long term trend continues to stay sideways as the long term moving averages are turning flat with a downward bias. For the coming week, the FBM KLCI is likely to see range-bound trade with a bearish bias as selling pressure from foreign fund continue to dictate the direction of the FBM KLCI. Critical support level is at 1,770 which coincide with the 60-day SMA support, and a break of the support level will likely see the FBM KLCI sliding lower to test the psychological support level of 1,750, which coincides with the mid-range for the range of 1,671 to 1,831, and a breach of the 1,750-point level will see the market sentiment turning more bearish.
Last Friday, the Dow fell 145.91 points or -0.82% to close at 17,749.31. This week, the FBMKLCI is likely to trade within a range of 1,747 to 1,823, and today, the FBMKLCI is likely to trade within a range of 1,771 to 1,796.
This week's expected range: 1747 – 1823
Today’s expected range: 1771 – 1796
Resistance: 1786, 1791, 1796
Support: 1771, 1776, 1779
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